POLICIES AND PROGRAMS ON RENEWABLE ENERGY

Prospects for Small Scale Clean Development Mechanism

Department of Energy

OUTLINE OUTLINE

1. RE Goals, Policies and Strategies

2. RE Situationer

3. Policies on Small RE Systems

4. RE Incentives

5. RE Potential Projects

Energy Sector ObjectivesEnergy Sector Objectives

1. Ensure sufficient, stable, secure, accessible and reasonably-priced energy supply

2. Pursue cleaner and efficient energy utilization and clean technologies adoption

3. Cultivate strong partnership and collaboration with key partners and stakeholders

4. Empower and protect welfare of various energy publics

Renewable Energy GoalsRenewable Energy Goals

Be the number one geothermal energy producer in the world

Increase RE-based capacity by 100% within the next 10 years (2003-2012)

Be the number one wind energy producer in Southeast Asia

Double hydro capacity by 2012

Expand contribution of biomass, solar and ocean energy

by 100 MW

Increase non-power contribution of RE to the energy mix by 10 MMBFOE in the next ten years

TARGETSTARGETS

RESOURCERESOURCE INSTALLEINSTALLED D

CAPACITY CAPACITY AS OF AS OF 20022002

TARGET TARGET INSTALLEINSTALLE

D D CAPACITYCAPACITY

TOTAL INSTALLED TOTAL INSTALLED CAPACITYCAPACITY

GeothermalGeothermal

HydroHydro

WindWind

Biomass, SolarBiomass, Solar

& others& others

1,9311,931

2,5182,518

00

00

1,2001,200

2,7232,723

255255

101101

3,1313,131

5,2415,241

255255

101101

TotalTotal 4,4494,449 4,2794,279 8,7288,728

ASSUMPTIONSASSUMPTIONS

Enhancement of existing policies and programs

Realization of higher production targets

Establishment of market-driven RE industry

Availability of new international financing schemes (e.g. Clean Development Mechanism (CDM) and Prototype Carbon Fund)

RE Policies and StrategiesRE Policies and Strategies Diversify energy mix in favor of indigenous RE resources

Promote wide-scale use of RE as alternative fuels and technologies

Transform Negros Island as a model of RE development and utilization

Make the Philippines a manufacturing hub for PV cells to facilitate development of local manufacturing industry for RE equipment and components

Encourage greater private sector investments and participation in RE development through market-based incentives

Establish responsive market mechanisms for RE-generated power

Formulate an effective management program for fuelwood utilization with the view of reducing environmental impact

RE SITUATIONERRE SITUATIONER

2002 2001 Percent Share Relative to Total Energy

Change 2002 2001

RENEWABLE 108.8 107.4 1.3 43.4 43.2

17.7 18.0 -1.9 7.0 7.2

Hydro 12.1 12.2 -1.0 4.8 4.9

Biomass 78.8 77.0 2.4 31.4 31.0

Wood/Woodwaste 44.7 43.7 2.3 17.8 17.6

Bagasse 11.2 11.0 2.2 4.5 4.4

Charcoal 5.5 5.4 1.3 2.2 2.2

Agriwaste 17.5 16.9 3.1 7.0 6.8

0.2 0.2 28.3 0.1 0.1

Geothermal

Others

Primary Energy Consumption, 2002 vs. 2001 (in MMBFOE)

RE SITUATIONERRE SITUATIONER

Renewable Energy Share in Total Primary Energy Consumption

0%

20%

40%

60%

80%

100%

Conventional Biomass, Solar, etc. Geothermal Hydro

0%

20%

40%

60%

80%

100%

Geothermal Hydro Biomass Solar Wind Others Conventional

Primary Energy Mix of Selected Countries, Share of Renewables vs. Conventional

RE SITUATIONERRE SITUATIONER

Existing Policies on Small RE Existing Policies on Small RE SystemsSystems

H Y D R O

1. Small hydro - 10 MW and below

- Mini-hydro - 101 kW to 10 MW

2. Large hydro - more than 10 MW

- Micro-hydro - 100 kW and below

RE INCENTIVESRE INCENTIVES

RA 7156 – Mini Hydro Law

Special privilege tax rates – Tax payable by developers/grantees to develop potential sites for hydroelectric power and to generate, transmit and sell electric power shall be 2 percent of their gross receipts

Income tax holiday for seven (7) years from start of commercial operations

Tax and duty free importation of machinery, equipment and materials- Exemption from payment of tariff duties and value-added tax (VAT) on importation of machinery and equipment (within seven (7) years from date of awarding of contract)

RE INCENTIVESRE INCENTIVES

Tax credit on domestic capital equipment - For developers who buy machinery, equipment, materials and parts from a local manufacturers, tax credit is given equivalent to 100 percent of value of VAT and custom duties that would have been paid to import said machinery, equipment, etc.

Special realty tax rates on equipment and machinery – Realty and other taxes on civil works, equipment, machinery and other improvements of a registered mini-hydroelectric power developer shall not exceed 2.5 percent of their original cost

VAT Exemption - Exemption from payment of 10 percent VAT on gross receipts derived from sale of electric power whether wheeled via the NPC grid or electric utility lines

RA 7156 – Mini Hydro Law

RE INCENTIVESRE INCENTIVES

EO 462 (1997) as amended by EO 232 (2000)- OSW

The government shall waive the signature bonus on the first project to reduce pre-operating cost burden on the OSW production-sharing contractor.

Payment of production bonus shall be applied only after the project has fully recovered its pre-operating expenses.

OSW developers shall be allowed to charge the cost of assessment, field verification and feasibility studies of other sites to its current commercial projects.

