The Energy Regulatory Commission (ERC) has approved and adopted the Price Determination Methodology (PDM) for Non-FIT-Eligible Renewable Energy (RE) Technologies under the Green Energy Auction Program (GEAP). This new methodology outlines the framework for evaluating price offers submitted by bidders for geothermal, impounding hydropower, pumped-storage hydropower, and other emerging RE technologies not covered under the Feed-in-Tariff (FIT) scheme, as may be declared by the DOE. The move aligns with the government’s goal of promoting renewable energy sources while ensuring competitive and transparent pricing mechanisms.
The PDM outlines a detailed framework for the evaluation of Non-FIT-Eligible RE facilities. These include general parameters such as installed capacity, project economic useful life, and plant degradation rates as well as financial metrics such as development and operational costs, equity and tax assumptions, as well as economic assumptions, among others. Price offers will be further evaluated based on parameters specified for each technology type, such as geothermal, impounding hydropower, and pumped-storage hydropower.
The PDM adopts the Discounted Cash Flow (DCF) model to assess the financial viability of the price offers submitted by qualified bidders. The model takes into account projected revenues, financing, and anticipated returns, providing a clear, structured approach to pricing.
Evaluation Stages
The evaluation of price offers will be conducted in two key stages:
- First Stage:
Proposal documents submitted by bidders will be evaluated for compliance with technical and financial requirements. This includes reviewing project development costs, capacity factors, and other critical metrics.
- Second Stage:
Price offers that meet the required criteria will be assessed using a weighted scoring system, outlined in the annexes, based on the defined parameters.
Once the evaluation is completed, the ERC will endorse the Evaluation Report to the DOE. The DOE will notify the winning bidders.
The PDM is effective immediately upon publication. The parameters for each technology will apply to the third round of the Green Energy Auction. These parameters will be reviewed and amended as necessary for future rounds, ensuring that they remain aligned with market conditions and regulatory requirements.
The PDM for Non-FIT-Eligible RE Technologies in the GEAP may be accessed using this link.