Challenges and Incentives for Renewable Energy Project
Philippine Landfill Gas Forum Workshop
Eastwood Richmonde Hotel, Q.C.
21 February 2012
Ruby B. de Guzman
OIC-Chief
Biomass Energy Management Division
• National Renewable Energy Outlook (2011-2030)
• RE Policy Framework
• Incentives for RE Project
• Challenges
• The Way Forward
• Registered Landfill Gas Projects under R.A. 9513
OUTLINE OF PRESENTATION
2009 RE POLICY FRAMEWORK - NREP
• Increase RE-based capacity by 200% within the next 20 years
• Increase non-power contribution of RE to the energy mix by 10 MMBFOE in the next ten years
• Be the number one geothermal energy producer in the world (additional 1,495 MW)
• Be the number one wind energy producer in Southeast Asia (up to 2,500 MW)
• Double hydro capacity (additional 5,400 MW)
• Expand contribution of:
Biomass - 265 MW
Solar - at least 280 MW Ocean energy - at least 10 MW
INCENTIVES FOR RENEWABLE ENERGY PROJECT Non-fiscal Incentives
• Renewable Portfolio Standard (RPS)
– Mandatory (percentage) utilization of RE generation system in on-grid systems
• Feed-in Tariff
– Priority connection to the grid
– Priority purchase and transmission of and payment for by grid system operators
– Fixed tariff for at least 20 years
– To be applied for generation utilized in complying with RPS
INCENTIVES FOR RENEWABLE ENERGY PROJECT Non-fiscal Incentives
• Green Energy Option
– End-users’ option to purchase electricity from RE facilities (open access)
• Net Metering
– Connection / sale of customers’ RE generation to the grid
• Renewable Energy Market
– Creation of separate RE market
– Establishment of RE Registrar for certification of RE generation which can be used for
RPS compliance
INCENTIVES FOR RENEWABLE ENERGY PROJECT Non-fiscal Incentives
• Transmission and Distribution System – Interconnection with the grid system
• Intermittent RE Resources – Priority (“must”) dispatch
• Off-grid RE Development
– Mandated minimum percentage of RE generation – Eligible for RE Certificates
INCENTIVES FOR RENEWABLE ENERGY PROJECT Fiscal Incentives for RE Resource Developers
• Government Share
– 1% of gross income on RE development projects, except geothermal resources
– 1.5% for geothermal resources
– Exemptions: biomass and micro-scale projects for communal purposes and non-commercial
operations (up to 100kW)
• Income Tax Holiday (ITH)
– 7-year tax holiday, including new
investments but not to exceed 3 times
INCENTIVES FOR RENEWABLE ENERGY PROJECT Fiscal Incentives for RE Resource Developers
• Duty-free Importation
– 10-year exemption from tariff duties
• Special Realty Tax Rate on Equipment and Machinery
• Net Operating Loss Carry Over
– 3-year losses carried over 7 years, except those resulting from availment of other incentives
• Corporate Tax Rate
– 10% of net taxable income after ITH – Not to exceed 1.5% of original cost
INCENTIVES FOR RENEWABLE ENERGY PROJECT Fiscal Incentives for RE Resource Developers
• Tax Exemption on Carbon Credits
• Zero Percent Value Added Tax(VAT) Rate
– 0% on sale of fuel or power generated from RE sources
• Cash Incentive for Missionary Electrification – 50% of the universal charge due
INCENTIVES FOR RENEWABLE ENERGY PROJECT Fiscal Incentives for RE Commercialization
• Tax and Duty-free Importation of Components, Parts and Materials
– Exemption from importation tariff and duties and value added tax
• Tax Credit on Domestic Capital Components, Parts and Materials
– 100% equivalent of custom duties and value added tax
INCENTIVES FOR RENEWABLE ENERGY PROJECT Fiscal Incentives for RE Commercialization
• Income Tax Holiday
– 7-year tax exemption
• Zero-rated Value Added Tax Transactions
– 0% VAT on transactions with local suppliers of goods, properties and services
INCENTIVES FOR RENEWABLE ENERGY PROJECT
Other Incentives
• For Farmers Engaged in Plantation of Biomass Resources
– 10-year Duty-free importation and value added tax exemption on all types of agricultural inputs,
equipment and machinery
• Tax Rebate for Purchase of RE Components
– RE equipment for residential, industrial and community use
CHALLENGES
• Integrating RE into grid operations
• Reducing red tape on promoting RE investments
• Regulatory environment at the local government level
• Social acceptability
THE WAY FORWARD
• Setting of Renewable Portfolio Standards (RPS) and Feed-In-Tariff (FIT) Rates
• Formulation of Guidelines on other RE Policy
Mechanism (Net Metering, Green Energy Option, etc.)
• Establish Energy Investment Coordinating Center and Linkages with other Government Regulatory Agencies - NEDA PPP One-Stop-Shop (DTI/BOI/DOF/BIR/BOC) - DENR/EMB, FMB, LMB, NSWMC
- NWRB/NCIP
THE WAY FORWARD
• Resource Inventory and Establishment of RE Database
• Capacity Building/information, Education and Communication Campaigns
• Investment Missions/Business Meetings
REGISTERED LANDFILL GAS PROJECTS UNDER R.A. 9513
• 4.0 MW Bacavalley Energy, Inc. (San Pedro, Laguna)
• 14.8 MW Montalban Methane Power Corporation (Rodriguez, Rizal)
• 1.2 MW Pangea Green Energy Philippines, Inc.
(Payatas, Quezon City)
Thank You and Mabuhay………..
www.doe.gov.ph
