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FEED-IN TARIFF ALLOWANCE RATE APPLICATION
for 2014-2015
September 16, 2014
Pasig City
Expository Presentation
by the National Transmission Corporation
ERC Case No. 2014-109RC
BACKGROUND
The Renewable Energy Act of 2008 (R.A. 9513)
encourages the development of renewable
energy resources in the country
• Minimize the country’s exposure to price
fluctuations in the international markets
• As tools to effectively prevent or reduce harmful
emissions and thereby balance the goals of
economic growth and developments with the
protections of health and the environment2
Incentives Under the RE Act
Renewable Energy Law (RA 9513)
Fiscal Incentives Non-Fiscal Incentives
Renewable Portfolio Std
FIT SchemeNet-
MeteringGreen Energy
Option
3
Source: NREB Presentation
FIT Coverage: Emerging RE Resources
Biomass
Ocean
Solar
Run-of-river HydroWind 4
FIT SYSTEM UNDER THE RE ACT
1. Priority Connection to the Grid
2. Priority purchase and transmission of, and payment for,
emerging RE generation by grid system operator
3. Determination of the fixed tariff to be paid for emerging RE
generation and the mandated number of years for the
application of such tariff, which shall not be less than 12
years
4. Application of the FIT to the emerging RE Resources to be
used in compliance with the RPS
5. ERC to promulgate other rules and mechanisms that are
deemed appropriate and necessary, in consultation with the
NREB, for the full implementation of the FIT system.
5
MECHANICS AND GUIDELINES
1. ERC Resolution No. 16 series of 2010 – Resolution
Adopting the FIT Rules, and as amended by ERC
Resolution No. 15 series of 2012 (where TransCo was
designated as FIT-All Fund Administrator instead of
NGCP)
2. ERC Resolution No. 24 series of 2013 – A Resolution
Adopting the Guidelines on the Collection of the Feed-
in Tariff Allowance (FIT-All) and the Disbursement of
the FIT-All Fund (“FIT All Guidelines”)
Among others, these ERC issuances provide for theestablishment of the FIT-All Fund and discuss the componentsthereof and their determination.
6
FEED IN TARIFF (FIT) SCHEME
1. Sets/Guarantees a fixed tariff for the different
emerging RE technologies applicable for 20 years
(subject to adjustment for inflation and forex only)
2. ERC-approved tariff for the first tranche (ERC
Resolution No. 10 series of 2012)
a) Hydro P/kWh 5.90
b) Wind P/kWh 8.53
c) Solar P/kWh 9.68
d) Biomass P/kWh 6.63
e) Ocean decision deferred
7
-
2.0000
4.0000
6.0000
8.0000
10.0000
Hydro Wind Solar Biomass
5.90 8.53 9.68 6.63
5.6708 5.6708 5.6708 5.6708
0.2292
2.8592
4.0092
0.9592
P/k
Wh
Fit Differential P/kWh
CRR/Market Rate P/kWh
FIT
ILLUSTRATION: Feed-in Tariff and the Market Rate
8
FEED IN TARIFF ALLOWANCE (FIT-ALL)
• Represents the difference between the FIT price
level and the prevailing/market prices (Cost
Recovery Rate or CRR), plus other components
• Will be charged to all end-users as a uniform P/kWh
charge
• Will be a separate line item in the power bill
9
COST RECOVERY RATE (CRR)
1. Where the RE Plant is in a Grid where WESM is
operational (Luzon and Visayas)
• Actual CRR is based on the nodal price while
Forecast CRR is the average LWAP for the last 36
months
2. Where the RE Plant is in a Grid where WESM is not
operational (Mindanao)
• Actual CRR is the blended generation cost of the
