RENEWABLE energy (RE) projects under the Feed-in-Tariff (FIT) program reduced electricity bills by P0.3916 per kilowatt hour (kWh) from 2024 to 2025, nearly doubling the current FIT – Allowance (FIT-ALL) rate of P0.2073 per kWh.
The Institute for Climate and Sustainable Cities (ICSC) said on Wednesday that FIT-supported RE projects generated P99.2 billion in wholesale electricity market savings over the 2024-2025 period. This two-year savings total equals nearly half of the P220.5 billion cumulative FIT-All fees paid by consumers since 2015.
‘The sharp decline in renewable energy costs over the past decade shows that sustained policy support, when paired with competition, can turn emerging technologies into affordable and competitive sources of electricity,’ said Atty. Pedro Maniego, ICSC’s Senior Policy Advisor.
‘The priority now is to build on these gains by expanding renewable energy, so more consumers can benefit from lower-cost electricity and reduced exposure to fuel-price volatility,’ he added.
The growing competitiveness of RE has helped drive these savings. Solar projects supported under the FIT program were priced at around P9.68 per kWh in 2014. Today, new solar projects are being contracted at roughly P3 to P4 per kWh.
Solar energy costs under the FIT program dropped from P9.68 per kWh in 2014 to between P3 and P4 per kWh today.
Moreover, the Green Energy Auction-Allowance (GEA-ALL) has reinforced this trend through competitive renewable energy auctions, helping keep solar prices within the P3.68 to P4.48 per kWh range.
The ICSC also said that RE can reduce electricity prices beyond the projects directly supported by FIT-ALL and GEA-ALL. Because solar and wind are often generated during periods of high electricity demand, they can displace more expensive power plants and lower prices in the Wholesale Electricity Spot Market (WESM).
Newer technologies could follow a similar path. Offshore wind has an auction ceiling of around P11 per kwh as the country begins developing the sector. Greater competition, technological improvements, and economies of scale could help bring down costs as the market matures as we’ve seen in solar technology.
‘As RE becomes more competitive, the focus should be on how these investments can reduce costs and risks across the power system. Consumers and policymakers need a fuller assessment of FIT-ALL and GEA-ALL-one that looks beyond their direct costs to the savings renewable energy can generate and the risks it can help reduce, including exposure to imported fuel prices and higher wholesale electricity prices during periods of tight supply,’ the group said.
Moreover, the ICSC pointed out that sustaining competition in RE procurement and keeping grid development aligned with new capacity will be critical to capturing these benefits as the market matures. ‘Ultimately, FIT-All and GEA-All should be assessed based on their net value to consumers: whether they contribute to a more affordable and reliable electricity system over time,’ it said.
FIT-ALL and GEA-ALL are uniform charges billed to all on-grid electricity consumers. This ensures timely payments to qualified RE developers who are assured of a fixed rate for electricity generated by their projects over 20 years. Both are reflected as a separate component in monthly electricity bills.