# Department Circular No. DC2023-10-0029 **Title:** Providing Specific Auction Policy and Guidelines for Non-FIT-Eligible Renewable Energy Technologies in the Green Energy Auction Program **Issuing authority:** DOE Secretary Raphael P.M. Lotilla **Issued:** December 12, 2023 **Pages:** 8 **Source:** raw/_pdf/regulations/dc2023-10-0029.pdf (image-based; OCR output at raw/_ocr/regulations/dc2023-10-0029.txt) --- ## Whereas Clauses WHEREAS, RA 7638 (DOE Act of 1992) declares the policy to ensure a continuous, adequate, and economic supply of energy; WHEREAS, RA 9136 (EPIRA) declares the policy to ensure the quality, reliability, security and affordability of the supply of electric power and to ensure transparent and reasonable prices in a regime of free and fair competition; WHEREAS, RA 9513 (RE Act) declares the policy to increase the utilization of RE by institutionalizing national and local capabilities and promoting cost-effective commercial application; WHEREAS, Section 5 of the RE Act designates the DOE as lead agency; WHEREAS, the DOE has determined that competitive bidding is the most attractive way to accelerate RE development and encourage private sector investment; WHEREAS, on 03 November 2021, the DOE issued DC No. DC2021-11-0036 (GEAP Guidelines); WHEREAS, Sections 6.1.3 and 6.1.4 of the GEAP Guidelines mandate the DOE, upon GEAC recommendation, to develop specific auction policy and guidelines or a separate remuneration package for geothermal, impounding hydropower, and other emerging RE technologies; WHEREAS, on 05 October 2022, the DOE issued DC No. DC2022-10-0031, declaring all RE resources as Preferential Dispatch Generating Units in the WESM (amending DC2015-03-0001); WHEREAS, the NREP 2020-2040 sets a target of at least 35% RE share by 2030 and 50% by 2040; WHEREAS, DC2023-04-0008 (Energy Storage System policy, 20 April 2023) was issued to support the influx of variable RE technologies and sustain grid stability; WHEREAS, on 14 July 2023, the DOE conducted an online public consultation on the draft DC; NOW, THEREFORE, the DOE hereby issues and promulgates the following guidelines for Non-FIT-Eligible RE technologies in the GEAP. --- ## Section 1. Title This Circular shall be known as the "Non-FIT-Eligible RE Technologies in the GEAP." ## Section 2. Scope 2.1 RE Developers/Generators of Non-FIT-Eligible RE technologies 2.2 RPS Mandated Participants 2.3 Transmission Network Service Provider 2.4 System Operator 2.5 WESM Market Operator 2.6 WESM Governance Arm 2.6 RE Registrar 2.7 Electricity End-Users ## Section 3. Purpose This Circular prescribes the specific auction policy and guidelines for Non-FIT-Eligible RE technologies to meet the Government's RE share targets; provided, that the DOE shall, upon GEAC recommendation, announce the inclusion of any Non-FIT-Eligible RE technology in an auction prior to drafting the TOR therefor. ## Section 4. Definition of Terms **a. Non-FIT-Eligible RE Facilities** — RPS-eligible facilities utilizing geothermal, impounding and pumped-storage hydro resources, and other emerging technologies as may be declared by the DOE. As used herein, RPS-eligible facilities are those referred to in Sections 6.1.1 and 6.1.2 of the GEAP Guidelines but are not eligible to FIT. **b. Non-FIT Green Energy Tariff (Non-FIT GET)** — the Price Offer, in PhP/kWh, approved by the ERC in accordance with Section 6 hereof after the conduct of each GEA for Non-FIT-Eligible RE technology, corresponding to each Winning Bidder on a pay-as-bid basis. **c. Price Offer** — the price in PhP/kWh that a Qualified Bidder offers for a specific capacity in each auction round. **d. Settlement Mechanism** — the process by which collection, payment, and settlement of the Non-FIT GET to the Non-FIT-Eligible RE Facilities of Winning Bidders shall be implemented. ## Section 5. Auction Process ### 5.1. Pre-Auction Process and Price Offer The DOE shall notify the ERC of the upcoming Auction Round, together with recommendations on the parameters and criteria for each specific Non-FIT RE technology to be set by the ERC. Within **ninety (90) days** from receipt of the DOE's notice and recommendation, the ERC shall issue the approved parameters and criteria per type of Non-FIT-Eligible RE Facility to be used in evaluating Price Offers submitted by Bidders. ### 5.2. Auction Proper The DOE shall issue a Notice of Auction (NOA) per Auction Round for Non-FIT-Eligible RE Technologies in accordance with Section 9.1 of the GEAP Guidelines. The NOA shall be consistent with the RE Act and the Energy Transition Program, and shall include: a. TOR defining the specific auction process for each Auction Round b. Auction design c. Auctioned capacity d. Legal and technical requirements including those enumerated under Section 5.3 The DOE shall also publish the set of ERC-approved parameters and criteria for evaluating Price Offers. ### 5.3. Legal and Technical Requirements Consistent with the GEAP Guidelines, Winning Bidders shall ensure they have no legal impediments to deliver their committed capacity. The Qualified Bidder shall offer the entire capacity of its Non-FIT-Eligible RE Facility. Where only a portion will be offered, the Qualified Bidder shall offer the entire capacity of the relevant