FEED-IN TARIFF ALLOWANCE
RATE APPLICATION
for 2014-2015
Expository Presentation
by the National Transmission Corporation
ERC Case No. 2014-109RC
September 16, 2014
Pasig City
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 environment
2
Incentives Under the RE Act
Renewable Energy Law (RA 9513)
Fiscal Incentives
Renewable
Portfolio Std
Non-Fiscal Incentives
FIT Scheme
NetMetering
Green Energy
Option
3
Source: NREB Presentation
FIT Coverage: Emerging RE Resources
Biomass
Solar
Ocean
Wind
Run-of-river Hydro
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 Feedin Tariff Allowance (FIT-All) and the Disbursement of
the FIT-All Fund (“FIT All Guidelines”)
Among others, these ERC issuances provide for the
establishment of the FIT-All Fund and discuss the components
thereof 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)
b)
c)
d)
e)
Hydro
Wind
Solar
Biomass
Ocean
P/kWh 5.90
P/kWh 8.53
P/kWh 9.68
P/kWh 6.63
decision deferred
7
ILLUSTRATION: Feed-in Tariff and the Market
Rate
Fit Differential P/kWh
10.0000
CRR/Market Rate P/kWh
4.0092
8.0000
2.8592
0.9592
P/kWh
6.0000
0.2292
4.0000
FIT
5.6708
5.6708
5.6708
5.6708
2.0000
Hydro
Wind
Solar
Biomass
5.90
8.53
9.68
6.63
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
FIT-ALL
RATE, P/
kWh
DIFFERENTIAL
(FD)
WORKING
CAPITAL
ALLOWANCE
(WCA)
ADMINISTRATION
ALLOWANCE
(AA)
DISBURSEMENT
ALLOWANCE
(DA)
FORECAST
NATIONAL SALES
(FNS)
FIT = Cost Recovery Rate + FIT Differential
11
OVERVIEW OF THE COLLECTION AND
PAYMENT UNDER THE FIT SYSTEM
12
Main Functions of the Fund
Administrator
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
13
FIT-ALL RATE 2014 AND 2015
DETERMINATION
14
Guidelines on the Collection of the Feedin Tariff Allowance (FIT-All) and the
Disbursement of the FIT-All Fund (“FIT-All
Guidelines”)
15
I. FIT-ALL RATE DETERMINATION ASSUMPTIONS
a. Considers a scenario of combined 2014 and 2015
rate
determination
(17months)
following
consultation with ERC
b. No adjustment of the FIT Rates for 2015 – pegged
at the initial approved levels applicable to the
initial implementation of the FIT system
c. Line-up of plants are for computation purposes
only; does not automatically entitle listed plants to
FIT
d. Projected energy generation from FIT-eligible
renewable energy projects capped at the
16
installation target
I. FIT-ALL APPLICATION FOR 2014-2015 – Data
Sources
a. List of Projected FIT Eligible RE Developers and
Capacities (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 from
17
PSALM)
2014
2015
Installation
Targets
Installed
Capacity, MW (750MW)
No. of
Plants
Installed
Capacity, MW
No. of
Plants
BIOMASS
8
65.35
11
112.15
EXISTING
NEW
5
3
13.39
51.96
5
6
13.39
98.76
3
12.60
11
48.25
2
1
5.60
7.00
2
9
5.60
42.65
SOLAR
3
50.00
3
50.00
NEW
3
50.00
3
50.00
WIND
4
200.00
4
200.00
NEW
4
200.00
4
200.00
HYDROPOWER
EXISTING
NEW
250
250
50
200
18
PROJECTED FIT ELIGIBLE PLANTS FOR 2014 & 2015
BIOMASS,
2014
112.5 MW
EXISTING
Installed
Capacity for
FIT (MW)
Grid
CF
Date of COC
65.35
13.39
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
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
18
Luzon
72%
10/1/2015
10.8
Luzon
72%
10/1/2015
18
Visayas
72%
10/1/2015
NEW
8.0 MW HPCo Bagasse Cogeneration Plant (Neg Occ)
2015
20 MW Rice Husk-Fired Biomass Power Plant (Isabela)
12 MW Rice Husk-Fired Biomass Power Plant (NE)
20 MW SCBio Bagasse-Fired Power Generation Project (Neg Occ)
51.96
46.80
19
PROJECTED FIT ELIGIBLE PLANTS FOR 2014 & 2015
HYDRO, 48.25 MW
2014
EXISTING
Installed
Capacity
for FIT
(MW)
Grid
CF
Date of COC
12.6
5.6
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
Mindanao
65%
04/1/2014
Luzon
64%
01/1/2014
NEW
Tudaya 2 Hydroelectric Power Project (Davao)
2015
7
7
35.65
Ibulao Hydro Power Project (Ifugao)
