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    Philippine Renewable Energy Briefer

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    PTIC London
    An overview of the Philippine Renewable Energy Sector and the investment incentives granted by government.

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    Philippine Renewable Energy Briefer

    Uploaded by

    PTIC London
    3K views20 pages
    An overview of the Philippine Renewable Energy Sector and the investment incentives granted by government.

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    An overview of the Philippine Renewable Energy Sector and the investment incentives granted by government.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3K views20 pages

    Philippine Renewable Energy Briefer

    Uploaded by

    PTIC London
    An overview of the Philippine Renewable Energy Sector and the investment incentives granted by government.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 20

    Investment Opportunities

    in the Philippine

    Renewable Energy Sector


    Philippine Trade & Investment Center – London
    Embassy of the Philippines – Commercial Section
    London United, Kingdom
    The Philippines is endowed with abundant renewable energy (RE) resources. Being an agricultural country, major
    crops grown are rice, coconut and sugarcane could generate substantial volumes of residues that could be
    utilized as energy fuel. Moreover, the country is situated on the fringes of the Asia Pacific monsoonal belt thus
    exhibits a good potential for wind energy. With its location just above the equator, the Philippines likewise has
    a vast potential for various solar energy applications.

    In the past years, initiatives have been geared towards increasing generation from geothermal and hydro resources that
    has significantly reduced the country's dependency on imported and polluting fuels. In addition, RE sources
    such as solar, micro-hydro, wind and biomass resources are seeing wide-scale use in the government's rural
    electrification efforts.

      With the current soaring of oil prices in the world market, harnessing and utilization of RE is critical in the
    government's strategy to provide energy supply for the country.

    As an aggressive move to promote RE development and use, the DOE has identified long-term goals, namely, to (i)
    increase RE-based capacity by 100 percent by 2013; and (ii) increase non-power contribution of RE to the
    energy mix by 10 million barrels of fuel oil equivalent (MMBFOE) in the next ten years. In support of these
    general goals, the government aims to (i) be the number one geothermal energy producer in the world; (ii) be the
    number one wind energy producer in Southeast Asia; (iii) double hydro capacity by 2013; and (iv) expand
    contribution of biomass, solar and ocean by about 131 MW. These goals serve as concrete benchmarks for
    government to advance its vision of a sustainable energy system with RE taking a prominent role in the process.

    With increased private sector investments as well as the adoption of modern and innovative technologies in
    exploration and development, the DOE is targeting the installation of an additional 1,200 MW of geothermal
    capacity within the next ten years, resulting to an increase of about 60 percent from the 2002 level of 1,931 MW.
    The attainment of this target is being pursued as a strategy to maintain, if not improve, the Philippines' ranking
    as the second largest geothermal producer in the world. For the hydro sector, the aim is for up to 2,950 MW of
    additional capacity to be installed within the next ten years on top of the 2002 level of 2,518 MW, reaching a
    total of 5,468 MW by 2013. Finally, the DOE will push for the installation of up to 548 MW from RE sources
    by 2013. Of this total, 417 MW will come from wind-based power while the remaining 131 MW will be
    sourced from solar, ocean and biomass.

    As of end 2006, the country’s total installed capacity from RE generated 5,261 MW. Hydropower accounted for the
    largest share of 61.9 percent followed by geothermal with 37.6 percent and the remaining 0.5 percent was
    provided by solar and wind. In addition, wind sites promise a huge contribution to the achievement of the
    envisioned double capacity for RE.
      With the Signing of the Philippine Renewable Energy Act of 2008 (Republic Act 9513)
    the Philippines seeks to achieve 60% self sufficiency in energy by 2010. Besides cutting
    back on carbon emissions, it saves the cost of imported oil, and is an important generator of
    foreign investments for the country.

      The Country’s installed hydropower capacity of 3,289 megawatts will be greatly increased
    with the operation of mini-hydropower plants adding 13.5 megawatts to the national grid.

      The Biofuels Act which was enacted into law last January 2007 will require the mandatory
    blending of coco-biodiesel with petroleum diesel initially at !% by early May 2007,
    increasing to 2% within two years.