The government shall facilitate developers in obtaining all applicable fiscal and non-fiscal incentives, including registration as pioneer industry under the Board of Investments (BOI) and securing of access to lands and offshore areas where OSW resources shall be harnessed.

RE INCENTIVESRE INCENTIVES

PD 1442 : An Act to Promote the Exploration & Development Of Geothermal Resources

Recovery of operating expenses not exceeding 90% of the gross value in any year with carry-forward of unrecovered cost

Service fee of up to 40% of the net proceeds Exemption from all taxes except income tax

Exemption from payment of tariff duties and compensating tax on the importation of machinery, equipment, spare parts and all materials for geothermal operations

Depreciation of capital equipment over a ten (10) year period

Easy repatriation of capital investments and remittance of earnings

RE INCENTIVESRE INCENTIVES

Proposed RE Bill

Existing fiscal incentives strengthened/additional incentives

Non-fiscal incentives – priority dispatch, ancillary services and interconnection & wheeling charges

Incentives

RE RE

PPRROOJJEECCTTSS

List of Potential Hydropower Resources for Power Generation

NAME CLASSIFICATION INSTALLED COMMISSIONING LOCATIONCAPACITY (MW) YEAR

Luzon 1,791.0 San Roque HEP* Large Hydro 419.4 2003 PangasinanKalayaan PS HEP* Large Hydro 400.0 2004 Laguna

Cantigas Mini-Hydro 0.9 2004 RomblonBatang-Batang MHP Mini-Hydro 3.5 2005 Palawan

Kapipian MHP Mini-Hydro 3.0 2005 CatanduanesKanan HEP Large Hydro 113.0 2007 QuezonColasi MHP Mini-Hydro 1.0 2007 Camarines NorteCatuiran HEP Large Hydro 24.0 2007 Mindoro OrientalDugui MHP Mini-Hydro 4.0 2008 CatanduanesLangogan MHP Mini-Hydro 6.8 2008 PalawanAddalam HEP Large Hydro 46.0 2009 QuirinoAglubang HEP Large Hydro 13.6 2009 Mindoro OrientalDiduyun HEP Large Hydro 332.0 2010 QuirinoAgbulo HEP Large Hydro 360.0 2011 ApayaoHitoma MHP Mini-Hydro 3.0 2011 CatanduanesAbuan HEP Large Hydro 60.0 2012 IsabelaCabinbin MHP Mini-Hydro 0.8 2012 Palawan

Visayas 126.2 Pacuan HEP Large Hydro 33.0 2006 Negros OrientalAmandaraga MHP Mini-Hydro 4.0 2006 Eastern SamarTimbaban HEP Large Hydro 29.0 2008 AklanSicopong HEP Large Hydro 17.8 2008 Negros OrientalBugtong MHP Mini-Hydro 1.0 2008 SamarIgbolo MHP Mini-Hydro 4.0 2009 Iloilo CitySiaton MHP Mini-Hydro 5.4 2010 Negros OrientalVillasiga HEP Large Hydro 32.0 2013 Antique

Mindanao 806.1 Hinubasan Mini-Hydro 0.4

2004 Dinagat IslandLower Dapitan MHP Mini-Hydro 3.8 2005 Zamboanga del Norte

Liangan HEP Large Hydro 11.9 2006 Lanao del NorteTaguibo MHP Mini-Hydro 7.0 2006 Agusan del NorteLake Mainit HEP Large Hydro 22.0 2007 Agusan del NorteMiddle Dapitan MHP Mini-Hydro 4.4 2007 Zamboanga del Norte

Tagoloan HEP Large Hydro 68.0 2009 BukidnonLibungan MHP Mini-Hydro 10.0 2009 North Cotabato

Agus III HEP Large Hydro 225.0 2010 Lanao del NorteUpper Dapitan MHP Mini-Hydro 3.6 2010 Zamboanga del NorteBulanog-Batang HEP Large Hydro 150.0 2011 Bukidnon

Pulangi V HEP Large Hydro 300.0 2012 North Cotabato

TOTAL 2,723.3

RE POTENTIAL PROJECTSRE POTENTIAL PROJECTS

List of Identified Wind Resources for Power Generation 

NAME INSTALLED COMMISSIONING LOCATIONCAPACITY (MW) YEAR

Luzon 225Wind 25 2004 Ilocos Norte Wind 40 2005 Ilocos Norte Wind 2 2006 RomblonWind 3 2006 MarinduqueWind 35 2007 Ilocos Norte Wind 80 2007 Ilocos Norte Wind 12 2007 PalawanWind 3 2007 CatanduanesWind 15 2008 Mindoro OrientalWind 5 2008 Mindoro OccidentalWind 4 2009 Masbate

Visayas 30Wind 30 2006 Negros Occidental

TOTAL 255

R E POTENTIAL PROJECTSR E POTENTIAL PROJECTS

List of Potential Biomass, Solar and Ocean Resources for Power Generation 

NAME INSTALLED COMMISSIONING LOCATIONCAPACITY (MW) YEAR

Luzon 40Biomass (Rice Husk) 40 2010 Bulacan

Visayas 50Biomass (Cogen) 50 2005 Negros Occidental

Mindanao 11Centralized Solar PV 1 2005 Cagayan de Oro Ocean Thermal 10 2007 South Cotabato

TOTAL 101

R E POTENTIAL PROJECTSR E POTENTIAL PROJECTSList of Potential Geothermal Resources for Power Generation

 

R E POTENTIAL PROJECTSR E POTENTIAL PROJECTS

Geothermal for Non-Power Applications 

Enhancement of the self-reliant multi-crop dryer project in Manito, Albay

Multi-crop dryer in geothermal sites in Leyte

In close coordination with the Department of Tourism, promote hot spring areas for possible spa resort development