To accelerate the exploration, development and utilization of renewable energy (“RE”) resources, the Renewable Energy Act of 2008 (“Act”) was signed into law on December 2008. The Act provides the legal and institutional framework for harmonizing the policies on the development of RE resources. The Department of Energy (DOE) is designated as the lead agency to implement the Act. The National Renewable Energy Board (NREB) is created to facilitate the implementation of the National Renewable Energy Program. Its composition, representing the major players in the electric power industry, emphasize the need for collective effort to contribute to the growth of the RE industry.
Seeking to institutionalize a Renewable Portfolio Standard (“RPS”) system, the Act requires electricity suppliers to source a minimum percentage of their energy supply from RE resources. RPS is complemented by a feed-in tariff system to ensure the priority grid connection, purchase and transmission of electricity generated by companies from renewable sources. To strengthen compliance with the RPS, the Renewable Energy Market (REM) is integrated into the Wholesale Electricity Spot Market (WESM).
The end-users contribute to RE development through the Green Energy Option, a program allowing power consumers to choose RE resources in meeting their energy requirements. The Philippine Electricity Market Corporation, National Transmission Commission, and relevant parties engaged in transmission and distribution are mandated to establish the mechanisms for the physical connection, commercial arrangements, net-metering interconnection standards and pricing methodology of the RE program.
To spur investment into the RE projects and activities, RE developers and local manufacturers, fabricators and suppliers of locally-produced renewable energy equipment are granted fiscal and non-fiscal incentives, upon prior registration and certification from the DOE. Some of these incentives are: income tax holiday (ITH) for the first seven years of commercial operations; duty-free importation of RE machinery, equipment and materials within the first 10 years upon issuance of a certification; a realty tax cap of 1.5% on RE equipment and machinery; Net Operating Loss Carry-Over (NOLCO) for the first three years of commercial operation carried over as deduction for the next seven consecutive years; after seven-year ITH, corporate tax of 10% of its net taxable income; accelerated depreciation, in lieu of ITH; zero percent value-added tax rate on the sale of its power; cash incentive of RE developers for missionary electrification; tax exemption of carbon credits; and tax credit on domestic capital equipment services.
This regional update was written by Jasmine Anne B. Gapatan from Sycip Salazar Hernandez & Gatmaitan
Jasmine Anne B. Gapatan
Sycip Salazar Hernandez & Gatmaitan
+ 632 817-98-11 loc. 261