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NEWS UPDATES 26 July 2010

Philippine tariff for renewable energy

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Consumers will soon start paying for another line item in their electricity bills as incentive to developers of renewable energy projects. The Energy Regulatory Commission (ERC) recently released the feed-in-tariff (FIT) rules for renewable energy projects to spur the development of clean and indigenous power sources.

Under the FIT rules, the National Grid Corp. of the Philippines (NGCP) and distribution utilities are mandated to connect renewable energy facilities to the grid and to take in the energy generated by these plants, the Manila Times reports.

NGCP operates the country’s power transmission highway.

”Whenever there is renewable energy injected into their systems, [NGCP] or the [distribution] utilities, in the case of embedded plants, allocate the energy among all their customers or electricity end-users,” the ERC said.

In turn, all electricity end-users are obligated to pay a uniform FIT charge, which will be subject to inflation and foreign currency exchange fluctuations.

The tariff will then be distributed to renewable energy developers depending on the technology and the power they put up and generate, respectively. The incentive will be applicable for 20 years.

”The FIT to be set shall also be subject to digression to encourage the developers to invest at the initial stage and hasten the development of renewable energy,” the regulator said.

The tariff will be reflected under a separate portion of the universal charge component of consumers’ power bills. The FIT will be administered by the NGCP.

The FIT offers guaranteed payment over a defined period to renewable energy developers using wind, solar, run-of-river hydro, biomass and ocean technology, which have been hampered by huge investment costs and limited markets.

The tariff, however, has yet to be determined by the National Renewable Energy Board, a body created under the Renewable Energy Act of 2008 to oversee the implementation of the law.

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