Review of Renewable Energy Law’s guidelines underway

The Department of Energy (DOE) will be scheduling public consultations on the proposed amendments to the implementing rules and regulations (IRR) of Republic Act 9513 or the Renewable Energy (RE) Law to finally open the sector to 100 percent foreign ownership, according to a report by Manila Bulletin.

“Since the DOJ has issued opinion that foreign ownership of renewable energy is allowed up to 100 percent foreign ownership, we have already finalized for public consultations the proposed amendments to the Renewable Energy Law’s implementing rules and regulations to reflect these opening up,” Energy Secretary Raphael P.M. Lotilla noted.

At this stage though, the energy department has not provided the exact schedules yet on when the IRR amendment-consultations with the relevant stakeholders.

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Additionally, the DOE chief stated that part of the deliverables relative to the RE Law’s IRR modification is the request of the National Economic and Development Authority (NEDA) and the Department of Trade and Industry (DTI) to exclude RE in the negative list of investments or the roll of industries with foreign equity limitations.

Apart from restrictions on shareholdings, foreign investors are likewise raised persistent concerns on the availment of promised incentives under the RE Law, including the enforcement of the 10 percent income tax rate for RE investors; the disconnect in what was laid down as process flow in securing project approvals versus actual permitting hurdles on the ground; as well as the corruption tied to development of RE projects.

If capital influx will gain traction in the RE sector, Lotilla emphasized that “additional power from the RE plants can help offset the loss from the 1,200-megawatt Ilijan plant’s output due to the decrease of natural gas supply from the Malampaya gas field.”

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To note, the Iligan gas-fed power facility had been on shutdown since June this year following the lapse of its gas supply purchase agreement (GSPA) with the Malampaya consortium.

Nevertheless, South Premiere Power Corporation (SPPC) of the San Miguel group, which is now the rightful owner of the plant, had already indicated that the facility will resume electricity generation by February next year when liquefied natural gas (LNG) will already be available in the country.

To shore up investments in the RE sector, Lotilla further sounded off the urgent need to synchronize development of transmission facilities so the generated capacity of the renewable-power sponsors can be seamlessly integrated into the grid.

He conveyed that in the fresh wave of RE investments’ build-up, the country has to avoid a scenario where RE capacities will be left stranded because the transmission lines are not ready to underpin the wheeling of their capacities into the grid.

“Definitely, that is why we are making sure that the transmission facilities will be there – that it will not create another Negros Island scenario where the renewable energy power has been stranded in Negros Island for the lack of sufficient transmission facilities that can bring them to market,” the energy chief highlighted.

He thus specified that “the challenge is for us to be able to do that — including the back-up power that is needed for renewable energy, so we are focusing on this.”

Lotilla, nevertheless, qualified that stranded RE generation capacity has not been unique to the solar plant-developments in Negros, as this similarly emerged as a major headache to RE installations in Vietnam. This is a project development chokepoint that shall be avoided in the Philippines, he said.

“In Vietnam, they also have problems in which you have overcapacity — which the renewable energy sector could not be brought to the market or the places where they are needed. And in fact, what they had to do was to pay the RE power producers in order not to run – we do not want to have that kind of scenario taking place in the country,” the energy secretary stressed.