DOE Releases Amendments on the Guidelines for Non-Feed-In Tariff Eligible Renewable Energy Technologies in the Green Energy Auction Program

On 25 March 2024, the Department of Energy (“DOE”) issued Department Circular No. DC2024-03-0010 (“DC 2024-03-0010”) amending Department Circular No. DC2023-10-0029 which provides for the specific auction policy and guidelines for Non-Feed-in-Tariff (“FIT”) Eligible Renewable Energy (“RE”) Technologies in the Green Energy Auction Program (“GEAP”). 

By way of background, the GEAP consists of the following: 

1. Green Energy Tariff which provides price signals on the commercial value of electricity generated from RE facilities resulting from a competitive process, and set the benchmark price for Distribution Utilities under the Opt-in Mechanism; and 
2. Green Energy Auction (“GEA”) which facilitates the determination of RE facilities that are eligible under the GEAP. 

The GEA refers to the competitive process of procuring RE supply undertaken pursuant to the GEAP Guidelines. The GEA was established as a mechanism to facilitate the selection of eligible RE plants through a competitive process or auction. 

The framework for the conduct of the auction was established in the GEAP Guidelines. The GEAP Guidelines enumerates the RE facilities whose capacities may be offered under the GEA. In Section 6.1.3 and 6.1.4 of the GEAP Guidelines, the DOE, upon the recommendation of the Green Energy Auction Committee shall develop a specific auction policy and guidelines or a separate remuneration package under the GEA for geothermal, impounding hydropower facilities and other emerging RE technologies. It is in relation to this authority of the DOE that they issued DC 2024-03-0010 amending certain specific provisions in the auction process pertaining to Non-FIT Eligible RE Technologies participating in the GEA. 

DC 2024-03-0010 amends the provisions on the pre-auction process and price offer in DC2023-10-0029. It provided that the Energy Regulatory Commission (“ERC”) must promulgate the rules on Price Determination Methodology (“PDM”) for Non-FIT-Eligible RE Facility to be used in evaluating Price Offers submitted by bidders, by taking into consideration the set of parameters and criteria based on, among others, cost range assumptions and weighted cost of capital of Project Internal Rate of Return.

The provision which requires the DOE to publish parameters and criteria for evaluating the Price Offers has also been removed. 

Further, DC 2024-03-0010 also clarified the evaluation process for price offers. First, the DOE will endorse legally, and technically compliant price offers to the ERC. The ERC, in turn, has 60 days to evaluate the said price offers based on their approved parameters and criteria. After the ERC completes its evaluation and endorses the price offers to the DOE, the DOE will confirm which bidders’ price offers are deemed acceptable. In line with this, Section 6 of DC 2024-03-0010 is amended to reflect that the winning bidders for each auction round of the GEA for Non-FIT-Eligible RE technology shall be those who price offers have been evaluated and found consistent by the ERC with its PDM.