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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
1 
First Regular Session 
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S E N A T E  
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Introduced by Senator Manuel “Lit”’ M. Lapid 
EXPLANATORY NOTE 
One of the most critical problems besetting the Philippine energy sector is the 
high cost of energy, which is directly caused by the country’s need to source its energy 
from “traditional” sources, such as imported fuel. The meteoric rise of the price per 
barrel of crude oil is caused by the growing global demand for energy and the vagaries 
of geopolitics within the oil-producing regions. Thus, importers such as the Philippines 
have no control over the fluctuation of these prices. 
Undoubtedly, the high cost of energy has a negative effect on the economy. The 
escalating cost of imported fuel dampens trade and investments, which in turn, 
depresses employment levels. Foreign exchange spent on imported fuel adds a fiscal 
strain on government and lessens funds available for public services. Financial costs, 
however, are not the only problem brought about by overdependence on fuel. Air 
pollution caused by these traditional sources of energy has a negative impact on the 
environment and public health. 
It is therefore necessary for us to develop alternative sources of energy. In this 
respect, renewable energy presents itself as a solution. Renewable energy includes 
resources such as biomass, solar, wind and other indigenous, inexhaustible and cleaner 
energy sources. With the country’s ratification of the Kyoto Protocol by the Philippine 
Senate, the prioritization of the use of renewable energy resources becomes more 
urgent. 
In order to build our capabilities in the use of these resources, it is vital that a 
Renewable Energy Bill is passed which will promote the development, utilization and 
commercialization of renewable energy. This bill proposes to introduce fiscal and non- 
fiscal incentives that will encourage private sector participation in this area, establish a 
renewable energy market, and institutionalize the use of renewable energy systems. 
This Renewable Energy Bill is a timely strategic initiative that will foster 
sustainable growth, energy independence, and economic security for the country. 
Early approval of this bill is earnestly sought. 0 
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FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
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Introduced by Senator Manuel “Lito” M. Lapid 
AN ACT 
TO FURTHER PROMOTE THE DEVELOPMENT, UTILIZATION AND 
COMMERClALlZATlON OF RENEWABLE ENEROY RESOURCES AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Phillppines 
in Congress assembled: 
SECTION 1. 
Short Title, - This act shall be known as “Renewable 
Energy Act of 2007”. 
SEC. 2. 
(a) 
Declaration of Policy. - It is the policy of the State to: 
Promote the development of renewable energy resources to further 
reduce the country’s reliance on generation systems powered by imported fuels to 
minimize exposure of the economy to price fluctuations in the international markets, the 
effects of which spiral down to almost all sectors of the economy; 
Increase the utilization of renewable energy by institutionalizing its use, 
including the development of national and focal capabilities in the use of renewable 
energy systems, by providing fiscal and non-fiscal incentives; and 
(c) 
Apply full cost accounting principle in the generation of electricity to reflect 
all the costs inherent in power generation. 
SEC. 3. 
Scope. - This Act shall establish the framework for the 
advancement and accelerated development of renewable energy resources, the grant 
of fiscal and non-fiscal incentives to all Renewable Energy activities; and the program to 
increase its utilization. 
SEC. 4. 
Definition of Terms. -As used in this Act, the following terms shall 
“Biomass Energy Systems” refer to energy systems, which use biomass 
resources to produce heat, steam, mechanical power or electricity through either 
thermo-chemical, biochemical or physico-chemical processes. 
“Biomass Resources” refer to natural or processed plants and plant 
materials, trees, crop residues, wood and bark residues, and animal manure or any 
organic or biodegradable matter that can be used in bioconversion process. 
(b) 
mean: 
(a) 
(b) 
1 


(c) 
(d) 
“Board of Investments” or “BO/”‘ refers to an attached agency of the 
Department of Trade and Industry created under Republic Act No. 5186, as amended. 
“Co-generation Systems” refer to facilities which produce electrical 
and/or mechanical energy and forms of useful thermal energy such as heat or steam 
which are used for industrial, commercial heating or cooling purposes through the 
sequential use of energy. 
“Depantment of Energy” or “DOE” refers to the government agency 
created pursuant to Republic Act No. 7638 whose functions are expanded in R.A. 9136 
and further expanded in this Act. 
”Department of Environment and Natural Resources” or “DENR” 
refers to the government agency created pursuant to Executive Order No. 192. 
