Recent projects that have been approved have established tariff rates in the range of P4.50 per kW hour, making these projects very financially attractive, capable of generating Internal Rates of Return (IRR) that can typically range from 10% – 25% depending on construction and operating costs.

It is anticipated that the Government will be enacting new legislation to allow private power generation companies to sell power directly to the national grid. A recent submission by PASSHYDRO (The Philippine Association of Small Hydropower, Inc.), representing the majority of key hydro players, recently submitted a formal proposal to the NREB which proposed a Feed-in Tariff of Php 7.80 for mini-hydro power stations. However, for conservatism, we have used the lower P4.5 for the following calculations.

Based on a construction cost of approximately Php150 million per MW, the total construction costs should be in the range of €40 million total, and a rough operating cost of €1 million per power station, the projects are extremely attractive.

It should be noted that these are very approximate numbers. A more detailed financial analysis will be conducted as part of the feasibility studies to be conducted by the 4th quarter of 2010.

 
See General Government Incentives