Hydro developers seek fair pricing

Run-of-river (ROR) hydropower developers are urging the government to adopt more realistic and operationally grounded assumptions in finalizing the next set of feed-in-tariff (FIT) incentive rates, warning that pricing must reflect the actual conditions faced by projects competing for the new installation targets.

At a summit in Quezon City on Tuesday, Philhydro Association Inc. emphasized that actual average capacity factors must be used in determining the new FIT rate for ROR hydro.

The group said that actual and historical data from operating projects “best represent the true conditions and challenges of operating ROR hydro in the country.”

Under the FIT scheme, renewable power plants qualify for fixed incentive rates on a first-come, first-served basis, with developers racing to complete their projects before the installation quota is fully taken. For ROR hydro, the government is currently offering 113.711 megawatts (MW) in new capacity eligible for FIT incentives.

Capacity factor, which measures actual energy production against maximum potential output, is a key variable for hydropower developers, who operate in highly variable natural conditions driven by water flow, rainfall, and other uncontrollable climate factors.

Philhydro added that regulators already have verifiable data to work with, saying “that several ROR hydro plants are now commercially operational, there is ample actual and historical data to use that is verifiable by regulators.”

The group also pushed for the inclusion of contingency costs in the pricing methodology, citing ROR hydropower’s “constant exposure to weather cycle, climate change, and natural disaster,” and stressed that these projects typically require at least three years to construct.

Philhydro Association president Gertrude Roque told reporters that the government must weigh these considerations carefully, noting that hydropower projects also involve watershed development and rural infrastructure support.

She added that the Energy Regulatory Commission (ERC), based on its latest draft, is evaluating a FIT rate of around P6.30 per kilowatt-hour (kWh) for new ROR entrants.

The FIT system was introduced in 2011 to stimulate private investment in renewable energy. Initial FIT rates for ROR hydro were set at P5.90 per kWh for projects completed in 2014–2016, before dropping to P5.8705 per kWh for those completed from 2017 to 2019.

Subsequent adjustments set the rate at P6.1110 per kWh for 2020–2021; P6.0804 per kWh in 2022; P6.0500 per kWh in 2023; P6.0198 per kWh in 2024; and P5.9897 per kWh for 2025.

FIT payments are sourced from the FIT Allowance, charged to consumers at P0.2073 per kWh.

The latest government data show that as of the end of August 2025, the country’s grid-connected installed capacity reached 31,849 MW, with 954 MW—approximately 3 percent—supplied by ROR hydropower plants.