The Restructured Power Sector and The Road Towards Clean Energy

Atty. Floresinda B. DigalDirector, Regulatory Operations Service

Energy Regulatory Commission (ERC)

Asia Pacific Energy Regulatory (APER) Forum 2016 29 September 2016EC Rate -Setting Methodologies 1

Discussion Points• Energy Profile

• Renewable Energy Act of 2008

• Incentives for RE Under RE Law

• Update on Policies

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Republic Act No. 9513RENEWABLE ENERGY ACT OF 2008

An Act Promoting the Development, Utilization, and Commercialization of Renewable Energy Resources and

For Other Purposes

Renewable Energy Act

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Renewable Energy Act of 2008

Accelerate the exploration and

development of the country’s renewable energy resources by providing fiscal and non-fiscal incentives

to private sector investors and

equipment manufacturers /

suppliers. APER Forum 2016

Bangui Wind FarmIlocos Norte, Philippines

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- Renewable Portfolio Standards- Feed-In Tariff System- Renewable Energy Market- Green Energy Option- Net Metering for Renewable Energy- Transmission and Distribution System

Development*DOE to lead, other agencies assist

RE Law Salient Features

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NON-FISCAL INCENTIVESOn-Gridü Renewable Portfolio

StandardsüFeed-in Tariffü Renewable EnergyMarketü Green Energy Optionü Net-Metering Program

Off-Gridü Min. RE Generationü Cash Incentives

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RE Law

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FISCAL INCENTIVES

ü Income tax holidayü Duty-free importationü Special Realty Tax Ratesü Net Operating Loss

Carryoverü Corporate Tax Rate after ITHü Accelerated Depreciationü Zero VAT

RE Law

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q For emerging renewable energy resources to be used in compliance with the renewable portfolio standard

q Priority connection to the gridq Priority purchase and transmission of, and payment for,

such electricity by the grid system operatorsq Fixed tariff by technologyq Mandated number of years, not less than twelve (12)

Feed-In Tariff System (Sec. 7, R.A. 9513)

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Feed-in Tariff System

üResolution # 16(July 12, 2010)

üResolution # 15, (November 19, 2012)

A fixed rate per kilowatt-hour for emerging renewable

energy sources, excluding any generation for own use,

as approved by the ERC.

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ü Based on cost of a representative project

ü Technology-specificü 20 years durationü Subject to degression and

adjustments ü Subject to review SA

LIEN

T FE

ATU

RES

Feed-in Tariff System

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TransCoFIT-ALL

END-USERS

Overall FIT Framework

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Process in Setting the FIT

NREB

ERC may, initiate the

proceedings in the review of the FITs.

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Approved FIT RatesERC Case No. 2011-006 RM

NREB-Proposed

(in PhP/kWh)

ERC-Approved

(in PhP/kWh)Run-of-River Hydro 6.15 5.90Solar 17.95 9.68Wind 10.37 8.53Biomass 7.00 6.63Effectivity“Payment of the approved FIT rates to the eligible RE Developers shall commence upon the effectivity of the Feed-in Tariff Allowance (FIT-All), which shall be determined by the Commission at a later date after due proceedings thereon.”

Note: Decision on OTEC FIT deferred

July 2012

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FIT 1

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ERC-Approved Degression Rates(in PhP/kWh)

ROR Hydro 0.5% after year 2 from effectivity of FIT

Solar 6% after year 1 from effectivity of FIT

Wind 0.5% after year 2 from effectivity of FIT

Biomass 0.5% after year 2 from effectivity of FIT

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Approved FIT Rates

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SOLAR FIT 2

WIND FIT 2

Ø Resolution No. 6, Series of 2015 (March 27, 2015)Ø PhP8.69 per kWh Ø Effective May 6, 2015 up to March 15, 2016

Ø Resolution No. 14, Series of 2015 (October 6, 2015)Ø PhP7.40/kWhØ Limited to three (3) wind projects only:

1. Trans-Asia’s San Lorenzo Project – 54MW2. Petro Wind’s Nabas Project – 36MW3. Alternergy’s Pililia Project – 54MW

Approved FIT Rates

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Section 2.5: FIT RulesFeed-In Tariff Allowance (FIT-All)

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How can we pay the RE Developers?

FIT-ALL

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FIT RULES

`ERC Resolution No. 24, S. of 2013(December 16, 2013)

Resolution Adopting the Guidelines on the Collection of the FIT-All and

the Disbursement of the FIT-All Fund.

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FIT-All Payment & Collection Guidelines

FIT-All Guidelines

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ü Uniform ₱/kwh charge ü Payable by all electricity users ü Proceeds go to FIT-All Fund, administered

by Transco, from where the RE payments will be sourced

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What is FIT-All?

Collecting Agents:Ø DUsØ NGCPØ RES

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Resolution # 9

23 May 2013

Net-Metering Rules

q On-grid systems.q Installations of

<100kWq For eligible RE

Technologiesq End-user should be

in good credit standing

q The RE System must be compliant with the standards

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Interconnection Set-Up

Bi-Directional

Meter

REC Meter

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Issues/Challenges

• DU – Resistance - violation of franchise– Additional responsibility– Revenue loss

• Qualified End User – Investment cost recovery – Limitations on size/rate recovery

*entitlement to lifeline

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Prospects for Clean Energy

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Initiatives Towards Clean Energy

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National Renewable Energy Program

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• Balanced Energy Mix Fuel mix goal is aimed at reducing the country’s dependence on coal

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Update on Policy

• Energy Mix policy being reviewed– 30:30:30:10 (Coal:RE:Natgas:Oil)

• Energy Mix should be in line with econ needs– Phil. signed the 2015 Paris Agreement– Phil. Has low carbon emissions– Our level of economic development at this

point does not allow us to rely completely on RE

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• Study to revive the Bataan Nuclear Power Plant

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Visit us at:

www.erc.gov.ph

Thank you!

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