rauf a. tan - a regulator's perspective on setting the feed in tariff

8/6/2019 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

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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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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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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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Optimal Penetration Approach

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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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Premium vs. Fixed

Duration

Indexation

Review

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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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Premium vs. Fixed

Duration

Indexation

Review

Fixed

Unlimited

Based on output

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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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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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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

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rauf a. tan - a regulator's perspective on setting the feed in tariff

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