generating unit/s; provided that said unit/s have a dedicated metering facility and corresponding revenue meter. The DOE shall specify other legal and technical requirements for each Auction Round in the TOR therefor. ### 5.4. Evaluation of Offers The **GEA-Bids Evaluation and Awards Committee (GEA-BEAC)** shall evaluate the compliance of Bidders' submissions with the legal and technical requirements. After evaluation, the DOE shall endorse the respective Price Offers of legally and technically compliant bids to the ERC. The **ERC shall evaluate the Price Offers** using the approved parameters and criteria. ## Section 6. Price Offer The Winning Bidders for each Auction Round for Non-FIT-Eligible RE technology shall be those whose Price Offers were **endorsed by the DOE to, and approved by, the ERC** after evaluation based on the approved set of parameters and criteria. ## Section 7. Settlement of Energy Generated by the Winning Bidders Payment and settlement for the Non-FIT GET shall be collected and administered **through the WESM by the Market Operator**. Non-FIT Eligible RE Facilities of Winning Bidders must be registered in the WESM. In all cases, Winning Bidders shall be paid the **Total GEA Amount**, without regard to the Energy Trading Amount in the WESM: **Total GEA Amount = Energy Delivered (kWh) × Non-FIT GET (PhP/kWh)** Where: - **Energy Delivered** — actual delivered energy in kWh of the Non-FIT Eligible RE Facility in the grid - **Energy Trading Amount (ETA)** — amount in PhP to be paid by or paid to a trading participant calculated in accordance with WESM PDM Manual §8.2.1 - **GEA Amount (GEAA)** — amount in PhP that a Non-FIT Eligible RE Facility of a Winning Bidder is entitled to be compensated for ### Section 7.1. Collection and Flowback The Market Operator shall calculate the difference between the Energy Trading Amount and the computed Total GEA Amount during the preliminary and final settlement process. ### Section 7.2. ETA < Total GEA Amount (Shortfall — buyers top up) If ETA < Total GEA Amount, the Market Operator shall collect the shortfall from WESM buyers: **Collection Allocation per buyer = GEA Shortfall Amount × (GESQc / GESQctotal)** Where: - GEA Shortfall Amount = ETAg − GEAAg (where ETAg < GEAAg) - GESQ = gross energy settlement quantity per WESM Rules 3.13.6 (MWh) - GESQc = GESQ for buyer c for the billing month - GESQctotal = total buyer GESQ for the billing month ### Section 7.3. ETA > Total GEA Amount (Surplus — buyers receive flowback) If ETA > Total GEA Amount, the Market Operator shall collect only the amount to satisfy the GEA Amount and flow back the difference to WESM buyers: **Flowback Allocation per buyer = GEA Flowback Amount × (GESQc / GESQctotal)** Where: - GEA Flowback Amount = ETAg − GEAAg (where ETAg > GEAAg) ## Section 8. Responsibilities of WESM Market Operator and ERC a. The Market Operator shall, within **thirty (30) days** from effectivity, apply for ERC approval of the Settlement Mechanism under Section 7; b. The ERC shall act on the Settlement Mechanism within **one hundred eighty (180) days** from receipt of the application; c. Within **thirty (30) days** from ERC approval, the Market Operator shall file urgent amendments to the relevant Market Rules and Manuals; and d. The Market Operator shall: i. Implement necessary enhancements on market systems ii. Ensure adequate manpower iii. Seek ERC approval on cost recovery for implementation including the settlement mechanism ## Section 9. Responsibilities of the WESM Governance Arm a. Facilitate the rules change process for amendments submitted by the Market Operator; and b. Conduct audit of market systems per Market Rules and Manuals. ## Section 10. Compliance with CSP Upon its **full implementation**, the Opt-In Mechanism shall serve as compliance with the CSP requirements for distribution utilities. ## Section 11. Compliance with RPS The RECs corresponding to the output of Non-FIT Eligible RE Facilities of Winning Bidders shall be **shared pro rata among the WESM trading participants** by reason of the Settlement Mechanism set forth in Section 7. ## Section 12. Separability Clause ## Section 13. Repealing Clause All previous issuances, rules, and regulations inconsistent with this Circular are hereby repealed, amended, or modified accordingly. ## Section 14. Effectivity This Circular shall take effect fifteen (15) days after publication in at least two (2) newspapers of general circulation. A copy shall be filed with the UP Law Center — Office of the National Administrative Register. ## Section 15. Transitory Provisions The DOE may issue NOA for Non-FIT Eligible RE Facilities upon the effectivity of this Circular; provided, however, that the settlement mechanism under Section 7 shall only be effective upon: (1) ERC approval of the Settlement Mechanism; and (2) PEM Audit Committee certification that the settlement systems are compliant with the ERC-approved Settlement Mechanism. In case Winning Bidders have commenced delivery of energy pending the fulfillment of the above conditions, the Non-FIT GET shall be settled in accordance with the WESM Price Determination Methodology, WESM Rules, and Market Manuals. --- *Issued: December 12, 2023* *Signed: RAPHAEL P.M. LOTILLA, Secretary*