“Department of Finance” or “DOF” refers to the government agency 
created pursuant to Executive Order No. 127, as amended. 
“Department of Science and Technology” or “DOST” refers to the 
iovernment agency created pursuant to Executive Order No. 128. 
(i) 
“Department of Trade and hdustry‘‘ or “DT‘” refers to the government 
agency created pursuant to Executive Order No. 133. 
4) 
“Distributed Generation” refers to a system of small generation entities 
supplying directly to the distribution grid, any one of which shall not exceed 100 kw in 
capacity. 
(k) 
“Distribution of Electricity” refers to the conveyance of electric power 
by a Distribution Utility through its distribution system pursuant to the provision of 
Republic Act No. 9136 and its implementing rules and regulations. 
(I) 
“Distribution UtiMy” refers to any electric cooperative, private 
corporation, government-owned utility or existing local government unit which has an 
exclusive franchise to operate a distribution system in accordance with its franchise and 
Republic Act No. 9136. 
(m) 
“Energy Regulatory Commission’’ or “ERC” refers to the independent 
quasi-judicial regulatory agency created pursuant to Republic Act No. 91 36. 
(n) 
‘%eneration Company” refers to any person or entity authorized by the 
Energy Regulatory Commission (ERC) to operate facilities used in the generation of 
electricity. 
(0) “Generation Facility” refers to a facility for the production of electricity 
andlor thermal energy such as but not limited to steam, hot or cold water. 
(p) 
“Geothermal Energy” refers to all geothermal fluids whether existing 
naturally or formed by the artificial introduction of fluids into naturally hot formation, heat 
energy in the earth, and any by-product derived from them. 
(4) 
“Geothermal Energy Systems” refer to machines or other equipment 
that converts geothermal energy into useful power. 
(r) 
“Geothermal Resources” refer to mineral resources, classified as 
renewable energy resource, in the form of (i) all products of geothermal processes, 
embracing indigenous steam, hot water and hot brines; (ii) steam and other gases, hot 
(e) 
(9 
(9) 
(h) 
2 


water and hot brines resulting from water, gas, or other fluids artificially introduced into 
geothermal formations; (iii) heat or associated energy found in geothermal formations; 
and (iv) any by-product derived from them. 
“Government Share” refers to the amount due the National Government 
and Local Government Units from the exploitation, development and utilization of 
naturally-occurring renewable energy resources. 
“Grid” refers to the high voltage backbone system of interconnected 
transmission lines, substations and related facilities, located in each of Luzon, Visayas, 
and Mindanao, or as may othetwise be determined by the ERC in accordance with the 
implementing rules and regulations of Republic Act No. 9136. 
“Hybrid Systems” refer to any power or energy generation facilities 
which make use of two or more types of technologies utilizing both conventional andlor 
renewable fuel sources, such as but not limited to integrated windldiesel systems, 
integrated solar wind systems, biomasslfossil fuel systems, hydrofiossil fuel systems, 
integrated solar biomass systems, integrated windlfossil fuel systems, with a minimum 
of ten (IO) megawatts or ten percent (10%) of the annual energy output provided by the 
Renewable Energy Systems components of the hybrid systems, whichever is lower. 
“Hydroelectric Power Systems” or ”Hydropower Systems” refer to 
water-based energy systems which produce electricity by utilizing the kinetic energy of 
falling or running water to turn a turbine generator. 
“Hydroelectric Power Development” or “Hydropower Development” 
refers to the construction and installation of a hydroelectric power-generating plant and 
its auxiliary facilities, such as diversion structure, headrace, penstock, substation, 
transmission, and machine shop, among others. 
“Hydroelectric Power Resources” or “Hydropower Resources” refer 
to water resources found technically feasible for development of hydropower projects, 
which include rivers, lakes, waterfalls, irrigation canals, springs, ponds and other water 
bodies. 
(s) 
(t) 
(u) 
(v) 
(w) 
(x) 
. 
“Market Operator” refers to an autonomous group, constituted by the 
DOE, with equitable representation from electric power industry participants, that 
undertake the preparatory work and initial operation of the wholesale electricity spot 
market. 
“Missionary Electrification” refers to the provision of basic electricity 
service in unviable areas with the aim of bringing the operations in these areas to 
viability levels. 