Host DU while Forecast CRR is the blended
generation cost of the Host DU for the past 12
months 10
FIT and FIT-All
FIT = Cost Recovery Rate + FIT Differential
ADMINISTRATION ALLOWANCE
(AA)
FIT DIFFERENTIAL
(FD)
WORKING
CAPITALALLOWANCE
(WCA)FIT-ALL RATE, P/
kWh
DISBURSEMENT ALLOWANCE
(DA)
FORECAST NATIONAL SALES
(FNS)
11
OVERVIEW OF THE COLLECTION AND PAYMENT UNDER THE FIT SYSTEM
12
a. File an application with the ERC for the approval of the FIT All Rate
b. Collect remittances of the “Collection Agents”
c. Disburse payments to the FIT Eligible RE Developers
d. Enter into a Trust Agreement with a GFI which shall maintain the FIT All Fund for the benefit of the FIT Eligible RE Developers
e. Enter into RE Payment Agreement (REPA) with FIT Eligible RE Developers
Main Functions of the Fund Administrator
13
FIT-ALL RATE 2014 AND 2015 DETERMINATION
14
15
Guidelines on the Collection of the Feed-in Tariff Allowance (FIT-All) and theDisbursement of the FIT-All Fund (“FIT-AllGuidelines”)
16
a. Considers a scenario of combined 2014 and 2015rate determination (17months) followingconsultation with ERC
b. No adjustment of the FIT Rates for 2015 – peggedat the initial approved levels applicable to theinitial implementation of the FIT system
c. Line-up of plants are for computation purposesonly; does not automatically entitle listed plants toFIT
d. Projected energy generation from FIT-eligiblerenewable energy projects capped at theinstallation target
I. FIT-ALL RATE DETERMINATION -ASSUMPTIONS
17
a. List of Projected FIT Eligible RE Developers andCapacities (DOE)
b. Installation Targets (DOE)
c. Forecast National Sales (DOE)
d. Approved FIT Rates (ERC)
e. Market Price and Blended Generation Cost(WESM/ERC)
f. Factor Rate in the Computation of WCA (NREB)
g. Collection Efficiency in the Computation of WCA(NEA, ERC and NGCP; UC data not available fromPSALM)
I. FIT-ALL APPLICATION FOR 2014-2015 – Data Sources
2014 2015 Installation Targets
(750MW)No. of Plants
Installed Capacity, MW
No. of Plants
Installed Capacity, MW
BIOMASS 8 65.35 11 112.15EXISTING 5 13.39 5 13.39
NEW 3 51.96 6 98.76 250
HYDROPOWER 3 12.60 11 48.25EXISTING 2 5.60 2 5.60
NEW 1 7.00 9 42.65 250
SOLAR 3 50.00 3 50.00NEW 3 50.00 3 50.00 50
WIND 4 200.00 4 200.00NEW 4 200.00 4 200.00 200
18
Installed Capacity for
FIT (MW)Grid CF Date of COC
2014 EXISTING
65.3513.39
1.2 MW Payatas Landfill Methane Recovery & Power Generation Facility .876 Luzon 72% 10/1/2014
14.8 MW Montalban Landfill Methane Recovery & Electricity Generation
2.175 Luzon 72% 10/1/2014
19 MW Bagasse-fired Cogeneration Power Plant (Isabela) 3 Luzon 56% 10/1/2014
3.6 MW Rice Husk-Fired Gasification Power Plant (Isabela) 3.24 Luzon 72% 10/1/2014
12.5 MW Bataan 2020 Rice hull-fired Cogen Plant 4.1 Luzon 72% 10/1/2014
NEW 51.96
8.0 MW HPCo Bagasse Cogeneration Plant (Neg Occ) 1.062 Visayas 36% 10/1/2014
24 MW (net) SJCi Power Rice Husk-Fired Biomass Power Plant Proj (NE) 9.9 Luzon 72% 10/1/2014
46 MW Bagasse-Fired Cogeneration Power Plant Project (Neg Occ) 41 Visayas 46% 12/01/2014
2015 46.80
20 MW Rice Husk-Fired Biomass Power Plant (Isabela) 18 Luzon 72% 10/1/2015
12 MW Rice Husk-Fired Biomass Power Plant (NE) 10.8 Luzon 72% 10/1/2015
20 MW SCBio Bagasse-Fired Power Generation Project (Neg Occ) 18 Visayas 72% 10/1/2015
