PHILIPPINE POLICY ON

OCEAN ENERGY RESOURCE

DEVELOPMENT IN THE

PHILIPPINESRoundtable Discussion on Ocean Energy

June 08, 2016

Mario C. Marasigan

Director IV

Renewable Energy Management Bureau

Department of Energy

1. Challenges and Barriers in Developing

Renewable Energy Resources

2. Policy on Ocean Energy Resource

Development - Renewable Energy Act of 2008

3. Ocean Energy Potential Sites

4. List of Existing/Terminated/Relinquished Ocean

Energy Service Contract

5. National Renewable Energy Program (NREP)

6. Challenges and Way Forward

CONTENTS

• High upfront and technology costs

• Non-competitiveness

• Non-viable markets

• Inaccessible Financial Packages

• Socio-environmental Issues

• Peace and Order Issues

• Concerned Government Agencies Policies

Challenges and Barriers in Developing

Renewable Energy Resources

Landmark Law

To address the barriers and challenges in

developing renewable energy resources , the

Government promulgated landmark Law to

accelerate development of renewable energy

resources

Republic Act No. 9513

Renewable Energy Act of 2008

R.A. 9513

Renewable Energy Act of 2008

Accelerate the development of the country’srenewable energy resources by providing fiscaland non-fiscal incentives to private sectorinvestors and equipment manufacturers /suppliers.

2. Republic Act 9513Renewable Energy Act of 2008

Wind

Solar

Biomass

Geothermal

Hydro

Ocean

RE Developers (New & Existing)RE Suppliers, Fabricators,

Manufacturers

7 year Income Tax Holiday (ITH) 7 year Income Tax Holiday (ITH)

10 year Duty-free Importation of RE

Machinery, Equipment and Materials

10 year Tax and Duty-free Importation of

Components, Parts and Materials

1.5% Special Realty Tax Rates on Equipment

and Machinery

7 year Net Operating Loss Carry-Over

10 % Corporate Tax Rate after ITH

Accelerated Depreciation

Zero Percent Value-Added Tax Rate Zero-rated value added tax transactions

Tax Exemption of Carbon Credits

100% Tax Credit on Domestic Capital

Equipment and Services

100% Tax Credit on Domestic Capital

Components, Parts and Materials

Hybrid and Cogeneration Systems

INCENTIVES FOR ELIGIBLE

RENEWABLE ENERGY PROJECTS

8

Existing and Updates on RE Policy

Mechanisms

Feed-in-Tariff (FIT)

• Priority connection to the grid

• Priority purchase and transmission of and

payment for by grid system operators

• Fixed tariff for 20 years

• To be applied for generation utilized in

compliance with RPS

• DOE issued List of guidelines for the Selection

Process of Renewable Energy Projects Under

Feed-In Tariff System and the Award of Certificate

for Feed-In Tariff Eligibility

9

Existing and Updates on RE Policy

MechanismsFeed-in-Tariff (FIT) issued Regulations

• The FIT Rules was promulgated on August 12, 2010.

• The ERC approved the FIT Rates on July 27, 2012.

• ERC issued FIT Allowance (FIT-ALL) Payment and Collection

Guidelines

• Approved FIT-ALL Rates 0.0406 PHP/kWh (2014-2015), Oct.

7, 2014 and effective January 2015

• Amendment of DOE’s installation target

• The DOE issued a Certification to amend installation targets of

Solar Energy Generation (50mw to 500mw) on April 30, 2014 and

Wind Energy Generation (200mw to 400mw) on April 24, 2015

• ERC issued new FIT Rates for Solar (0.1293$/Kwh, Resolution

No. 6, series of 2015)) and Wind (0.164$/Kwh, Resolution No.

14, series of 2015)

FEED-IN TARIFF (FIT) RATES

1,210 MW* Amended solar energy installation target from 50 MW

to 500 MW.

** Under review by the Energy Regulatory Commission,

in reference to its Resolution No. 10, Series of 2012

approving the FIT Rates.

RE Technology FIT Rate

(PhP/kWh)

Degression Rate Installation

Target (MW)

Wind8.53

0.5% after 2 years from effectivity

of FIT

200

Biomass6.63

0.5% after 2 years from effectivity

of FIT

250

Solar9.68**

6% after 1 year from effectivity of

FIT

500*

Run-of-River

Hydropower5.90

0.5% after 2 years from effectivity

of FIT

250

Ocean Deferred 10

• Selection of Feed-in-Tariff (FIT) Eligible RE Projects

– The DOE issued Department Circular No. 2013-05-009 dated

May 28, 2013, entitled the “Guidelines for the Selection

Process of Renewable Energy Projects Under Feed-in Tariff

(FIT) System and the Award of Certificate for FIT Eligibility”

which took effect in June 2013

• FIT Allowance - FIT-ALL Payment and Collection Guidelines

–The ERC Approved the Guidelines on December 2013

• The DOE transmitted an amendments of its Certification on

Installation Target from 50 MW to 500 MW for Solar Energy

Generation under the Feed-In Tariff (FIT) System last May 26,

2014 to ERC .