(aa) 
“National Power Corporation” or “NPC” refers to the government 
corporation created under Republic Act No. 6395, as amended. 
(bb) 
“National Transmission Corporation” or “TRANSCO” refers to the 
corporation created pursuant to Republic Act No. 9136 responsible for the planning, 
construction, and centralized operation and maintenance of high voltage transmission 
facilities, including grid interconnection and ancillary services. 
(cc) 
“Net Metering” refers to a system, appropriate for distributed generation, 
in which a distribution grid user has a two-way connection to the grid and is only 
charged for his net electricity consumption and is credited for any overall contribution to 
the electricity grid. 
(y) 
(z) 
3 


(dd) 
“Ocean Energy Systems” refer to energy systems which convert ocean 
or tidal current, ocean thermal gradient or wave energy into electrical or mechanical 
energy. 
(ee) 
“Off-Grid Systems” refer to electrical systems not connected to the wires 
and related facilities of any Mini-Grid System or the On-Grid Systems of the Philippines. 
(ff) 
“On-Grid Systems” refer to electrical systems composed of 
interconnected transmission lines, distribution lines, substations and related facilities for 
the purpose of conveyance of bulk power on the Grid of the Philippines. 
“Renewable Energy (Systems) Developers” or “RE Developers” refer 
to individualk or a group of individuals formed in accordance with existing Philippine 
Lqws engaged in the exploration, development and utilization of renewable energy 
resources and actual operation of renewable energy systemslfacilities. 
“Renewable Energy Policy Framework” or “REPF” refers to the long- 
term policy developed by the DOE, which identifies among others, the goals and targets 
for the development and utilization of renewable energy in the country. 
“Renewable Energy Service (Operating) Contract’’ or “RE Contract” 
refers to the service agreement between the Government, thru the Department of 
Energy, and RE Developer over a period in which the RE Developer has the exclusive 
right to a particular RE area for exploration and development. The RE Contract shall be 
divided into two (2) stages - the predevelopment stage and the development/ 
commercial stage. The prelimhay assessment and feasibility study up to financial 
costing shall refer to the pre-development stage. The construction and installation of 
facilities up to operation phase shall refer to the development stage. 
“Renewable Energy Resources” or “RE Resources” refer to energy 
resources that do not have an upper limit on the total quantity to be used. Such 
resources are renewable on a regular basis, and whose renewal rate is relatively rapid 
to consider availability over an indefinite period of time. These include, among others, 
biomass, solar, wind, hydropower, geothermal, and ocean energy, and other emerging 
energy sources using technologies. 
(kk) 
“Renewable Energy Systems” or “REF” refer to energy systems, which 
convert renewable energy resources into useful energy forms, like electrical, 
mechanical, etc. 
(11) 
“Republic Act No. 9136” or “Electric Power Industry Reform Act of 
2001” refers to the law mandating the restructuring of the electric power sector and the 
privatization of the NPC. 
(mm) “Rural Electrification” refers to the delivery of basic electricity services, 
consisting of power generation, sub-transmission, andlor extension of associated power 
delivery system that would bring about important social and economic benefits to the 
countryside. 
“Solar Energy” refers to the energy derived from solar radiation that can 
be converted into useful thermal or electrical energy. 
“Solar Energy Systems” refer to energy systems which convert solar 
energy into thermal or electrical energy. 
(gg) 
(hh) 
(ii) 
(jj) 
(nn) 
* 
(00) 
4 


(pp) 
“Small Power Utilities Group” or “SPUG” refers to the functional unit of 
the National Power Corporation mandated under Republic Act No. 9136 to pursue 
missionary electrification function. 
(qq) 
“Transmission of Electricity” refers to the conveyance of electricity 
through the high voltage backbone system. 
(rr) 
“Wind Energy” refers to the energy that can be derived from wind that is 
converted into useful electrical or mechanical energy. 
(ss) 
“Wind Energy Systems” refer to the machines or other related 
equipment that convert wind energy into useful electrical or mechanical energy. 
“Wholesale Electricity Spot Market” or “ WESW” refers to the wholesale 
electricity spot market to be created pursuant to Republic Act No. 9136. 
Lead Agency. - The DOE shall be the lead agency mandated to 
implement the provisions of this Act. 
