Several governments around the world have adopted policies aimed at promoting the development of renewable energy sources and reducing their dependence on traditional sources of energy (e.g., fossil fuels). One of these policies is the adoption of a feed-in tariff (or FIT).
The Philippines is no exception. The Philippine Renewable Energy Act (RE Act) provides for the establishment of a feed-in tariff (FIT) system. Under the envisioned system, electricity produced from wind, solar, ocean, run-of-river hydroelectric and biomass energy resources, as well as RE components of hybrid systems, is entitled to priority connection to the Philippine electric grid and to priority purchase, transmission and payment at a fixed price.
The Philippine FIT system has been in the news several times over the past few months. The specific FIT rates for each type of technology (e.g., for wind and solar) were supposed to have been issued on 31 March 2011. However, the Department of Energy announced that they would need more time to complete a study on how to feed energy from the various RE technologies into the Philippines’ energy grid without creating problems. In the meantime, alliances of interested investors in wind and solar technologies have been concentrating their efforts on having favorable rates approved. The new rates are now targeted to be issued by 15 May 2011.
But how is the FIT system envisioned to work?