The Manila Electric Co. (Meralco) 'strongly recommends' a deferment of the implementation of Renewable Portfolio Standards (RPS) until further comprehensive studies on the feasibility and necessity of such policy mechanism is conducted.
RPS requires distribution utilities (DUs) to source a portion of their power supply from eligible renewable-energy (RE) sources. The National Renewable Energy Board, the advisory body tasked with the effective implementation of RE projects in the Philippines, is conducting a series of public consultations on RPS.
The consultations focus on the rules and guidelines for the RPS for off-grid areas, a policy mechanism requiring electric power-industry participants, such as generators, DUs and suppliers to source or produce a specified fraction of the electricity they generate from eligible RE resources.
'The proposed RPS rules for off-grid areas will contribute to the growth of the renewable-energy industry through increased development and utilization of RE resources in the countryside where significant percentage are using expensive fuels. Thus, we will be able to diversify energy supply,' Energy Secretary Alfonso G. Cusi said.
'Ultimately, we see this to spur socioeconomic development and help address environmental concerns,' the energy chief added.
However, Meralco said mandating the RPS at this time will definitely reduce RE developers' incentive to be more and more cost-competitive, to the detriment of consumers.
'However, if we allow the market to work, without distortionary policies like the RPS, we may see more and more RE being integrated into the system without adverse consequences on prices and on the reliability and quality of electric service,' Meralco Vice President and Head of Utility Economics Lawrence Fernandez said.
The utility firm pointed out that it has proactively supported RE programs that benefit end-users. As a DU, Meralc said it provided timely and reliable interconnection and wheeling services to numerous RE-based embedded generators and energized the first net metering participant in the Philippines and currently connects 92 percent of all net metering participants in the country.
'In recent months, we have seen RE projects become more price-competitive, even without government-imposed mandates,' it said.
It strongly suggests the need for rigorous technical and economic studies before any plan to impose the RPS. 'There should first be an assessment of what RE-based projects will be available for compliance. Equally important, the capacity of the grid to absorb them should be studied ahead of any RPS implementation,' the Meralco official added.
The issuance of the RPS guidelines is based on Republic Act 9513, or the Renewable Energy Act of 2008, which aims to increase the utilization of RE by enhancing national and local capabilities.
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