The Department of Energy (DOE) is finalizing a policy to lower the performance bond for offshore wind (OSW) projects to 5%, down from the usual 20% required in green energy auctions (GEA) for other renewable energy technologies.
In a report by Manila Bulletin, Energy Undersecretary Rowena Cristina Guevara shared this update, stating that the DOE reduced the performance bond requirement based on industry feedback.
Guevara confirmed that this revised performance bond would be part of the terms of reference (TOR) for the 5th GEA, a competitive bidding event focusing on OSW projects set for the third quarter of next year.
Performance bonds serve as a guarantee for firms that win capacity auctions, with forfeiture to the government if they fail to meet electricity delivery commitments by their commercial operations deadline.
Investment costs for offshore wind projects, whether using bottom-fixed or floating installations, are estimated at USD 3 million to USD 7 million per megawatt (MW), making even the reduced five percent bond a significant expense.
Developers have noted that costs could rise further depending on factors such as water depth, site distance from shore, infrastructure complexity, and regulatory challenges like permitting.
However, they expressed optimism that advancements in technology and economies of scale could lower costs for future offshore wind projects.
Guevara reiterated the DOE’s commitment to supporting offshore wind through the fifth GEA but stressed the importance of serious investments to match the government’s efforts in advancing the industry.
She noted that 16 developers have submitted proposals for pre-development environmental compliance certificates (pre-dev ECC) to the Department of Environment and Natural Resources (DENR).
One of these developers has already secured a pre-development ECC and a certificate of confirmation of commerciality (COCOC), allowing the project to move forward into the development phase.
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