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DECISION
In the said public hearing, the Commission took note of all the
comments of the stakeholders, including that of the Foundation for
Economic Freedom (FEF), represented by Mr. Ernest Leung. FEF
manifested that the new FIT for solar energy should be lower
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 3 of 25
NREB, as well as the other Parties, were also given ten (10) days
from said date of hearing within which to submit additional
documents, data, study, report in support of their respective positions
pertaining to the appropriate new Solar FIT.
DISCUSSION
1 As of May 2014
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 5 of 25
Applicable FIT
Solar PV Projects
(PhP/kWh)
2 ERC Case No. 2011-006 RM, entitled "In the Matter of the Petition to Initiate Rule-Making for
the Adoption of the Feed-In Tariff for Electricity Generated from Biomass, Ocean, Run-of-River
Hydropower, Solar and Wind Energy Resources"
3 ERC Case No. 2011-006 RM, Decision dated July 27, 2012
4 Generation Company Management Report (GCMR) for 2010 and 2011 submitted by CEPALCO
as part of its annual reportorial requirements under the terms and conditions of its Certificate of
Compliance (COC)
6 NREL is the national laboratory of the United States Department of Energy (USDOE), Office of
Energy Efficiency and Renewable Energy. www.nrel.gov
7 Insolation is a measure of solar radiation energy received on a given surface area in a given
time. It is commonly expressed as average irradiance in watts per square meter (W/m2) or
kilowatt-hours per square meter per day (kWh/m2/day).
Plant
Annual Average
Energy Average
Average Initial DCCF,
Areas Yield ACCF,
Irradiance PR (%) Years 1-
(MWhNear) Years 1-20
(kWh/m2) 20
Year 1
Mindanao 1* - EI Salvador
1,991.8 79.0% 1,569 16.9% 19.5%
City, Misamis Oriental
*PAG-ASA Station
FIG;lm~ 2.5: GLOBAL lYPlCAtll\'STAtUO COSi, Cll,PACITV fACTO!? .AND lCOEI'lAI~~S WITH W~IGHTE:D AVERAGES FOP. luntl1Y-
'SCAlE SOlAR' PflOTOVOlTAIC Afo,'O OJ4SKOir: Vltrro PROJEC1S,201 0 ANO 2014
0.5 n I
I
I
I
I
,
I
I
I
6000 03 ~ 1
, 004 .1
I 1
I ,I
J
I .1
n
I
.1
J
I
I
0.3 1
'n
4000 1
,
11
I
u- 0.2 I
I
I
I
2000 ~lll_~
':,"
.LJ.
u 0.1 IlJ
U IT TI
I
I
II
0.1
11
TI
o I 0.0 0.0
201'0 2014'I 20102014 2014 2014
I
9 IRENA Report, entitled "Renewable Power Generation Cost in 2014" published in January 2015
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 10 of 25
1018% to 22%
11 Around 40% growth in cumulative installed capacity in each of 2012 and 2013
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 11 of 25
FIGURE 5.9: 'EstiMATED GLOBAL AVERAGE INSTAI.IO COSTS fORUTIUTV-,sCALE AND RESIDENTIAL SOLAR PVSYStEMS AND tHE RANGE
OF OOUNmvA~AGs.2009 TO .2014
2014USDMI
8
. -'"" ...- ..
-.
1
2
____~_~ ...
__ . "_ 1
._m
o 1 I I 1 I :1
12 IRENA Report, entitled "Renewable Power Generation Cost in 2014" published in January 2015
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 13 of 25
I TECHNOLOGY
POWER GENERATION
14 http://www .greenteeh med ia.eom/articles/read/Solar -Bala nee-of -System-Aeeou nts- for -58-of -PV-
System-Prieing-New-GTM-Report
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 15 of 25
.$9.00
U.S. large CommerGial end Utility Installed Cost (S/Wdc)
$$.00
$7.00
~
~ .$5100
t::..
$ Ss.oo
.~ .
,8$4.00
'tl
,{EtS3.00
.""
:gS2.00
SLOO
$0.00 .. N
1Ii11ii111 JMIl
o
.N
0
N
cPVBOS
- - -- - - - - - - - - -- - - -- -- -
Price
Particulars
In PhP In US$15
= rf + Setae x MRP
15 at PhP44.40/US$
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 17 of 25
Where:
Particulars Values
Market Risk Premium 10.13%
Multiply by Relevered beta 1.03
Equals 10.43
Plus Risk Free Rate 6.010/0
Cost of Equity 16.44%
From the 6.01 % risk free rate (rf), the Commission used an
updated risk free rate (rf) of 5.270/0,which was bench marked on the
daily average of Philippine Dealing System Treasury Fixing (PDST -F)
rates for the CY 2014 as published by Philippine Dealing Exchange
Rate (PDEx) in its official website (www.pdex.com.ph).
Using the current input parameters and the CAPM Formula, the
Commission derived an adjusted Cost of Equity of 13.87%, to wit:
Particulars Values
Market Risk Premium 8.600/0
Multiply by Relevered beta 1.0
Equals 8.60%
Plus Risk Free Rate 5.27%
Cost of Eq uity 13.87%
ERC CASE NO. 2014-004 RM
DECISION/March 27, 2015
Page 19 of 25
TAQLE 1.1: ASSUMPTIONS fOR THE CALCUlATION OF !'HE LMLISEO COST OF ElECTRiCITY NOT DERIVD fROM PROJECT IDATA
Wind power 25
Solar PV 25
'CSP 25
7.5% 10%
Hydropower 30
iBlomassfor power 20
Geothermal 25
16 IRENA report entitled "Renewable Power Generation Cost in 2014" published in January 2015
Curr:ency Forecast
lrastprice For.eeasts
[
Euro
'CulT.ll'ncy
~G-l.-o.-u~s-O-o'-II-aT'----' ------~
__ ._~ .J __ "-'-' __ '
EURU.SO
OG-fV.a.r-:lS
_.
