The development and optimal use of the country's renewable energy (RE) resources is central to the
Philippine's sustainable energy agenda. Renewable energy is an essential part of the country's low
emissions development strategy and is vital to addressing the challenges of climate change, energy
security, and access to energy. The passage of Republic Act No. 9513 otherwise known as the
Renewable Energy Act of 2008 indicates that the Philippine Government is seriously taking “renewable”
into stride. The RE Law basically aims to accelerate the development of the country’s renewable energy
sources by providing fiscal and non-fiscal incentives to private sector investors and equipment
manufacturers and suppliers. Promising opportunities await U.S. providers of RE technology and
expertise, especially in harnessing the Philippines’ abundant RE sources like wind, solar, hydro,
geothermal, biomass and ocean energy.
In line with the country’s energy security agenda, the Philippine Department of Energy (DOE) established
the National Renewable Energy Program (NREP), which outlines the policy framework enshrined in
Republic Act 9513. It establishes the strategic building blocks that will help the country achieve the goals
set forth in the Renewable Energy Act of 2008. The NREP signals the country's big leap from fragmented
and halting RE initiatives into a focused and sustained drive towards energy security and improved
access to clean energy. As a result, several RE projects have been set up or are in various stages of
development all over the country, many of which are supported by international funding agencies.
There is increasing interest in tapping RE sources due to several factors. These include the spiraling
costs of imported fossil fuel, the expected surge in power demand in both rural and urban areas resulting in increased economic activities, environmental concerns arising from the use of conventional energy sources (e.g., coal), attempts to arrest an impending power crisis while addressing the power needs of remote, off-grid and therefore underserved communities. Moreover, multilateral agencies such as the World Bank, International Finance Corporation), the Asian Development Bank (ADB) and the United Nations Development Program (UNDP) have been promoting the use of RE sources to address
sustainability and other related issues, particularly in developing countries such as the Philippines.
In recent years, the U.S. has played and continues to play an active role in promoting RE in the
Philippines, whether in terms of policy advocacy, direct involvement in RE projects and even supply of
technology and expertise. This augurs well for U.S. companies wishing to tap the Philippine RE market,
since U.S. products and technology are widely perceived as reliable and high quality.
Market Trends and Opportunities
Renewable energy development was given a tremendous boost with the passage of the Renewable
Energy Act of 2008 (Republic Act 9513). Since its signing, a total of 221 contracts had been signed and
counting. The target is to double the RE-based installed capacity for power generation at the end of the
planning horizon from its 2008 level of 5,300 MW.
Now on its final phase of deliberation of the National Renewable Energy Board of the Philippine
Department of Energy are the various policy and regulatory mechanisms to speed-up the implementation of the law. These include the mechanisms on Feed-in-tariff (FIT), Renewable Portfolio Standard (RPS) and Net Metering (NM). FiT refers to the RE policy that offers guaranteed payments on a fixed rate per kwh for RE generation, excluding any generation for own use; RPS is market-based policy that requires electricity suppliers to source an agreed portion of their energy supply from eligible RE resources; Net Metering a system in which a distribution grid user has a two-way connection to the grid and is only charged for his net electricity consumption and is credited for any overall contribution to the grid.
The National Renewable Energy Board has proposed FIT rates of P7 per kilowatt-hour (kWh) for
biomass-sourced power, P6.15/kWh for run-of-river hydroelectricity, P10.37/kWh for wind power,
P17.65/kWh for wave technology power and P17.95/kWh for solar power.
Among the plans and programs, which will be done in collaboration with DOE’s state university-based
Renewable Energy Centers and other local research institutions is the updating of DOE’s existing RE
database, as well as, the continuing conduct of promotional activities on renewable energy particularly
ocean energy projects that could be in the form OTEC, wave, marine and tidal.
In a related development, local RE project proponents are looking into trading their carbon credits with
such partners as Japan and the European Union (EU) under the Clean Development Mechanism (CDM).
The CDM, which was a direct result of the Kyoto Protocol, allows signatory industrialized countries to fulfill their commitments to reduce greenhouse gas emissions in their respective countries by helping finance RE projects in developing countries.
On the other hand, a UNDP-sponsored program called Capacity Building to Remove Barriers to
Renewable Energy Development in the Philippines (CBRED) reported that certain challenges still need to
be hurdled in order to promote a wider utilization of RE sources. Among such barriers include the lack of
a comprehensive development plan or a clear policy environment, difficulty in accessing financing
mechanisms for RE projects, inadequate technical skills and local competence, lack of a reliable and
updated RE resource assessment, inadequate knowledge of RE market conditions, among other related
issues. In a way, these challenges can be viewed as opportunities for RE consultants, engineers and
other professionals to render their expertise in order to overcome such barriers.