Renewable Portfolio Standard (RPS). - All stakeholders in the 
electric power industry shall contribute to the growth of the renewable energy market of 
the country. To provide impetus in the acknowledged market-driven electric power 
industry, an RPS is hereby imposed on all generation companies. Towards this end, the 
National Renewable Energy Board, under Section 19 of this Act, shall promulgate the 
RPS Rules on a grid-to-grid basis that shall set the minimum percentage that all 
generation companies shall he required to source from eligible Renewable Energy 
Resources within two (2) years from the effectivity of this Act. 
Thereafter, the DOE shall, in consultation with the generation companies, set the 
minimum increase per year but shall, in no case be less than one percent (1 %) per year 
dver the next ten (IO) years. The mandate may be complied with by either directly 
generating from renewable sources, contracting for energy sourced from renewable 
energy facilities, or trading for Renewable Energy in the Wholesale Electricity Spot 
Market (WESM). 
Renewable Energy Market (REM). - To facilitate compliance with 
Sec. 6 of this Act, the Department of Energy (DOE) shall, in consultation with the Market 
Operator of the WESM and the National Renewable Energy Board, promulgate the 
rules for the establishment and operation of a Renewable Energy Market, as a sub- 
market under the WESM. 
The DOE shall also establish or designate a Renewable Energy Registrar that 
shall issue, keep and verify Renewable Energy Certificates corresponding to energy 
generated from eligible Renewable Energy resources. Such certificates may be used for 
compliance with the RPS. 
Full Cost Accounting. - The DOE shall spearhead a multi-agency 
effort that shall develop the full cost accounting of the generation of electricity from 
Renewable Energy. It shall require all RE-based generators to account for all the 
economic, environmental, health and other costs associated with or resulting from the 
production of electricity. 
The DOE shall, in collaboration with the RE developers, develop a framework to 
reflect the true cost of power generation, which shall he implemented gradually, taking 
into consideration the potential impact to the end users of electricity. 
(tt) 
SEC. 5. 
SEC. 6. 
SEC. 7. 
SEC. 8. 
5 


SEC. 9. 
Green Energy Option, - A Green Energy Option program which 
provides end-users the option to choose renewable energy resources, shall be made 
available to all end-users. 
Towards this end, the DOE shall, in collaboration with the National Renewable 
Energy Board, cause the modification of any Implementing Rules and Regulations and 
WSM Rule or any other Rule or Regulation. 
Upon the determination of the DOE of its technical viability, end users with a 
monthly average of at least IOOkW may directly contract for RE based energy. 
Consistent herewith, the National Transmission Corporation, the Distribution Utilities, 
the Market Operator and all relevant parties are hereby mandated to provide the 
mechanisms for the physical connection and commercial arrangements necessary to 
ensure the success of the Green Energy Option. 
SEC. IO. 
Net-metering and Distributed Generation for Renewable 
Energy. - The distribution utilities shall, upon request and subject to technical 
considerations and without discrimination, enter into net-metering agreements with 
qualified distribution grid users up to a distributed generation market share of one 
percent (1%) of peak distribution grid demand. 
To qualify, the power that a distribution grid user must generate from renewable 
sources, shall be less than 1OOkw in peak capacity, and shall meet any specific 
regulation, which may be issued by the DOE, in consultation with electric power industry 
participants, within one (1) year upon the effectivity of this Act. 
The distribution utility shall charge qualified users their net energy consumption 
at the standard retail rate. The distribution utility shall credit net contributors at the 
prevailing bulk generation rate. The distribution utility shall be entitled to any renewable 
energy production certificate resulting from RE distributed generation for sale or use in 
the RPS. 
Consistent herewith, the National Transmission Corporation, the Distribution 
Utilities, the Market Operator and all relevant parties are hereby mandated to provide 
the mechanisms for the physical connection and commercial arrangements necessary 
to ensure the success of the Net-metering and Distributed Generation for Renewable 
Energy program. 
SEC. 11. 
Off-Grid Areas. - In the performance of its mandate to provide 
missionary electrification, the SPUG, successors-in-interest andlor qualified third party 
in off-grid areas shall, within two (2) years from the effectivity of this Act, source a 
minimum percentage of its total annual generation from available RE resources in the 
area concerned, as may be determined by the DOE through its Renewable Energy 
Policy Framework. 