      The Philippines holds the largest potential (76,000 MW) for wind energy among the
    Southeast Asian countries.

      On Geothermal energy, the Philippines is the second largest producer in the world.

      Solar power technology has been instrumental in providing power to agrarian communities
    in the countryside. The solar support project, initiated by the Philippine National Oil
    Company (PNOC), has been crucial in this regard.

      The country has abundant biomass resources with installed capacity expected to reach 161
    MW by 2014.
      Income tax holiday for 7 years

      Duty-free importation of RE machinery, equipment and


    materials including control and communication equipment

      Special realty tax rates on equipment and machinery not


    exceeding 1.5% of their original cost less accumulated normal
    depreciation or net book value

      Net operating loss during the first 3 years from the start of
    commercial operation which had not been previously deducted
    from gross income shall be carried over as deduction from
    gross income for the next 7 consecutive taxable years
    immediately following the year of such loss.

      Corporate tax rate of 10% on its net taxable income after 7


    years of Income Tax Holidays.

      Accelerated depreciation of plant, machinery and equipment


    may be applied if the project fails to receive an Income Tax
    Holiday before full operation
      0% Value Added Tax Rate on the sale of fuel or power
    generated. Zero rated VAT on purchases of local supply of
    goods, properties and services needed by Renewable Energy
    developers in the development, construction and installation of
    its plant facility as well as the exploration and development of
    Renewable Energy resources and its conversion into power.

      Tax exemption from carbon credits

      Cash incentive of Renewable Energy developers for


    Missionary Electrification. A cash generation-based incentive
    per kilowatt hour equivalent to 50% of the universal charge for
    the power needed to service missionary areas chargeable
    against the universal charge for missionary electrification.

      Tax credit on domestic capital equipment and services

      Exemption from universal charge

      Option to pay transmission and wheeling charges of on a per


    kilowatt-hour basis at a cost equivalent to the average per
    kilowatt-hour rate of all other electricity transmitted through
    the grid.
      Employment of foreign nationals

      Simplification of customs procedures

      Importation of consigned equipment

      Privilege to operate a bonded


    manufacturing/ trading warehouse
    subject to custom rules and regulations
      Wind power development in the country is gaining interest from potential investors.
    Based on the study conducted by the US National Renewable Energy Laboratory,
    the country has a total wind resources potential of 76,600 MW in six regions
    namely, the Batanes and Babuyan Islands, the Northwest tip of Luzon (Ilocos
    Norte), the higher interior terrain of Luzon, Mindoro, Samar, Leyte, Panay,
    Negros, Cebu, Palawan, Eastern Mindanao and adjacent islands, well-explored est
    facing coastal locations from Northern Luzon southward to Samar; the wind
    corridors between Luzon and Mindoro (including Lubang Island) and between
    Mindoro and Panay (including the Semirara and Cuyo Island)
      Data from the Philippine Geophysical
    Astronomical Services Administration (PAG-
    ASA) shows that the country has a mean
    average of about 31 watts per square meter
    (W/m2) of wind power density.

      A study conducted by the US-NREL in 1999


    shows over 10,000 sq.km. of windy land
    areas estimated to exist with a good-to-
    excellent wind resource potential. At 7 MW
    per sq.km, this windy land could theoretically
    support over 70,000 MW of potential
    installed capacity.

      In 2005, the country led the way in South


    East Asia in wind energy production with
    Northwind’s first 25 MW Windfarm in
    Bangui Bay, Ilocos Norte and a 180 KW
    wind-diesel project in Basco, Batanes.
      For clearer detail Refer to Attached file
      More than 10% of the Philippine electricity requirements are
    supplied by hydropower generation. The utilization of
    hydropower has been increasing in the past years with is
    share in the primary mix up to 5.4% in 2007. This upward
    trend is expected to continue with the interest shown by the
    private sector.
      Run-of-river hydropower companies will play an
    integral role in the island chain's move to double its
    clean energy capacity.

