THE Department of Energy (DOE) has proposed to amend the guidelines governing the award of renewable energy contracts to include offshore wind (OSW) technology.
In a draft circular, the agency cited a need to update and enhance the Omnibus RE Guidelines to provide specific policies and rationalize the regulatory framework towards a timely and efficient development and implementation of offshore wind projects, and further streamline the award of offshore wind energy service contracts.
“Cognizant of the peculiarities of OSW development, the DOE deemed it necessary to review, assess and determine the appropriateness of the existing policies and guidelines for OSW development, timelines-based development stage, the requirements, qualifications, and procedures in the award of OSW Energy Service Contracts (OSWESCs),” the draft circular stated.
The DOE had informed RE developers in November last year of its objective to refine the existing policies governing the administration of WESCs to address the peculiarities of OSW projects in terms of technical, financial operational and administrative risks and challenges.
Per the draft circular, the financial qualification of the OSWESC applicant shall be evaluated based on its financial capability to fund the cost of activities for the first three years of the OSWESC based on the template work program.
The developer shall complete its pre-development activities within five years, submit the plan of development and proof of financial closing at the end of the predevelopment stage.
Before the predevelopment stage expires, the developer shall submit an application for declaration of commerciality (DOC). Upon confirmation of the DOC, the DOE shall issue a certificate of Confirmation of Commerciality (COCC), advancing the OSW project from predevelopment stage to development stage. The term of the development stage is equivalent to the balance of 25 years reckoned from the award of the OSWESC.
After the award of the OSWESC, the DOE shall issue a certificate of registration (COR), which the developer needs to access incentives.
The developer may apply to change the design of the OSW project even after the issuance of the COCOC. Developers under existing WESC in offshore areas may convert to OSWESC within 30 days from effictivity of the proposed circular.
Under the Philippine Offshore Wind (OSW) roadmap launched in April 2022, a potential capacity of 178 gigawatts can be harnessed from OSW resources.
The DOE is reviewing offshore wind policies after President Ferdinand R. Marcos, Jr. approved its proposal to explore and develop offshore wind potential in the country. It has so far identified northern Luzon, Verde Island Passage, northern Mindoro and southern Mindoro as potential sites of offshore wind projects. It could take at least six years to develop offshore wind power projects.
The DOE had said the current rule of thumb for offshore wind project investment is about $5 million per megawatt. Like solar, the cost is expected to go down in the coming years with more deployment.
Image credits: AP/Michael Dwyer