BDO says new guideline on RE developers unfair

MANILA, Philippines - The country’s leading lender has expressed concern over the Department of Energy (DOE)’s move to grant feed-in tariff (FIT) allocation only to those renewable energy (RE) developers that have completed putting up their power facilities.

BDO Unibank Inc. executive vice president Eduardo Francisco, who is also president of BDO Capital  & Investment Corp., said the DOE’s decision would put small RE developers at a disadvantageous position.

“It will be chicken or egg.  (It would be) unfair to RE developers as how can they put up power plants and get financing if there is no FIT,” he said, noting that only big RE firms would manage to put up their facilities without financial assistance from banks.

Francisco said most of the RE developers would definitely need something to back up their loans.

“Banks would look at financial feasibility and the FIT will be integral,” he said.

FIT is a guarantee for the investments made by renewable energy firms. It assigns fixed rates that could be collected from consumers over a period of 20 years.

The BDO official said the FIT allocation is also a guarantee for the banks to collect payment from the RE developers.

“Banks might not release loans unless there is a FIT allocation,” he noted.

Energy Secretary Carlos Jericho Petilla had earlier said FIT allocation would be given to the first developers who can complete their projects.

Petilla was also earlier quoted as saying that the “definition of (project) completion is the first to commence commercial operation.”

Regulators want to put an installation target on RE utilization to balance power generation mix in the grid.

Since RE is quite expensive, the DOE does not want to put pressure on power rates if they would allow more RE in the grid.

Based on the approved installation targets of the DOE, only 250 megawatts (MW) would be installed for hydro projects; 250 MW for biomass; 200 MW for wind; 50 MW for solar and 10 MW for ocean technology.

The approved FIT rates for each specific renewable technology are: run of the river hydro (P5.90 per kilowatthour); biomass (P6.63 per kWh); wind (P 8.53 per kWh); and solar (P9.68 per kWh).