Energy to the Philippines
Trends and opportunities
The Philippines is a vast archipelago with a significant proportion of the community living in rural and remote areas. Energy supply is hampered by limited and poor infrastructure provision, while the country remains reliant upon imported energy (primarily oil) for its power generation. As a result electricity rates are the second-highest in Asia and the ninth-highest globally.
A growing demand for power has led several local companies, particularly those represented by some of the Philippines’ wealthiest families, to increase their investment in energy generation as New Independent Power Producers (IPPs).
In response to supply issues, the Department of Energy (DOE) developed the 2012-2030 Philippine Energy Plan. With a focus on finding ways to ensure self-sufficiency in the form of renewable and indigenous supplies by 2030, the DOE set a number of targets, including the electrification of 90 per cent of all homes by 2017. Other objectives include tripling the country’s renewable energy capacity, having one third of all public utility vehicles running on alternative fuels and implementing energy efficiency programs.
The Philippines is well placed to increase its levels of renewable energy. It has a Wind Resource Potential of 700MW, the highest capacity in South-East Asia. It is already the second largest producer of geothermal energy in the world. The Government has also developed a significant body of environmental legislation and built the National Renewable Energy Program (NREP) to encourage investment in renewable technologies for domestic consumption as well as export.
Other initiatives underway include the implementation of mandated renewable energy generation by power suppliers and enabling end-users to feed electricity generated from renewable sources back into the grid.
(Source: KPMG, The Energy Report Philippines, 2013-2014 Edition)
International donor agencies have been assisting the Philippines to develop its renewable energy (RE) resources through several capacity-building programs and by carrying out resource assessments. Opportunities exist for developers of RE projects and service providers of geothermal, biomass, hydropower, solar and wind generation projects in on-grid and off-grid areas.
During Gloria Arroyo’s presidency, more than two hundred energy service contracts were signed. Most of the companies involved do not have the expertise or technology to fulfil their obligations. In some cases they have no experience in the sector. Therefore, there are opportunities for Australian companies to partner with, or provide consultancy services to these companies. There is also scope for Australian businesses with engineering expertise or new products and technologies to provide material assistance.
The energy sector is dominated by local conglomerates. Companies from the United States, Britain, Germany, Korea and Japan are actively pursuing projects with local partners across the energy sector.
Tariffs, Regulations and Customs
Net Metering Rules
The rules enabling the Net-metering Program for Renewable Energy, including the Net-metering Interconnection Standards, were issued on July 1, 2013 by the Energy Regulatory Commission (ERC). In 2014, the Manila Electric Co. (Meralo), the country’s biggest power distributor Metro Manila and the Visayan Electric Co. (VECO) in Metro Cebu, have been processing net-metering applications allowing their customers to generate electricity from renewable energy sources like solar, wind and biomass not exceeding 100 kilowatts. The net metering program has been encouraging consumers to install solar panels in their homes. This is to save on power cost at the same time decreasing demand from the grid which has been experiencing volatile power supply.
Feed in Tariffs (FiTs)
The DOE increased the installation cap for solar plants from 50 to 500 megawatts (MW) in April 30, 2014. The higher threshold will allow more developers of solar power to apply for the feed-in-tariff (FIT) incentive. The installation cap for wind is pegged at 200 MW but the number of proposed projects has been increasing, thus, DOE is now looking to increase the cap similar to solar.
The Energy Regulatory Commission (ERC) issued a Provisional Authority (PA) to the National Transmission Corporation (TRANSCO) on 28 October 2014 to implement the Feed-in Tariff Allowance (FIT-All) rate of US$0.00090/kWh (PhP0.0406/kWh). This was effective as of January 2015 for the billing of all On-Grid electricity consumers. The PA given to TRANSCO will allow it to perform its duties as a fund administrator and pay the Renewable Energy (RE) Developers. The FIT-All will be charged to all electricity consumers, as part of government efforts to develop the renewable energy sector. The FIT-All will serve as an incentive to renewable energy investors to develop wind, solar, biomass and hydropower projects in the Philippines. The FIT-All comes at the right time as the country is struggling with a looming power crisis in 2015.
Marketing your products and services
It is strongly recommended that Australian companies partner with local Philippine companies when pursuing opportunities across the energy sector.
Austrade Manila is able to provide additional information and background on specific energy segments and can also help to identify local partners for interested Australian companies.
Links and industry contacts
Department of Energy (DOE)
Board of Investments
Department of Trade and Industry (DTI)
Energy Regulatory Commission (ERC)
National Electrification Administration (NEA)
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
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