UPDATES ON RE POLICY

MECHANISMS

Net-Metering Rules and Interconnection Standards

• Connection / sale of customers’ RE generation to the grid

• The ERC approved the Net Metering Rules last May 27,

2013

• Conducting nationwide IEC for LGUs, DUs, consumers

Renewable Portfolio Standards (RPS)

• Mandated minimum percentage of RE generation

• For final public consultation

Green Energy Option Program

• End-users’ option to purchase electricity from RE facilities (open

access)

• For Department of Energy’s finalization

UPDATES ON RE POLICY MECHANISMS

Potential Ocean Thermal (Energy-Conversion) Sites

3. PREVIOUSLY IDENTIFIED OCEAN

ENERGY POTENTIAL SITES

Potential Ocean Tidal Energy Sites

Potential Ocean Wave Energy Sites

Potential Ocean Current Energy Sites

Item No.Ocean Energy

Service Contract No.Date Signed Type of Contract Project Name

Capacity

(MW)Location Developer

1.0 2010-10-003 2/2/2010Pre-Development

Contract Cabangan Ocean Energy 5.00 Cabangan, Zambales Bell Pirie Power Corporation

2.0 2013-09-004 10/30/2013Pre-Development

Contract

San Bernardino Strait

Between Bicol Peninsula and

Samar Leyte Corridor (2

sites) - Area 1OP (Tidal In-

Stream Energy Conversion

TISEC Project)

5.00

southeast side of

Municipality of Matnog,

Sorsogon

H&WB Corporation

3.0 2013-09-005 10/30/2013Pre-Development

Contract

San Bernardino Strait

Between Bicol Peninsula and

Samar Leyte Corridor (2

sites) - Area 2OP

5.00

East side of Municipality of

Capul, Northern Samar

and on the west side of

Municipality of San

Antonio, Northern Samar

H&WB Corporation

4.0 2013-09-006 10/30/2013Pre-Development

Contract San Bernardino Strait

Between Bicol Peninsula and

Samar Leyte Corridor (2

sites) - Area 3OP

5.00

East side of Municipality of

San Antonio, Northern

Samar and on the west

side of Municipalities of

San Isidro and Victoria,

Northern Samar

H&WB Corporation

5.0 2014-12-008 12/29/2014Pre-Development

ContractGaboc Channel Ocean

Energy Project6.00 Surigao del Norte

Adnama Power Resources

Corporation

6.0 2015-02-009 2/24/2015Pre-Development

ContractTISEC-Project Site (Areas

4&5)tbd

San Bernardino Strait and

Northern Samar

Poseidon Renewable Energy

Corporation

7.0 2015-02-010 2/24/2015Pre-Development

Contract

TISEC-Project Site (Area 6)

tbd

Capul Pass, Dalupiri

Island, San Antonio,

Northern Samar

Poseidon Renewable Energy

Corporation

List of Existing Ocean Energy Service Contract4.

Item No.

Ocean Energy

Service Contract

No.

Date Signed Type of Contract Project Name Capacity (MW) Location Developer Status

1.0 2009-10-001 10/23/2009Pre-Development

Contractto be determined Anini-y, Antique

Deep Ocean Power Philippines,

Incterminated

2.0 2009-10-002 10/23/2009Pre-Development

Contractto be determined

Sablayan, Occidental

Mindoro

Deep Ocean Power Philippines,

Incterminated

7.0 2013-09-007 10/30/2013Pre-Development

Contract

Sta. Ana & Adjoining

Towns in Cagayan

Valley

5.00 Cagayan H&WB Corporation relinquished

List of Terminated/Relinquished Ocean Energy Service Contract

19

Renewable Energy Targets, 2011-2030

Note: RE Targets under review of NREB to reflect developments on RE sector and the DOE’s issuances of new

Installation targets

6. Current Status/DOE Program

(Ocean Energy)

• Seven (7) Existing Ocean Energy Service Contracts

• On-going Ocean Energy Potential Site Inventory with

establishment of Ocean Energy Database

• Procured Tide Gauge, Current Temp. Depth (CTD)

Measuring Equipment, Single Beam Echosounder (for

resource inventory)

• Capacity Building on Ocean Energy Basic Principles

and Potential Site Identification’

• Proposed Wave and Current Demonstration Projects

21

Challenges

• Lack of Comprehensive Data

• Technical Expertise/Technology in Ocean Energy

Development

• High Upfront Cost/Investment Extensive

• Awareness and Social acceptance

• Streamlining of Administrative Process

• Full implementation of Policy Mechanisms under the

RE Law

• Socio-environmental Issues

• Peace and Order Issues

• Concerned Government Agencies Policies

7.

22

Full implementation of the Renewable Energy Act

Finalization / Approval of Guidelines on other RE Policy

Mechanisms (Renewable Portfolio Standard (RPS), Green

Energy Option, etc.)

Establish Energy Investment Coordinating Center and

Linkages with other Government Regulatory Agencies

Finalization of Ocean Energy Potential Site Inventory and

Establishment of Ocean Energy Database

Capacity Building / Information, Education and

Communication Campaigns

More Investment Missions / Business Meetings

The Way Forward

www.doe.gov.ph