LOS
J
lMar.1S
L_ .._-"_____
1.
11
Jun~.lS
:1.07
Sep.,1LS
.....
1,02
..'=-=~=~'~-=~-_=~
Oce-:1S
0.99
Mar.1G
0.98
Japanc se yen USOJPY120.8 1<1~ 123 128 130
BrW!oi1PoundGBPUSD 1.'50 :1.:52 1.45 1.3G :1.32
:S\'Jh,sF,mnc. USDet"" O:9g O.gg 3..,04 :1.08 1.:12 1.:12
.AustnlUan Donal' ALJDUSO 0.71 0.7.5 0,,73 0.71 0.70 ,0.70
NeWZealand NZDUSO 0.74 0..74 0.71 0.68 0.G7 0.G6
canadian IDollla!"
[~A.Sia __
llSDCAD
-----
__ .__..
:1.2,6
1
J L
1.25 1.21 1....29
.. _._... .-~~. _ ..... _.'
1.30
.._..._. __
1.30
--.
I
Chlne.S\!! lRenmlnibl USDCNY 6.2G ,6.29 ,6,28 6.24
14ongKong llSDt1t{O 7.76 7.79 7.79 7 ..78
ItldoncsianRupiah 'USO:IDR 1.297G 1l3,1.4S 13.182 .13,:142
Indian Rupee U,SDl:/ltR G2 '[;4.6 ,G5.0 64.9
Ko:reanWon USDKIRW 10gS.S'! 1c,144 "1,1.49 1.,147
Malaysian Ringgit USOMY"R3.!GS 3.G9 :LG9 3.67
Phmp;pinePeso USDP""P 44.09 '-'5 . 4 45.5 45.6
Singapore Do'll:u' USDSGO :LElS 1.39 1..'10
Thai Baht USI>TI'IS :!l2.5S 33.4 33-S
Talw3.n OoUl'lr USOnNO 31.44 32.4 32.S
(MEuropc ~-._-
..-..'-_-.__-.-_._-_~_-
__-_.-._-_-_.-. -;
Russian Rub'le:! USORUiB 69 ..2 70.1 69.S
:SouthAfriean~and USOZAP. 12.04 11..81 lL92 12.04 12.?-2 .2.1.6
t~ lat:~~_~ __ ~ ._._. -:=1 L __ ~_. __,..,_,. N. __ . _ _
Existing Solar
Particulars New Solar FIT Difference
FIT
IRENA
US DjkWh
Jl
C~
r
=H=
u
I I I I I I
Stomass HYdt(JSOlar CSP Wind WinG
Photovoltaic offSnor<i!' ,onsnore
REN21
----"----"---------------------
TECHNOLOGY TYPICAL CHARACTERISTICS CAPITAL COSTS TYPICAL ENERGY COSTS
1 USD I kW LCOE - U.S. cents / kWh
POWER GENERAnON
Hydropower: PlJnl slle: 1 MW-18,000+ MW Projecls >300IlfN: 1,000--2,250 Projecls >20 MW; 2-12
Grid. b::sed Plant type: reservol; run-of. river Projects 20-300 MW: 7S0-2.500 Projecls <20 MW: 3-23
Capat:llyfaclor: 30.-60% Projects <20 MW: 750-4,000
Hydropower: Plant slle: 0.1-1,000 WI i,175-6,OOO 5-40
Off-gTid/Mel Plantlype: run.of.river,
I1Ydroldnellc. dillfnalsloragl!
,ocean pOIver: : Plant size: <110>250 MW 5,290-5,870 2i-28
rKlalrange Capacilyfaclor. 23-29%.-
:SolarPV: Peak c",pacf.l': R~1cler:UJl costs: 2,200 2i-44 (OECD)
Roollop 3-5 ~N (residenlla\); (Germany); 3,500-7,000 (United 28-55 (non.OECDI
100 kW (commerct;;l); 51alO5);4,260 (Japan), 2,150 j6-38 <Europei
500 kIN (industria I) (China); .3,380 (A:Jslra:lal;
CapaClly factor: 10-25% (Exed 11m 2,400-3,000 (llaly)
CommerclalO:lsls: 3,BO()(Uniled
Slates); 2,900-3,800 (Japan)
SolarPV: Peak c;:pacity: 2.5-250 MW i,200-1.950Hyplccl11lobalJ; as 12-38 (OECOl
Groond-mounled CapaCilyfactor: JD-25%(flxecl Ull mOOt'!as 3,800 lnctucling Japan. 9-40 (non.OECD)
1l1~;:Y.scale COI1Vl!l'&:on ~x::etlCy: 10--30% Averages: 2,OOO(Un,ledSla:esl; 14-34 (Europe)
(higl'.end Is C r:\Il i,710 (01:nill; 1,450 (Gt:ma!l'jl:
i,510 ftndia)
t
SO ORDERED.
~)t,C~
ENAIDA G. CRUZ-DUCUT
~ Chairperson
0&/
ALFREDO J. NON
O... :7if,.~(L,
GL~ICTORIA
n tv-'
C. fAp-TARUC
Commissioner Commissioner
MJ~FAS/SOMlNJS/~CJ
ERC CASE NO. 2014-004 RM
DECISION/March 27,2015
Page 25 of 25
Copy Furnished:
3. MERALCO
4. PEMC
5. SaCasol
6. PSPA
7. EDC
8. VECO
9. Astroenergy
12. SOLEQ