By Victor V. Saulon, October 14 2019; Business World
Image Credit to Business World/FREEPIK
THE DEPARTMENT of Energy (DoE) has opened biomass energy development to full foreign ownership to encourage growth of the sector that has lured only a few investors even after the feed-in tariff (FiT) scheme gave them a fixed, subsidized rate for their power output.
Marissa P. Cerezo, a director at the department’s Renewable Energy Management Bureau (REMB), said the DoE was working on immediate publication of the “omnibus guidelines” for the award and administration of renewable energy contracts, signed earlier this month by Energy Secretary Alfonso G. Cusi.
“In these new guidelines, we opened up the biomass sector to foreign corporations,” she told reporters, adding that the DoE has done away with the 60-40% ownership rule in favor of Filipinos.
She said the reason for allowing foreign ownership in biomass development is that this thrust uses a natural resource, hence, no foreign ownership limitation should apply.
Biomass energy projects use agricultural waste to generate energy. The DoE has also classified waste-to-energy projects under biomass development, thus widening the sector’s scope.
“We don’t have the local technology on biomass yet so with this policy opening up to foreign companies, we believe that a lot more foreign companies will engage in biomass development or waste-to-energy development,” she said.
DoE Undersecretary Felix William B. Fuentebella said the new guidelines have also removed the blocking system for biomass projects, which is akin to delineating the scope of a service contract in petroleum exploration projects. A block is equivalent to 81 hectares.
“You’re not supposed to explore. There’s no exploration stage. That’s why in the award of the contract, it will start with operating stage,” he said.
Monalisa C. Dimalanta, chairman of the National Renewable Energy Board (NREB), said it was the biomass developers themselves who sought clarification from her office about whether technologies involved in waste-to-energy projects can be considered as exploration projects.
She said NREB, which advises the DoE on renewable energy issues, believes that these projects do not involve natural resources thus the nationality requirement should not apply.
“I think that’s an indication that it will also unlock more interest or will realize more interest in the sector because… the request came from that sector itself,” she said.
Mr. Fuentebella said he was optimistic that the new guidelines would encourage more investments in biomass projects.
“We’re addressing one of the hindrances,” he said, referring to ownership restrictions.
He also said the problem of feedstock availability could be addressed by business models that allow the supplier of agricultural waste to be part-owner of the power plant projects.
Biomass development is among renewable energy technologies for which the DoE had set an installation target in a race to complete a project and qualify under the feed-in tariff program, an incentive scheme that grants priority connections to the grid, priority purchase and transmission of, and payment for, electricity generated.
Under the rules, eligible RE developers are guaranteed a rate for 20 years for each kilowatt they produce. For biomass developers, the rate was set at P6.63 per kilowatt-hour (/kWh). The rate was degressed to P6.5969/kWh for 2017, when the scheme was supposed to end.
But on Feb. 23, 2018, the DoE endorsed to the Energy Regulatory Commission the extension of the biomass installation target for two years — from Dec. 31, 2017 until Dec. 31, 2019 — or upon successful commissioning of projects covering the unsubscribed balance of their respective 250-megawatt (MW) installation targets, whichever comes first.
At that time, up 170.33 MW had been taken up and considered FiT-eligible by the DoE, leaving developers in a race to complete their projects ahead of the others before the end-2019 deadline.
Ms. Dimalanta said NREB was expecting the installation target to be exceeded by yearend. The board has a pending request to the DoE to accommodate the excess.
For 2018 and 2019, the degressed rates for biomass are P6.5639 per kWh and P6.5310 per kWh, respectively.
“As of now, based on the guidance of the Secretary, until 2019 na lang because ’yung extension na two years will be finished by 2019,” said REMB Director Mylene C. Capongcol in an earlier interview.
“Inaaral pa namin pero (We are still studying but) we’re not extending as of now the biomass [feed-in tariff]. But we may devise a mechanism on how we will be able to accommodate ‘yung lumagpas (those that go beyond that deadline).”