4.5
Sabangan Hydroelectric Power Project (Benguet)
14
Dupinga Hydro Power Project (NE)
3
Igbulo Hydro Power Project (Iloilo)
5.10
Loboc Hydroelectric Power Plant (Expansion) (Bohol)
1.2
Hilabangan Hydroelectric Power Project (Upper Cascade) (Neg Occ)
4.8
Hilabangan Hydroelectric Power Project (Lower Cascade) (Neg Occ)
Pasonanca Hydroelectric Power Project (Zamboanga)
3
.05
Luzon
Luzon
Visayas
Visayas
Visayas
Visayas
Mindanao
45%
56%
59%
91%
59%
61%
66%
06/1/2015
10/1/2015
01/1/2015
06/1/2015
08/01/2015
08/01/2015
12/1/2015
20
PROJECTED FIT ELIGIBLE PLANTS
FOR 2014 & 2015
SOLAR, 50 MW
Installed
Capacity
for FIT
(MW)
Grid
CF
Date 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
21
PROJECTED FIT ELIGIBLE PLANTS
FOR 2014 & 2015
WIND, 200 MW
Installed
Capacity
for FIT
(MW)
Grid
CF
Date of COC
18
Luzon
29%
Jul 26,2014
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
2014
Bangui Wind Power Project
Burgos Wind Power Project (Phase 1)
200
22
FIT
DIFFERENTIAL
(FD)
FIT ALL
RATE, P/k
Wh
WORKING
CAPITAL
ALLOWANCE
(WCA)
ADMINISTRATION
ALLOWANCE
(AA)
DISBURSEMENT
ALLOWANCE
(DA)
FORECAST
NATIONAL SALES
(FNS)
23
ACTUAL ELECTRICITY SALES, kWh
2009
Luzon
Visayas
Mindanao
Total
2010
2011
FORECAST ELECTRICITY SALES, kWh
2012
2013
2014
2015
2016
37,859,434,000 41,388,794,000 41,706,246,000 44,063,677,000
6,309,113,000
7,036,059,000
7,224,369,000
7,646,701,000
6,699,295,000
6,840,916,000
7,166,977,000
7,500,241,000
50,867,842,000 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
• 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
24
FIT DIFFERENTIAL
TOTAL FIT
REVENUE
( Forecast
Annual RE
Generation x
FIT Rate
FORECAST
COST RECOVERY
REVENUE
( Forecast
Annual RE
Generation x
CRR Rate
DATA NEEDED
(OVER)/UNDER
RECOVERY
SOURCE
FIT Eligible RE Forecast Annual Generation 2014-2016
DOE
FIT Rate
ERC
CRR Rate
Luzon & Visayas (LWAP)
Mindanao (Blended Rate of Host DU)
PEMC-LWAP
DASURECO &
ZAMCELCO
25
Biomass
Hydropower
Solar
Wind
Total
2014
56,813
52,658
34,123
104,616
248,210
2015
387,727
174,909
72,559
491,895
1,127,090
2016
547,268
293,298
72,559
491,895
1,405,020
26
Biomass
6.6300
Hydro
5.9000
Solar
9.6800
Wind
8.5300
27
Month
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Luzon
3.8947
4.4798
3.6717
3.7721
6.9756
5.0194
5.0259
5.2181
3.3238
4.4758
3.7193
6.8351
9.1406
8.0682
2.3919
4.3011
6.4088
5.3936
Visayas
3.8640
4.5126
3.7797
3.9381
5.8952
5.4610
5.3220
4.8837
3.7341
4.6248
3.6603
6.8450
9.1711
7.8361
2.5949
4.7041
5.5557
5.4958
Month
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Luzon
6.1065
3.0384
2.7917
4.8899
6.9935
6.0233
4.3098
2.8649
3.2022
2.6780
6.6411
16.1222
18.1939
2.3089
2.4876
6.7882
9.9506
6.6423
Visayas
6.1578
3.2487
2.6268
4.2261
7.1583
6.0143
4.0549
2.8762
2.9497
3.0279
6.3195
3.1819
6.3772
7.2200
Average
5.6708
4.9162
28
Month
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Average
Dasureco
4.6605
4.0481
4.3324
4.0825
3.9709
4.2791
4.5029
4.1492
3.9610
4.1272
3.7458
3.9786
4.1532
Month
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Average
Zamcelco
3.7733
4.0039
3.6946
4.1716
4.0879
3.4498
4.0745
4.4505
4.2953
3.8422
3.8280
3.9756
3.9706
29
FIT DIFFERENTIAL
FORECAST
COST RECOVERY
REVENUE
( Forecast
Annual RE
Generation x
CRR Rate
TOTAL FIT
REVENUE
( Forecast
Annual RE
Generation x
FIT Rate
2014
FIT Revenue
Less: Cost Recovery Revenue
FIT Differential
FIT Differential, P/kWh
1,910,041,357
1,324,144,450
585,896,907
0.02169
(OVER)/UNDER
RECOVERY
2015
8,500,828,364
6,084,385,488
2,416,442,876
0.03553
Combined
2014-2015
10,410,869,721
7,408,529,938
3,002,339,783
0.03160
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 Payout
31
WCA t+1
Forecast
Annual Payout
t+2
DATA NEEDED
Forecast Annual Payoutt+2
Factor Rate
Factor
Rate