    With 1,081 potential hydroelectricity generation sites


    spread throughout the country's 7000+ islands, it's easy
    to see why the Philippines is part of a growing list of
    nations embracing run-of-river. "Mini-hydro," as some
    call it there, uses generation sizes between 101KW and
    10MW to expand efficient electricity access with
    minimal transmission distances.

      At present, the country has identified a total of 1,025.1


    MW untapped hydropower resource potential. These
    consist of 41 hydropower projects – 10 large capacity
    (924.8 MW) and 31 mini-hydropower (100.3 MW)
    located in Luzon and Mindanao.
      For clearer detail Refer to Attached file
      For clearer detail Refer to Attached file
      Based on information from the Department of Agriculture (DA) and the Department of
    Environment and Natural Resources (DENR), the Philippines could generate substantial
    volumes of residues which can be utilized as energy fuel. Based on geographical consideration
    on biomass supply, there is an abundant supply of bagasse in Regions III, IV, VI and VII.
    Coconut residues abound in Regions IV, VIII, IX and XI while ricehull is abundant in Regions
    II, III, IV and VI.

      At present, biomass technologies utilized in the country vary from the use of bagasse as boiler
    fuel for cogeneration, rice/coconut husks dryers for crop drying, biomass gasifiers for
    mechanical and electrical applications, fuelwood and agriwastes for oven, kiln, furnace and
    cookstoves for cooking and heating purposes. The household sector will remain the largest user
    of these energy forms particularly fuelwood.

      Renewable energy from biomass is targeted to contribute 120 MW to the overall energy self-
    sufficiency target of 60.0 percent in 2010. Initiatives from private sectors provide a good
    indication on the potential of biomass energy development in the country. This is evidenced by
    the 12-MW Cogeneration Plant of JG Summit Holdings, Inc. in Negros Oriental. The said
    cogeneration plant will use the bagasse generated from the sugar milling operations of the
    Kabankalan, Negros Occidental and Manjuyod, Negros Oriental sugar mills and refineries of
    Universal Robina Corporation, one of the subsidiaries of JG Summit Holdings, Inc.

      In the municipalities of San Manuel, Cabatuan and Luna in Isabela province, own-use ricehull
    cogeneration plants are expected to provide an additional power generation capacity of 5 MW
    by 2008. Proponents of these projects are La Suerte Rice Mill, Family Choice Grains
    Processing Center and Golden Season Grains Center.

      On the other hand, by-product from sugar cane industry is providing an option for energy
    resource in the Central Philippines super region. The Central Azucarera de San Antonio in
    Passi, Iloilo has an ongoing pre-commissioning activities on bagasse cogeneration plant with
    15-MW capacity. Likewise, the municipality of Talisay in Negros Occidental through its
    proponent, the First Farmers Holdings, Inc. is 40.0 percent complete in the construction of the
    physical structure of a 30-MW bagasse cogeneration plant. Both cogeneration plants are
    planned to serve the energy requirement of the proponents by 2008 and the excess will be
    distributed through the grid.
      A total of 183.9 MW rice hull and bagasse-fueled co-generations projects distributed over
    the super regions are lined up within the planning period. The Bulacan Biomass-to-Energy
    Project in Bocaue by the Global Green Power Plc (GGP) shall be expected to generate
    additional capacity of 15 MW to the Luzon grid in December 2009. GGP also has three
    other biomass projects – the Panay Biomass Power Project (25 MW), Mindoro Biomass
    Power Project (10 MW), and the Cagayan de Oro Biomass Project (10 MW) – which are
    proposed to be completed in 2010. The Panay and Cagayan de Oro Biomass Projects shall
    be connected to the grid. Capacity additions expected from these biomass indicative
    projects are: 15 MW in 2009, 57 MW in 2010, 50 MW in 2013 and 61.9 MW in 2014. A
    number of these co-generation projects are located in the provinces covered by the North
    Luzon Agribusiness Quadrangle and Central Philippines super regions.
      For clearer detail Refer to Attached file
      For clearer detail Refer to Attached file

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