REC has huge potential

As the largest pure renewable energy (RE) platform in the Philippines, ACEN is expected to be a top beneficiary of renewable energy certificate (REC) trading.

ACEN has previously signaled its intention to participate in REC trading, which is estimated to initially generate around P180 million to P230 million annually in additional revenues.

As the second-largest RE developer, we also expect Citicore Renewable Energy Corporation (CREC) to benefit, albeit to a lesser extent, as most of its future capacity is already contracted under feed-in tariff/green energy auction (FIT/GEA) programs. Turn to page 10

REM goes full blast

The Department of Energy (DoE) is targeting full operations of the Renewable Energy Market (REM) by December 26, which will finally allow the trading of RECs. The REM launched interim commercial operations in 2022, but no actual trading and settlement could occur during the interim period as regulators fine-tuned the registration and pricing mechanisms.

The DoE’s Renewable Portfolio Standards currently require power suppliers to source at least 11 percent of their energy from eligible RE facilities, with the goal of reaching 35 percent RE utilization by 2030. When distribution utilities (DUs) or direct buyers purchase power from an RE facility, it usually comes in bundled form, which means that the DU or end-user buys the REC along with the underlying power.

This allows them to claim that the power they purchased or used was generated from renewable sources. However, renewable energy can also be sold in unbundled form, which means that the REC can be sold separately from the underlying power.

Potentially lucrative market

The ability to separate RECs from the underlying power will likely put a premium on the price of bundled RE contracted under future deals, according to AP Securities.

At the same time, the sale of unbundled RECs on the REM can provide a much-needed alternative revenue stream for RE companies. The ERC currently caps the price of RECs at P241.56/MWh, but dynamic pricing and rising demand in response to escalating RPS requirements open the possibility of higher prices in the future.