BIOMASS, 112.5 MW
PROJECTED FIT ELIGIBLE PLANTS FOR 2014 & 2015
19
PROJECTED FIT ELIGIBLE PLANTS FOR 2014 & 2015Installed Capacity for FIT (MW)
Grid CF Date of COC
2014 EXISTING
12.65.6
Commonal-Udlawan Hydroelectric Power Plant (NV) 1.8 Luzon 67% 04/1/2014
Irisan 1 Hydroelectric Power Plant (Benguet) 3.8 Luzon 36% 01/1/2014
NEW 7
Tudaya 2 Hydroelectric Power Project (Davao) 7 Mindanao 65% 04/1/2014
2015 35.65
Ibulao Hydro Power Project (Ifugao) 4.5 Luzon 64% 01/1/2014
Sabangan Hydroelectric Power Project (Benguet) 14Luzon
45%06/1/2015
Dupinga Hydro Power Project (NE) 3Luzon
56%10/1/2015
Igbulo Hydro Power Project (Iloilo) 5.10Visayas
59%01/1/2015
Loboc Hydroelectric Power Plant (Expansion) (Bohol) 1.2Visayas
91%06/1/2015
Hilabangan Hydroelectric Power Project (Upper Cascade) (Neg Occ) 4.8Visayas
59%08/01/2015
Hilabangan Hydroelectric Power Project (Lower Cascade) (Neg Occ)3
Visayas61%
08/01/2015
Pasonanca Hydroelectric Power Project (Zamboanga) .05Mindanao
66%12/1/2015
HYDRO, 48.25 MW
20
Installed Capacity for FIT (MW)
Grid CFDate of
COC
2014 50
San Carlos Solar PV Power Project (SACASOL) 13 Visayas 16% May 15, 2014
San Carlos Solar PV Power Project (SACASOL) 9 Visayas 16% June 15,2014
Cavite Economic Zone Solar Power Project (Majestic)
28 Luzon 17% July 30,2014
PROJECTED FIT ELIGIBLE PLANTS
FOR 2014 & 2015
SOLAR, 50 MW
21
Installed Capacity for FIT (MW)
Grid CF Date of COC
2014 200
Bangui Wind Power Project 18 Luzon 29% Jul 26,2014
Burgos Wind Power Project (Phase 1)87 Luzon 30% Aug 31, 2014
Caparispisan Wind Energy Project 81 Luzon 39% Sept 29, 2014
San Lorenzo Wind Power Project 14 Visayas 21% Dec 1, 2014
PROJECTED FIT ELIGIBLE PLANTS
FOR 2014 & 2015
WIND, 200 MW
22
23
ADMINISTRATION ALLOWANCE
(AA)
FIT DIFFERENTIAL
(FD)
WORKING
CAPITALALLOWANCE
(WCA)FIT ALL
RATE, P/kWh
DISBURSEMENT ALLOWANCE
(DA)
FORECAST NATIONAL SALES
(FNS)
• For combined application, FNS used is based on 5 months
FNS of 2014 (27,007,438,336 ) and 12 months of 2015
(68,016,055,191) equal to 95,023,493,528 kWh
ACTUAL ELECTRICITY SALES, kWh FORECAST ELECTRICITY SALES, kWh
2009 2010 2011 2012 2013 2014 2015 2016
Luzon37,859,434,000 41,388,794,000 41,706,246,000 44,063,677,000
Visayas6,309,113,000 7,036,059,000 7,224,369,000 7,646,701,000
Mindanao6,699,295,000 6,840,916,000 7,166,977,000 7,500,241,000
Total50,867,842,000 55,265,769,000 56,097,592,000 59,210,619,000 62,285,223,980 64,817,852,008 68,016,055,191 71,233,134,129
% Growth Rate 5.19 4.07 4.93 4.73 4.58
24
FIT DIFFERENTIAL
TOTAL FIT REVENUE( Forecast Annual RE
Generation x FIT Rate
FORECAST COST RECOVERY
REVENUE( Forecast Annual RE
Generation x CRR Rate
(OVER)/UNDER RECOVERY
DATA NEEDED SOURCE
FIT Eligible RE Forecast Annual Generation 2014-2016 DOE
FIT Rate ERC
CRR RateLuzon & Visayas (LWAP)Mindanao (Blended Rate of Host DU)
PEMC-LWAPDASURECO & ZAMCELCO
25
2014 2015 2016
Biomass 56,813 387,727 547,268
Hydropower 52,658 174,909 293,298
Solar 34,123 72,559 72,559
Wind 104,616 491,895 491,895
Total 248,210 1,127,090 1,405,020
26
Biomass 6.6300
Hydro 5.9000
Solar 9.6800
Wind 8.5300
27
Month Luzon Visayas Month Luzon Visayas
Jun-11 3.8947 3.8640 Dec-12 6.1065 6.1578
Jul-11 4.4798 4.5126 Jan-13 3.0384 3.2487
Aug-11 3.6717 3.7797 Feb-13 2.7917 2.6268
Sep-11 3.7721 3.9381 Mar-13 4.8899 4.2261
Oct-11 6.9756 5.8952 Apr-13 6.9935 7.1583