As used in this Act, successors-in-interest refers to an entity deemed technically 
and financially capable to servehake over existing NPC-SPUG areas, through open and 
competitive bidding. 
Government Share. - The government share on RE development 
projects shall be equal to at least one and one-half percent (1.5%) of the gross 
proceeds for all RE resources except for geothermal which shall be at least two percent 
(2%) of the gross proceeds. 
Compliance with Environmental Regulations. - All renewable 
energy explorations, development, utilization, and RES operations shall be conducted in 
SEC. 12. 
SEC. 13. 
6 


accordance with existing environmental regulations as prescribed by the DENR andlor 
any other government agency. 
Incentives for Renewable Enegy Projects and Activities, - RE 
developers of renewable energy facilities, including hybrid systems, in proportion to their 
RE component, for both power and non-power applications, as duly certified by the 
DOE, shall be entitled to the following privileges: 
Tax Zero and Duty-free Importation of RE Machinery, Equipment and 
Materials. -Within the first ten (IO) years of an RE operating contract, importation of 
machinery and equipment, and materials and parts thereof, including its control and 
communication equipment, shall not be subject to tariff duties, and value-added tax: 
Provided, however, That the said machinery, equipment, materials and parts are: 
(i) 
not manufactured neither domestically nor locally available in 
reasonable quantity and quality: 
(ii) 
directly and actually needed and used exclusively in the RE 
facilities for transformation into energy, and transmission of electric 
energy to the point of use: and 
covered by shipping documents in the name of the duly registered 
Operator to whom the shipment will be directly delivered by 
customs authorities. 
Provided further, That the approval of the DOE is obtained before the importation 
of such machinery, equipment, materials and parts are made; 
Approval of the DOE must be secured before any sale, transfer or disposition of 
the imported capital equipment, machinery or spare parts is made: Provided, That if 
such sale, transfer or disposition is made within the first five (5) years from the date of 
importation, any of the following conditions must be present: 
If made to another RE developer enjoying tax and duty exemption on 
imported capital equipment; 
If made to another RE developer, upon payment of any taxes and duties 
due on the net book value of the capital equipment to be sold; 
Exportation of the capital equipment, machinery, spare parts or source 
document or those required for RE development: and 
For reasons of proven technical obsolescence. 
SEC. 14. 
A. 
(iii) 
(1) 
(2) 
(3) 
(4) 
When the aforementioned sale, transfer or disposition is made under any of the 
conditions provided for in the foregoing paragraphs other than paragraph (2), the RE 
developer shall not pay the taxes and duties waived on such items: fiuvided furfher, 
That if the RE developer sells, transfers or disposes the aforementioned imported items 
without prior approval within five years from the date of importation, the RE developer 
and the vendee, transferee, or assignee shall be solidarily liable to pay twice the 
amount of tax and duty exemption given it: Provided finally, That even if the sale, 
transfer or disposition of the capital equipment, machinery or spare parts is approved 
after five years from the date of importation, the RE developer is still liable to pay the 
taxes and duties based on the net book value of the capital equipment, machinery or 
spare parts if it has violated any of its registration terms and conditions. Othewise, it 
shall no longer be subject to the payment of the taxes and duties waived thereon. 
7 


B. 
Tax Credit on Domestic Capital Equipment and Services. - A  tax credit 
equivalent to one hundred percent (100%) of the value of the value-added tax and 
custom duties that were paid on the RE machinery equipment, materials and parts had 
these items been imported shall be given to a RE operating contract holder who 
purchases machinery, equipment, materials and parts from a domestic manufacturer for 
purposes set forth in this Act: Provided, That prior approval by the DOE was obtained 
by the local manufacturer: Provided further, That the acquisition of such machinery, 
equipment, and parts shall be made within the validity of the RE operating contract; 
Special Realty Tax Rates on Equipment and Machinery. - Any law to 
the contrary notwithstanding, realty and other taxes on civil works, equipment, 
machinery, and other improvements of a registered RE developer actually and 
exclusively used for RES facilities shall not exceed two and a half percent (2.5%) of 
their original cost; 
D. 
Income Tax Holiday and Exemption. - For the first six (6) years of its 
commercial operations, the RE operating contract holder shall be exempt from income 
taxes levied by the National Government: Provided, That the RE developer complies 
with the following: (1) large capital investments or sizeable employment generation, or 
(2) use high level of technology, or (3) located in less developed areas as defined by the 
NEB. 
