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Rauf A. Tan - A Regulator's Perspective on Setting the Feed in Tariff
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Transcript of Rauf A. Tan - A Regulator's Perspective on Setting the Feed in Tariff
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A Regulator's Perspective onSetting the Feed In Tariff
1
RAUF A. TAN
Commissioner, Energy Regulatory Commission,Philippines
Asia Clean Energy Forum 2011Manila June 21, 2011
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Agenda
Who is able to sell?
Which are the products entitled to FIT?
Should there be FIT discrimination?
How to set the FIT level?
What other issues affect the FIT?
Who pays?
Who buys? How will the FIT be collected & settled?
How to ensure transparency?2
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Which are the products
entitled to FIT? Should be defined by :
Legislation
Policy framework
Regulation
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Who is Able to Sell?
Any licensed RE producer
Not all RE producers can sell
Priority connection to the grid
Priority Dispatch
RE access and integration to the gridchallenge
Required reserve issues for non-firm energy
Refusal for connection? By whom
Under what circumstances
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Should there be
FIT discrimination? Technology
Size
Fuel type
Load Factor
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How to set the FIT level?
Top-down approach:
Benchmarking
Bottom-up approach:
Average private avoided cost
Average social avoided cost RE cost-based
RE-conventional energy supply equilibrium
(Optimal Penetration Approach)
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How to set the FIT level?
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How to set the FIT level?
RE Cost-based Investment for the plant
Other costs related to the project, such as expenses forlicensing procedures
Operation and maintenance (O&M) costs
Fuel costs (in the case of biomass and biogas)
Return on/of capital
,
Fiscal and other non-tariff incentives should be considered forpassing through to end-users
Financial constraints commonly used by financing institutions(DSCR, etc.)
Transmission cost depending on the regulation and capped(distance, total cost, % of the investment, etc)
According to the expected amount of electricity generated andthe estimated lifetime of the power plant, a levelized tariff can befixed.
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How to set the FIT level?
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How to set the FIT level?
Optimal Penetration Approach
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How to set the FIT level?
NREB Proposed FIT & Installation Target
(P/kWh) (MW)
Biomass 7.00 250
Ocean 17.65 10
RoR Hydro 6.15 250
Solar 17.95 100
Wind 10.37 220
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
Premium is anamount paid on top
of the electricitymarket price while afixed FIT is
guaran eeremuneration that isindependent fromthe electricitymarket price
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
Fixed
Unlimited
Based on output
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
To protect investorsfrom inflation by
providing a risk-adjusted return
Annual pass-
through of localinflation and foreignexchange rate
variations using aformula
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
To allow consumersto benefit from
technologicaladvance; and, tosecure new
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nves men s Forward or
backward looking
approach Frequency
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What other issues affect the FIT?
Premium vs. Fixed
Duration
Indexation
Review
To induce earlier,rather than later, RE
investments; and, toreduce the RE coststo consumers as far
as ec no ogyadvances allow
Rate
Frequency
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Who Pays?
Equal burden sharing of all electricityconsumers as the whole community
takes advantage of a low-emissioneconomy
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Who Buys?
Electricity consumers
Who should act as agent?
Entity obligated for the Renewable PortfolioStandards
s r u on y
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How is the FIT collectedand settled?
Need of a system and identification ofresponsible parties for the collection and
settlement of the FIT FIT Allowance
Collected b the distribution utilit or retail
electricity supplier as a separate charges inthe electricity bill
Contributed to a Fund managed by the Grid
Operator who pays the RE producer theamount of FIT equivalent to its production
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How is the FIT collectedand settled?
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NGCP
F
IT
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How to Ensure Transparency
Rules
Public Consultation
FIT Levels
Public Consultation
FIT Allowance Public Hearing
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THANK YOU!THANK YOU!
Title of Presentation 23
www.erc.gov.phwww.erc.gov.ph