Nov-11 5.0194 5.4610 May-13 6.0233 6.0143
Dec-11 5.0259 5.3220 Jun-13 4.3098 4.0549
Jan-12 5.2181 4.8837 Jul-13 2.8649 2.8762
Feb-12 3.3238 3.7341 Aug-13 3.2022 2.9497
Mar-12 4.4758 4.6248 Sep-13 2.6780 3.0279
Apr-12 3.7193 3.6603 Oct-13 6.6411 6.3195
May-12 6.8351 6.8450 Nov-13 16.1222 3.1819
Jun-12 9.1406 9.1711 Dec-13 18.1939 -
Jul-12 8.0682 7.8361 Jan-14 2.3089 -
Aug-12 2.3919 2.5949 Feb-14 2.4876 -
Sep-12 4.3011 4.7041 Mar-14 6.7882 -
Oct-12 6.4088 5.5557 Apr-14 9.9506 6.3772
Nov-12 5.3936 5.4958 May-14 6.6423 7.2200
Average 5.6708 4.9162
28
Month Dasureco Month Zamcelco
Apr-13 4.6605 Mar-13 3.7733
May-13 4.0481 Apr-13 4.0039
Jun-13 4.3324 May-13 3.6946
Jul-13 4.0825 Jun-13 4.1716
Aug-13 3.9709 Jul-13 4.0879
Sep-13 4.2791 Aug-13 3.4498
Oct-13 4.5029 Sep-13 4.0745
Nov-13 4.1492 Oct-13 4.4505
Dec-13 3.9610 Nov-13 4.2953
Jan-14 4.1272 Dec-13 3.8422
Feb-14 3.7458 Jan-14 3.8280
Mar-14 3.9786 Feb-14 3.9756
Average 4.1532 Average 3.9706 29
FIT Revenue 1,910,041,357 8,500,828,364 10,410,869,721
Less: Cost Recovery Revenue 1,324,144,450 6,084,385,488 7,408,529,938
FIT Differential 585,896,907 2,416,442,876 3,002,339,783
FIT Differential, P/kWh 0.02169 0.03553 0.03160
Combined
2014-201520152014
FIT DIFFERENTIAL
TOTAL FIT REVENUE( Forecast Annual RE
Generation x FIT Rate
FORECAST COST RECOVERY
REVENUE( Forecast Annual RE
Generation x CRR Rate
(OVER)/UNDER RECOVERY
30
II. C WORKING CAPITAL ALLOWANCE
1. Buffer to address any deficiency, default or delay in the
collection and remittance of the FIT All/ACRR and including, but
not limited to:
• Variations between the actual and forecasted (a) RE Generation
from Eligible RE Plants resulting from over- and under- generation,
(b) Annual National Sales, and (c) CRR
• Timing difference of the collection and billing cycle for the FIT All
and ACRR
• Any other collection or payment shortfall
2. Can be updated on a quarterly basis as may be needed but
subject to approval of ERC
3. Shall guarantee monthly payments in full to the RE Developers
4. Based on a factor of the Expected Annual Payout31
WCA t+1
Forecast Annual Payout
t+2
Factor Rate
WCA Ending Balancet
DATA NEEDED SOURCE
Forecast Annual Payoutt+2 As computed
Factor Rate NREB
32
FCRR* 1,199,778,477 6,084,385,488 7,592,507,005
FD 585,896,907 2,416,442,876 2,664,572,501
AA - - -
DA - - -
Forecast Annual Payout 1,785,675,384 8,500,828,364 10,257,079,505
* Includes only FCRR for the months of Aug-Dec. 2014
201620152014
33
COMPONENTS DATA SOURCE
Cost Recovery Revenue-WESM As computed
Total Annual Payout As computed
FactorRateWESM
1- PEMC Collection Efficiency NREB
FD,AA,DA, CRRNon-WESM As computed
Collection Efficiency*1. ECs – NEA 2. DUs – ERC3. Directly Connected – NGCP
*Notprovided by PSALM
Factor Rate
CRRWESM
Total Annual Payout
Factor RateWESM
FD,AA,DA,CRRNon-
WESM
Total Annual Payout
Factor RateFIT All
34
Collection Efficiency Weight
Electric Cooperatives 81.62% 21.88% 17.8573%
Private Distribution Utilities 91.10% 72.18% 65.7641%
NGCP-Directly Connected 96.65% 5.94% 5.7376%
Weighted Collection Efficiency 89.3590%
Collection Efficiency Weight
Ecs NEA Report ending December 31, 2012 PSALM Energy Sales Report (2012)
PrUs ERC Report ending 12/31/12 and updates for 12/2013 PSALM Energy Sales Report (2012)
NGCP Financia l Ratio Report ending 12/31/13 NGCP's 2013 Bi l l ing Determinants