Additional investments in the project shall be entitled to income tax holiday 
equivalent to such investment is made in the same project, upon approval by the DOE: 
Provided, That the entitlement period for additional investments shall not exceed three 
times the period of the initial availment of the ITH. 
The Bureau of Internal Revenue (SIR) shall require a RE developer availing of 
the ITH or NOLCO to secure a certificate of eligibility from the DOE before filing an 
official copy of its Income Tax Return (ITR) with the BOI. 
Failure to secure certification andlor file the ITH or NOLCO availment for 
validation by the BO1 within forty-five (45) days from the last day of statutory filing date 
for ITR shall cause the forfeiture of the availment for the taxable period. 
Net Operating Loss Carryover (NOLCO). - The net operating loss of the 
RE developer during the first three (3) years from the start of commercial operation 
which had not been previously offset as deduction from gross income shall be taxable 
years immediately following the year of such loss: Provided, however, That operating 
loss resulting from the availment of incentives provided for in this Act shall not be 
entitled to NOLCO. RE developers availing of the ITH as in this Act provided shall be 
ehtitled to avail of the NOLCO. 
F. 
Accelerated Depreciation. - Accelerated depreciation of 
plant, 
machinery, and equipment that are reasonably needed and actually used for the 
exploration, development, and utilization of renewable energy resources may be 
depreciated using a rate not exceeding twice the rate which could have been used had 
the annual allowance been computed in accordance with the rules and regulations 
prescribed by the Secretary of Finance and the provisions of the National Internal 
Revenue Code (NIRC) of 1997, as amended. 
C. 
Exemption from the Universal Charge. - Power and electricity 
generated through the RES for the generator’s own consumption and/or for free 
distribution in the off-grid areas shall be exempted from the payment of the Universal 
Charge provided for under Section 34 of Republic Act No. 9136. 
C. 
E. 
8 


SEC. 15. 
Hybrid und Cogeneration Systems. - The tax exemptions andlor 
incentives provided for in Section 14 of this Act shall be availed of by RE operating 
contract holders of hybrid and cogenerations systems, utilizing both RE sources and 
conventional energy; Provided, however, That the tax exemptions and incentives shall 
apply only to the equipment, machinery andlor devices utilizing repewable energy 
resources. 
lntermittent RE Resources, - Subject to technical and financial 
feasibility considerations, qualified RE generating units with intermittent RE resources 
shall enjoy the benefit of priority dispatch in accordance with the rules and regulations to 
be promulgated by the DOE, in consultation with the RE developers. As used in this Act, 
RE generating unit with intermittent RE resources refers to a renewable energy 
generating unit or group of units connected to a common connection point whose 
energy resource is location-specific and has a natural variability which renders the 
output unpredictable and the availability of the resource inherently uncontrollable, which 
include plants utilizing wind or ocean energy. 
SEC. 17. 
lncentives for RE Commercialization. - All manufacturers, 
fqbricators and suppliers of locally-produced RE equipment and components duly 
recognized and accredited by the DOE, in consultation with DOST, DOF, and DTI, shall 
be entitled to the following privileges: 
Tax and Duty-free Importation of Components, Parts and Materials. - 
All shipments necessary for the manufacture andlor fabrication of RE equipment and 
components shall be exempted to importation tariff and duties and value added tax: 
Provided, however, That the said components, parts and materials are: (a) not 
manufactured domestically in reasonable quantity and quality at competitive prices, 
(b) directly and actually needed and shall be used exclusively in the manufacture/ 
fabrication of RE equipment; and (c) covered by shipping documents in the name of the 
duly registered manufacturer I fabricator to whom the shipment will be directly delivered 
by customs authorities: Provided further, That prior approval by the DOE was obtained 
before the importation of such components, parts and materials were made; 
Tax Credit on Domestic Capital Components, Parts and Materials. - A 
tax credit equivalent to one hundred percent (lOO%)of the amount of the value-added 
tax and custom duties that were paid on the components, parts and materials, had 
these items been imported shall be given to a RE equipment manufacturer, fabricator, 
and supplier duly recognized and accredited by the DOE, who purchases RE 
components, parts and materials from a domestic manufacturer: Provided, That such 
components, and parts are directly needed and shall be used exclusively by the RE 
manufacturer, fabricator and supplier for the manufacture, fabrication and sale of the RE 
equipment Provided further, That prior approval by the DOE was obtained by the 
local manufacturer. 
