Republic of the Philippines

ENERGY REGULATORY COMMISSION

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ERC Sets GEAR Prices for the First Round of the Green Energy Auction

ERC Sets GEAR Prices for the First Round of the Green Energy Auction

     In support of the government’s thrust to accelerate the development of renewable energy systems, including the promotion and commercialization of its applications, the Energy Regulatory Commission (ERC) has set the Green Energy Auction Reserve (GEAR) Prices for Solar, Wind, Biomass and Run-of-River Hydro technologies.  The GEAR Prices shall serve as the ceiling price for the first round of the Green Energy Auction Program to be conducted by the Department of Energy (DOE).  

     “We have set the GEAR Prices for each type of technology consistent with the Notice of Auction of the DOE setting the auction capacities on a per technology basis, and using the Discounted Cash Flow Model with forty-six (46) parameters and assumptions for each technology,” ERC Chairperson and CEO Agnes VST Devanadera explained.

     The GEAR Prices for the first Round of Auction under the Green Energy Auction Program approved by the Commission on 26 May 2022 are as follows:


     The ERC, in accordance with its mandate under Section 25 of the EPIRA (Electric Power Industry Reform Act) is tasked to allow the recovery of prudent and reasonable economic costs incurred, consistent with the declared policy to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability, in order   to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market. 

     The approved GEAR Prices considered the stakeholders’ comments, inputs, and concerns before and after the public consultation held on 12 April 2022.  

     The financial model used by the Commission does not allow any escalation or adjustment due to changes in forex and inflation, therefore, the GEAR prices are fixed during the whole life of the project.

     Further, the GEAR Prices set by the Commission are lower or within the range of the recent Power Supply Agreements (PSA) for newly constructed plants or plants that are ongoing construction, taking into consideration the approved rates and the escalation/ adjustment provisions of these PSAs.

     “In the determination of a representative project and the computation of the GEAR Prices, the Commission was guided by the principle of efficiency and international benchmarks to ensure that only the cost of efficient plants will be passed on to consumers,” ERC Chair Devanadera added.

 


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