Legislation needed to allow foreign ownership in solar, wind projects

MANILA, Philippines — Legislation may be needed to allow foreign ownership in solar and wind projects in the country, according to a ranking official of the Department of Energy.
 During the Energy Smart Forum organized by the European Chamber of Commerce of the Philippines (ECCP) on Tuesday, DOE Undersecretary Felix William Fuentebella said relaxing foreign ownership in solar and wind projects was looked into by the National Renewable Energy Board (NREB) and this may need a new law to back it up.

“We just have a problem on the interpretation of the Constitution. It states there the Regalian Doctrine of all natural resources with energy potential should undergo service contracting, etc.,” he said.

“There were exemptions identified, that’s why we were able to do it for biomass and geothermal. [But] as far as wind and solar is concerned, there may be a need for legislation on that,” Fuentebella said.

Under the Regalian doctrine, all lands of public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State.

Foreign investors have been citing the challenge of foreign ownership in the renewable energy space.

Sen. Sherwin Gatchalian earlier said foreign capital is critical to unlock the massive potential in renewable energy in the country.

So far, the DOE is studying the possibility of foreign ownership in other renewable energy developments such as impounding hydropower projects, following a Supreme Court decision supporting the entry of foreign capital.

“I think there is an SC decision that harnessed resources can already be opened to the foreign private sector. We’re still studying that...hoping to find ways on how we will be able to improve the investment climate,” DOE-Renewable Energy Management Bureau director Mylene Capongcol said in May.

On the legislation side, Gatchalian said the Senate is constantly in consultations with legal experts to further loosen restrictions of foreign investments in the renewable energy space.

Last year, the DOE opened the country’s geothermal sector to greater foreign investments by allowing 100 percent foreign participation in large-scale geothermal projects.

This is through the third Open and Competitive Selection Process (OCSP3) wherein foreign companies are now allowed to participate in geothermal exploration, development, and utilization activities with a minimum investment cost of $50 million and under the Financial and Technical Assistance Agreements (FTAAs) as provided by the Philippine Constitution.

Meanwhile, in the omnibus guidelines for the award and administration of renewable energy contracts issued in 2019, the DOE said renewable energy applicants must be a Filipino, or a corporation that is  at least 60 percent owned by Filipinos, except for biomass and waste-to-energy technology.

The exemption is stemmed from the reason that biomass and waste-to-energy are not natural resources.

For biomass projects, the DOE allowed 100-percent foreign ownership, which means foreign firms no longer need to partner with a local entity to construct such facilities.