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MANILA, Philippines - Renewable energy developers are against bidding for the tariff incentive, saying this would only stunt the industry's growth.
In a position paper, the Renewable Energy Developers Association said using an auction to set the feed-in-tariff (FIT) for green power projects violates the Renewable Energy Act of 2008 or Republic Act 9513, which aims to draw investors to a "predictable and stable" regulatory framework.
"In contrast, a bidding system, with its narrow objective of eliciting the lowest price, would not provide any certainty to investor-bidders," the group said.
Under the law, FIT rates would be set for renewable energy projects, with the cost of the tariff to be borne by consumers. The rates should be based on technology, capacity and capital.
Lawmakers however are pushing for a competitive bidding to set the tariff. Regulators have set public consultations on the proposal.
Based on the proposal, developers who want to qualify for the limited volume of power generation capacity from renewable energy projects that would be granted FIT would have to offer the lowest incentive.
But renewable energy companies said this scheme would only drive away investments in projects that are more expensive than conventional power plants, since driving prices down risks project viability and sustainability.
The Renewable Energy group cited the experience of China, France and Ireland, all of which abandoned a bidding scheme to determine FIT rates after failing to draw investors
"A bidding system may not be as ideal as it seems, especially in a market that is undeveloped or intended to be developed. Bidders must put up significant sums in order to mount a bid at all, thus adding layers of transaction costs with little assurance that the risk will be rewarded with an actual contract to build," the group said.
"Hence, it would be very difficult to develop a robust and dynamic supply market for renewable energy."
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