SEC. 16. 
A. 
B. 
C. 
Income Tax Holiday and Exemption. - For six (6) years starting from the 
date of recognition I accreditation, an RE manufacturer, fabricator and supplier of RE 
equipment shall be fully exempt from income taxes levied by the National Government. 
SEC. 18. 
Period of Grant of Fiscal Incentives. - The fiscal incentives 
granted under this Act shall apply only to the first 2,500 MW new RE capacity upon the 
effectivity of this Act or within twenty (20) years from the effectivity of this Act, whichever 
comes first. Thereafter, the tax treatment applicable on the parties concerned prior to 
the passage of this Act shall apply. 
Creation of the National Renewable Energy Board (NWS). - 
The National Renewable Energy Board is hereby created. It shall be composed of the 
Secretary of the Department of Energy or his designated Undersecretary as chairman 
SEC. 19. 
9 


and the Secretaries or the designated Undersecretaries or Assistant Secretaries of the 
Department of Trade and Industry (DTI), Department of Finance (DOF) and Department 
of Environment and Natural Resources (DENR); the Presidents or the duly designated 
representatives of the National Power Corporation (NAPOCOR), National Transmission 
Corporation (TRANSCO), and Market Operator; and one (1) representative each from 
the following sectors: renewable energy developers, Government Financial Institutions 
(GFls), and non-governmental organizations, duly endorsed by their respective industry 
associations and appointed by the President of the Republic of the Philippines. 
The DOE Secretary or his designated Undersecretary, in his capacity as 
Chairman, shall, within one (1) month form the effectivity of this Act, convene the NREB. 
The NREB shall be assisted by a Technical Secretariat from the Energy Utilization 
Management Bureau of the DOE, thru the Renewable Energy Management Division, 
and shall directly report to the Office of the Secretary or the Undersecretary of the 
Department, as the case maybe, on matters pertaining to the activities of the NREB. 
The number of staff of the Technical Secretariat and the creation of corresponding 
positions necessary, to complement and/or augment the existing plantilla of the 
Renewable Energy Management Division shall be determined by the Board, subject to 
the approval of the Department of Budget and Management (DBM) and existing civil 
service rules and regulations. 
The NREB shall have the following powers and functions: 
A. 
B. 
C. 
D. 
E. 
F. 
Approve the National Renewable Energy Program, as formulated by the 
DOE: 
Evaluate and set the mandated Renewable Portfolio Standards and 
minimum RE generation capacities in off-grid areas, as it deems 
appropriate; 
Recommend specific actions in facilitating the implementation of the 
National Renewable Energy Program to be executed by the DOE and 
other appropriate agencies of government; 
Monitor and review the implementation of the National Renewable Energy 
Program, including the compliance with the Renewable Portfolio 
Standards and minimum RE generation capacities in off-grid areas; 
Oversee and monitor the collection and utilization of the Renewable 
Energy Trust Fund as administered by the Department; and 
Perform such other functions, as may be necessary, to attain the 
objectives of this Act. 
SEC. 20. 
Renewable Energy Trust Fund (RET@. - A Renewable Energy 
Trust Fund is hereby established to enhance the development and greater utilization of 
Renewable Energy. It shall be administered by the DOE as a special account in any of 
the GFI. The RETF shall be exclusively used to: 
Finance the research, development, demonstration and promotion of the 
widespread and productive use of renewable energy systems for power and non-power 
applications; 
Support the development and operation of new RE resources to improve 
their competitiveness in the market: Provided, That the grant thereof shall be done 
through a competitive and transparent manner; 
(a) 
(b) 
10 


(c) 
Conduct nationwide resource and market assessment studies for 
biomass, solar, wind, hydro, tidal current, and ocean energy; 
(d) 
Propagate RE knowledge by accrediting, tapping, training, and providing 
benefits to institutions, entities and organizations which can extend the promotion and 
dissemination of RE benefits to the national and local levels; and 
(e) 
Fund such other activities necessary or incidental to the attainment of the 
Use of the fund may be through grants, loans, equity investments, loan 
guarantees, insurance, counterpart fund or such other financial arrangements 
necessary for the attainment of the objectives of this Act: Provided, that the allocation 
thereof shall, as far as practicable, be done through a competitive and transparent 
manner. 
objectives of this Act. 