WCA Ending
Balancet
SOURCE
As computed
NREB
32
FCRR*
FD
2014
2015
2016
1,199,778,477
6,084,385,488
7,592,507,005
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
33
CRRWESM
Factor
Rate
Total
Annual
Payout
COMPONENTS
Factor
RateWESM
FD,AA,DA,
CRRNonWESM
Total
Annual
Payout
Factor
RateFIT All
DATA SOURCE
Cost Recovery Revenue-WESM
As computed
Total Annual Payout
As computed
FactorRateWESM
1- PEMC Collection Efficiency
FD,AA,DA, CRRNon-WESM
NREB
As computed
Collection Efficiency*
1. ECs – NEA
2. DUs – ERC
3. Directly Connected – NGCP
*Notprovided by PSALM
34
Electric Cooperatives
Private Distribution Utilities
NGCP-Directly Connected
Collection Efficiency
81.62%
91.10%
96.65%
Weighted Collection Efficiency
Weight
21.88%
72.18%
5.94%
17.8573%
65.7641%
5.7376%
89.3590%
Reference Data
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
Financial Ratio Report ending 12/31/13
NGCP's 2013 Billing Determinants
35
CRR-
Factor
Rate
WESM
Total
Annual
Payout
COMPONENTS
FactorRateWESM
Factor
RateWESM
FD,AA,DA,
CRRNonWESM
Total
Annual
Payout
Factor
RateFIT All
Computation
FactorRateWESM= 1 – 97% = 0.03
1- PEMC Collection Efficiency
36
2014
Cost Recovery RevenueLuzon and Visayas
1,075,858,996
2015
5,704,025,598
Combined
2014-2015
6,779,884,594
37
Cost Recovery RevenueMindanao
FIT Differential
Administration Allowance
Disbursement Allowance
Total
2014
84,332,068
628,072,499
8,593,587
2015
171,654,325
2,625,148,441
18,052,497
Combined
2014 & 2015
255,986,392
3,253,220,939
26,646,084
720,998,153
2,814,855,263
3,535,853,416
38
Factor
Rate
FD,AA,DA,
CRRNon-
CRRWESM
Factor
RateWESM
Total
Annual
Payout
WESM
Total
Annual
Payout
FD,AA, DA,
CRRNon-WESM
CRRWESM
Component of Annual Payout
Divided by: Total Annual Payout
Equals: Weighting Factor
X Factor Rate
Weighted Factor Rate
Effective Factor Rate
Factor
RateFIT All
6,779,884,594
10,315,738,010
0.6572
3,535,853,416
10,315,738,010
0.3428
3%
18.49%
1.97%
6.34%
8.30973%
*per NREB Resolution No. 3 Series of 2014
39
WCA t+1
Forecast Annual
Payout t+2
2014
Factor Rate
2015
WCA Ending
Balancet
2016
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
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
FIT ALL
RATE,
P/kWh
FD
2014
WCA
AA
2015
Rate
Rate
Share Amount (P)
Share
(P/kWh)
(P/kWh)
FD
585,896,907 0.02169 45.34% 2,416,442,876 0.03553 94.30%
WCA
706,395,634 0.02616 54.66%
145,939,676 0.00215 5.70%
AA
- 0.00%
- 0.00%
DA
- 0.00%
- 0.00%
Total
1,292,292,541
2,562,382,553
FNS
27,007,438,336
68,016,055,191
FIT-All, Php/kWh
0.04785
0.03767
Amount (P)
DA
FNS
Combined 2014-2015
Rate
Amount (P)
Share
(P/kWh)
3,002,339,783 0.03160 77.89%
852,335,310 0.00897 22.11%
0.00%
0.00%
3,854,675,094
95,023,493,528
0.04057
Without DA
43
FIT-ALL APPLICATION FOR 2014-2015
Combined 2014-2015
Amount (P)
FD
WCA
AA
DA
Total
FNS (kWh)
FIT-All, Php/kWh
3,002,339,783
852,335,310
3,854,675,094
95,023,493,528
Rate (P/kWh)
Share
0.03160 77.89%
0.00897 22.11%
0.00%
0.00%
0.04057
44
a. To grant Provisional Authority to collect proposed FIT-All effective
August 2014 billing period
b. To direct Collection Agents such as DUs, RES and NGCP to bill, collect
and remit the FIT-All to the FIT-All Fund as provided in the FIT-All
Guidelines
c. To direct PEMC and Host DUs to remit the CRR to the FIT-All Fund as
provided in the FIT-All Guidelines
d. To approve NREB recommended Factor Rate and adopt the same in
the computation of the WCA and the FIT-All Rate for 2014 and 2015
e. To allow TransCo to make supplemental submission for the DA and
adopt the same in the computation of the FIT-All Rate for 2014 and
2015
f. To approve the FIT-All Rate for 2014 and 2015 as applied after due
notice and hearing
45
g. To waive the payment of ERC supervision fees, if any
END OF PRESENTATION
46