The Department of Energy is set to bid out 11,600 megawatts (MW) of renewable energy (“RE”) capacities under the Second Round of the Green Energy Auction (“GEA”) or GEA2 in June 2023.
The GEA is a competitive process to select eligible RE plants and aims to promote the growth of the RE industry in the country. It is a part of the Green Energy Auction Program (“GEAP”) of the DOE, which is facilitated by the reconstituted Green Energy Auction Committee (“GEAC”), composed of the members of the Renewable Portfolio Standards (“RPS”) Composite Team, and designated representatives from the Market Operator (currently the Independent Electricity Market Operator of the Philippines), and the National Transmission Corporation (“TransCo”).
DOE Circular No. DC2021-11-0036 primarily governs the guidelines for the conduct of the GEAP, which consists of two components: the Green Energy Tariff (“GET”) and the GEA. The GET corresponds to the rate of the winning bids and is included in the computation by the Energy Regulatory Commission (“ERC”) of the Feed-in Tariff Allowance for the GEA.
Out of the 11,600 MW RE capacities for auction under GEA2, 3,600 MW is targeted for installation in 2024, 3,600 MW in 2025, and 4,400 MW in 2026. Of the 3,600 MW installation target in 2024, 2,400 MW is allocated to Luzon, 870 MW to the Visayas, and 330 MW to Mindanao. For the installation target in 2025, 2,325 MW is accounted for Luzon, 910 MW for the Visayas, and 365 MW for Mindanao. Finally, out of the 4,400 installation target in 2026, 2,990 MW is allocated to Luzon, 915 MW to the Visayas, and 495 to Mindanao. Available RE resource types include ground-mounted solar, roof-mounted solar, onshore wind, and biomass. In 2026, floating solar and waste-to-energy will also be rolled out.
The GEA2 kicked off with the publication of the Notice of Auction on 27 March 2023. Meanwhile, the Auction proper will be held on 19 June 2023. Under DC2021-11-0036, all qualified bidders shall place their bid’s capacity (MW), price (PhP/kWh), and target supply delivery commencement date offer through an electronic bidding platform. The bids shall be ranked from lowest to highest bid price. The ranked offers shall be stacked to their respective RE technologies until the RE capacities are met. All bids below the clearing price shall be declared Winning Bidders. The resulting prices shall then constitute the GET, or the set of prices awarded to the Winning Bidders on a pay-as-bid basis.
The DOE has already released the Terms of Reference (“TOR”) for the GEA2 on 18 April 2023. The TOR supplements DC2021-11-0036 and contains major GEA instruments such as Auction Design, Bonds, Instruction to Bidders, Bidding Data, Forms, and Templates, and Post Auction requirements.
Based on the TOR, Notices of Award are set to be issued on 28 June 2023. Winning bidders shall have a supply delivery period of twenty (20) years reckoned from the delivery commencement date of the RE project.
The DOE said in a statement that the GEAP will help the government to realize its target of 35% RE in the energy mix by 2030 and 50% by 2040.
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