The RETF shall be funded from: 
(a) 
(b) 
(c) 
(d) 
(e) 
Proceeds from the emission fees collected from all generating facilities 
consistent with Republic Act No. 8749 or the Philippine Clean Air Act; 
One and 1/2 percent (1.5%) of the net annual income of the Philippine 
Charity Sweepstakes Office; 
One and 1/2 percent (1.5%) of the net annual income of the Philippine 
Amusement and Gaming Corporation; 
One and % percent (1.5%) of the net annual dividends remitted to the 
National Treasury of the Philippine National Oil Company and its subsidiaries; 
Contributions, grants and donations: Provided, That all contributions, 
grants and donations made to the RETF shall be tax deductible subject to the provisions 
of the National Internal Revenue Code. Towards this end, the Bureau of Internal 
Revenue shall assist the DOE in formulating the Rules and Regulations to implement 
this provision; 
One and 1/2 percent (1.5%) of the proceeds of the Government share 
collected from the development and use of indigenous non-renewable energy 
resources; 
Any revenue generated from the utilization of the RETF; and 
Proceeds from the fines and penalties imposed under this Act. 
Financia/ Assistance Program. - Government financial institutions 
such as the Development Bank of the Philippines (DBP), Land Bank of the Philippines 
(LBP), Phil-Exim Bank and other government financial institutions shall, in accordance 
with and to the extent allowed by the enabling provisions of their respective charters or 
applicable laws, provide preferential packages for the development, utilization and 
commercialization of RE projects as duly recommended and endorsed by the DOE. 
Adoption of Waste-to-Energy Technologies. - The DOE shall, 
dhere practicable, encourage the adoption of waste-to-energy facilities such as, but not 
limited to biogas systems. The DOE shall, in coordination with existing private 
companies and suppliers, facilitate the provision of technical assistance, in the adoption 
of the technology. The DOE shall, in coordination with the DENR, ensure compliance 
with this provision. 
(0 
(9) 
(h) 
SEC. 21. 
SEC. 22. 
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As used in this Act, Waste-to-Energy Technologies shall refer to systems which 
convert biodegradable materials such as, but not limited to, animal manure, agricultural 
waste, into useful energy through chemical processes such as anaerobic digestion, 
fermentation and gasification, among others. 
lmplementing Rules and Regulations. - Within six (6) months 
from the effectivity of this Act, the DOE shall, in collaboration with the Senate and 
House Committees on Energy, relevant government agencies and all RE developers, 
promulgate the Implementing Rules and Regulations (IRR) of this Act, subject to the 
approval by the Joint Congressional Renewable Energy Oversight Committee. 
Congressional Oversight Committee. - Upon the effectivity of this 
Act, the Senate and House Committees on Energy, shall jointly monitor the 
implementation of this Act. Likewise, the Oversight Committee shall be co-chaired by 
the Chairpersons of the Senate and House Committees on Energy. 
Penalty Clause. - Any person found in violation, through an act of 
commission or omission of the provisions of this Act shall pay a minimum penalty of 
One hundred thousand pesos (Php100,000.00) or twice the amount of damages or 
costs avoided for non-compliance, whichever is higher. 
Official Development Assistance. - The provision of Executive 
Order No. 230 of 1986 and the rules and regulations governing the evaluation and 
authorization for the availment of Official Development Assistance notwithstanding the 
privatization of renewable energy facilities as provided for in this Act shall be eligible for 
foreign loans and grants without further evaluation by the NEDA Board, subject to 
Section 21, Article XI1 of the Constitution. 
Separability Clause. - If any provision of this Act is held invalid or 
inconstitutional, the remainder of the Act or the provisions not otherwise affected shall 
remain valid and subsisting. 
Repealing Clause. - Any taw, presidential decree or issuance, 
executive order, letter of instruction, administrative rule or regulation contrary to or 
inconsistent with the provisions of this Act is hereby repealed, modified or amended 
accordingly. 
Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in at least two newspapers of general circulation. 
SEC. 23. 
SEC. 24. 
SEC. 25. 
SEC. 26. 
SEC. 27. 
SEC. 28. 
SEC. 29. 
Approved, 
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