RP eyes $10-billion investments in renewable energy

MANILA, Philippines – With the signing of the implementing rules and regulations (IRR) of the Renewable Energy Act, the Philippines would be able to generate up to $10 billion in fresh capital from renewable energy development projects over the next 10 years, said Energy Secretary Angelo Reyes.

He said there are already a number of interested investors that have lined up for pre-qualification at the Department of Energy (DOE).

“Our objective is to double the power being generated from renewable energy sources from 4,500 megawatts to 9,000 MW in 10 years,” he said.

Based on estimates, a renewable energy project may need a capital investment of $1 million to $2 million per megawatt.

Reyes said the Philippines has a capacity potential of 200,000 MW from renewable energy.

“Investors are aggressively coming in as they see the potential of RE development in the country,” he said.

He said the IRR for Republic Act 9513 will also usher in a better appreciation of renewable energy development prospects in the Philippines.

DOE director Mario Marasigan, on the other hand, said they are currently pre-qualifying 15 projects, most of which will be undertaken by local groups with foreign partners.

Marasigan said the local power firms have also been actively looking at potential investments in RE development.

Aside from the state-owned PNOC-Renewables Corp., which will take the lead in RE development, a lot of existing power generation companies have signified interest to engage in developing RE sources, he added.

Among these companies are First Gen Corp., Aboitiz Power Corp., Trans-Asia Power, Energy Development Corp., Suweco, Constellation Corp., Oriental Energy, Green Power Philippines, Deep Ocean Philippines, Norasian Corp. and Philcarbon.

“Many have submitted their letters of interest to deal with wind, hydro, biomass, solar and ocean projects,” he said.

RA 9513 aims to accelerate the development and use of the nation’s vast renewable energy resources through fiscal and non-fiscal incentives for investors. Among these incentives are seven-year income tax holidays for RE developers, exemption from VAT and duty-free importation of equipment and machinery, reduction of corporate income tax after the expiry of the income tax holiday to 10 percent of net income as well as a zero percent VAT rate for the sale of power from RE. 

It also assures investors in wind, solar, ocean, run-of-river hydropower and biomass in electricity generated from these clean sources through feed-in tariffs. Other incentives include duty-free importation of equipment, tax credit on domestic capital equipment and services, special realty tax rates, income tax holidays, net operating loss carry-over, accelerated depreciation and exemption from the universal charge and wheeling charges. The law also exempts the proceeds from the sale of carbon credits from all taxes.

The law also seeks to institutionalize a Renewable Portfolio Standard requiring the country’s electric utilities to obtain a certain portion of their electricity from clean, homegrown renewable energy sources. This mechanism is intended to promote the swift development of renewable energy resources.

According to the DOE, the country’s renewable energy potential is vast – with 4,531 MW from geothermal; 13,097 MW from hydropower, 277 million barrels of fuel oil equivalent from biomass; 5.0-5.1 kwh/m2/day from solar; 76,600 MW from wind; and 170,000 MW from oceanic waves.

“We, in the renewable energy industry, are most appreciative of the extraordinary efforts that Secretary Reyes and his team exerted in completing the IRR. That it was completed a month ahead of schedule is indeed an admirable feat that was achieved through the strong leadership of Secretary Reyes,” Former Energy Secretary and Merritt Partners chairman Vincent S. Pérez  said.

Perez, appointed recently by President Arroyo as special envoy for Renewable Energy Development, said the national consultations conducted were most comprehensive in national coverage and engaged various sectors to reflect the full intent of the law.

He said yesterday’s IRR signing is an indication of the DOE and the National Renewable Energy Board’s commitment in promoting renewable energy in the Philippines.

“We hope to build on the positive momentum from the IRR to implement the NREB’s mandate under RE Act,” he said.

The NREB, created under Section 27 of the RE Act, is a recommending advisory body on renewable energy policies that will monitor the implementation of action plans of the DOE.