Philippines Eyes Green Auction for Off-Grid Areas

MANILA, Philippines — The Department of Energy (DOE) is planning to launch a competitive bidding round for renewable power projects in remote, off-grid areas. The DOE recently engaged potential bidders for the proposed green energy auction (GEA) focused on areas served by National Power Corp. (Napocor), where most small power utilities group (SPUG) plants still rely heavily on diesel. Through the auction, the agency aims to attract private sector investments that will help accelerate the shift of off-grid communities from diesel-based generation toward hybrid renewable power systems. Napocor has identified 20 priority off-grid areas for the first auction round, targeting remote communities with a combined annual energy demand of around 367,000 megawatt-hours. Additional details of the auction have yet to be disclosed. The DOE currently conducts GEA rounds for on-grid power projects, with winning bidders receiving fixed tariffs that provide long-term revenue certainty. The cost of these incentives is passed on to consumers through the GEA allowance, which is reflected in their electricity bills. On top of GEA charges, on-grid consumers also pay the universal charge for missionary electrification, a non-bypassable fee that subsidizes power rates in SPUG areas. Even before the global oil crisis, the actual cost of generation in SPUG areas was estimated to be as high as P62 per kilowatt-hour (kWh). The figure reflected generation costs alone and did not include other charges. Despite the high cost of generating power in off-grid areas, consumers typically pay only around P7 to P8 per kWh, thanks to subsidized rates. The DOE expects the planned off-grid GEA round to lower UCME subsidies, delivering more affordable and sustainable electricity to remote communities. “The DOE remains committed to working closely with fellow government units and industry stakeholders to advance policies and programs that support the country’s clean energy transition and inclusive electrification goals,” it said.