Reference Data
35
COMPONENTS Computation
FactorRateWESM
1- PEMC Collection Efficiency
FactorRateWESM= 1 – 97% = 0.03
Factor Rate
CRR-
WESM
Total Annual Payout
Factor RateWESM
FD,AA,DA, CRRNon-
WESM
Total Annual Payout
Factor RateFIT All
36
2014 2015 Combined
2014-2015
Cost Recovery RevenueLuzon and Visayas 1,075,858,996 5,704,025,598 6,779,884,594
37
2014 2015
Combined
2014 & 2015
Cost Recovery RevenueMindanao 84,332,068 171,654,325 255,986,392
FIT Differential 628,072,499 2,625,148,441 3,253,220,939
Administration Allowance 8,593,587 18,052,497 26,646,084
Disbursement Allowance
Total 720,998,153 2,814,855,263 3,535,853,416
38
CRRWESM
FD,AA, DA,
CRRNon-WESM
Component of Annual Payout 6,779,884,594 3,535,853,416
Divided by: Total Annual Payout 10,315,738,010 10,315,738,010
Equals: Weighting Factor 0.6572 0.3428
X Factor Rate 3% 18.49%
Weighted Factor Rate 1.97% 6.34%
Effective Factor Rate 8.30973%
*per NREB Resolution No. 3 Series of 2014
Factor Rate
CRR-WESM
Total Annual Payout
Factor RateWESM
FD,AA,DA, CRRNon-
WESM
Total Annual Payout
Factor RateFIT All
39
Forecast Annual Payout 1,785,675,384 8,500,828,364 10,257,079,505
x Factor Rate 8.30973% 8.30973% 8.30973%
Equals: Portion of Annual Payout 148,384,750 706,395,634 852,335,310
WCA Annual Funding 706,395,634 145,939,676
WCA, P/kWh 0.02616 0.00215 0.00897
2014 2015 2016
WCA t+1Forecast Annual
Payout t+2Factor Rate
WCA Ending Balancet
40
II.D ADMINISTRATION ALLOWANCE (AA) , Php
TransCo has set the Administration
Allowance to zero (0) for the initial
setting of the FIT-All rate pending
approval of its proposed organizational
structure
41
II.E DISBURSEMENT ALLOWANCE
Based on the Trustee Service
Fee that will be approved by the
ERC under the Trust Agreement
42
Amount (P)Rate
(P/kWh)Share Amount (P)
Rate
(P/kWh)Share Amount (P)
Rate
(P/kWh)Share
FD 585,896,907 0.02169 45.34% 2,416,442,876 0.03553 94.30% 3,002,339,783 0.03160 77.89%
WCA 706,395,634 0.02616 54.66% 145,939,676 0.00215 5.70% 852,335,310 0.00897 22.11%
AA - - 0.00% - 0.00% - - 0.00%
DA - - 0.00% - - 0.00% - - 0.00%
Total 1,292,292,541 2,562,382,553 3,854,675,094
FNS 27,007,438,336 68,016,055,191 95,023,493,528
FIT-All, Php/kWh
2014 2015 Combined 2014-2015
0.03767 0.04785 0.04057
43
Without DA
AAFD WCAFIT ALL RATE,
P/kWhDA FNS
44
Amount (P) Rate (P/kWh) Share
FD 3,002,339,783 0.03160 77.89%
WCA 852,335,310 0.00897 22.11%
AA - - 0.00%
DA - - 0.00%
Total 3,854,675,094
FNS (kWh) 95,023,493,528
FIT-All, Php/kWh
Combined 2014-2015
0.04057
FIT-ALL APPLICATION FOR 2014-2015
45
a. To grant Provisional Authority to collect proposed FIT-All effectiveAugust 2014 billing period
b. To direct Collection Agents such as DUs, RES and NGCP to bill, collectand remit the FIT-All to the FIT-All Fund as provided in the FIT-AllGuidelines
c. To direct PEMC and Host DUs to remit the CRR to the FIT-All Fund asprovided in the FIT-All Guidelines
d. To approve NREB recommended Factor Rate and adopt the same inthe computation of the WCA and the FIT-All Rate for 2014 and 2015
e. To allow TransCo to make supplemental submission for the DA andadopt the same in the computation of the FIT-All Rate for 2014 and2015
f. To approve the FIT-All Rate for 2014 and 2015 as applied after duenotice and hearing
g. To waive the payment of ERC supervision fees, if any
END OF PRESENTATION
46