FOURTEENTH CONGRESS OF THE 
First Regular Session 
REPUBLIC OF THE PHILIPPINES 
SENATE 
Senate Bill No. 1711 
introduced by SENATOR COMPANERA PIA S. CAYETANO 
EXPLANATORY NOTE 
At present, the Philippines continues to be dependent on nonrenewable energy 
sources, mainly fossil fuel, to sustain its energy needs. Fossil fuel has been proven to 
emit greenhouse gases which contribute to global warming. Also, it is said to cause air, 
water and soil pollution. 
With the realization of the finite resources of fossil fuels, expensive oil prices and 
its consequential greenhouse gas effects, the urgency to explore and develop 
renewable energy resources is becoming more resounding. Extensive studies have 
proven that renewable energy resources offer cleaner and better alternatives to fossil 
fuel. 
Renewable energy utilizes natural resources like sunlight, wind, tides and 
geothermal heat. These natural resources are naturally replenished. 
Renewable resources have inherent and varying technological, environmental, 
social, and economic benefits. Renewable energy resources also allow countries to 
have security for its energy and electricity requirements for the development of its 
indigenous and environment-friendly energy sources. 
This Bill therefore seeks to promote the development, utilization and 
commercialization of renewable energy sources. 
For the protection of Mother Nature, approval of this Bill is urgently sought. 
SENA 
PIA S. CAYETANO 


FOURTEENTH CONGRESS OF THE 
Firsf Regular Session 
REPUBLIC OF THE PHILIPPINES 
SENATE 
Senate Bill No. A 711. 
Introduced by Senator Pia S. Cayetano 
AN ACT PROMOTING THE DEVELOPMENT, UTILIZATION AND 
COMMERCIALIZATION OF RENEWABLE ENERGY SOURCES 
AND FOR OTHER PURPOSES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
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TITLE AND DECLARATION OF POLICY 
Section 1. Short Title. -This Act shall be known as the "Renewable Energy Act 
of 2007". 
Section 2. Declaration of Policies. - It is hereby declared the policy of the 
State to: 
a. Achieve self-reliance in the country's energy requirements primarily through 
the exploration, development and utilization of renewable energy resources 
including but not limited to biomass, solar, wind, hydro, geothermal, and ocean 
energy sources or hybrid systems; 
b. Promote greater private sector investment and participation in the 
implementation of renewable energy activities and projects; 
c. Prioritize the development and utilization of renewable energy resources and 
technologies, in view of their environmental benefits, to improve energy security 
and catalyze economic development in the countryside through the energization 
of off-grid communities; 
d. Establish the institutional infrastructure and provide key government inputs to 
develop national and local capabilities in the use of renewable energy systems, 
encourage their widespread commercial applications and promote their efficient 
utilization; 
e. Promote and prioritize the utilization of electrical energy from power generation 
facilities utilizing renewable energy resources, including but not limited to wind, 
solar, ocean, hydro, geothermal, and biomass energy, whose facilities are 
capable of supplying electricity through the Main Grid or Transmission Systems 
under R.A. 9136, to reduce dependence on imported sources of fuel and to 
assure the development of facilities which utilize environment-friendly sources of 
energy; 
f. Promote and prioritize the utilization of renewable energy resources for non- 
power application; and 
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g. Promote people empowerment by providing opportunities for all stakeholders 
to participate in the development, planning, and implementation of renewable 
energy projects and activities. 
Section 3. Scope. - This Act shall provide the framework for the exploration, 
development and utilization of the country’s renewable energy resources, encourage 
their widespread commercial applications, and promote their efficient utilization, 
including the development of local capabilities in all aspects of Renewable Energy 
Systems. 
Section 4. Definition of Terms. - As used in this Act, the following terms shall 
mean as follows: 
a. “Affiliated Renewable Energy Centers” or “ARECs” refer to the institutions 
established by the Department of Energy (DOE) to provide extension and 
technical services at the national and local levels in the promotion and 
dissemination of renewable energy technologies. An AREC refers to any 
university, 
college, 
non-government 
organization 
or 
private 
volunteer 
organization certified by the DOE upon its compliance with the technical and 
legal requirements that shall be imposed by the DOE; 
b. “Alternative FuelslAIternative Fuel Systems” refer to the use of materials, 
machinery, andlor equipment to generate power using non-petroleum fuels. The 
machinery and/or equipment may be modified from its original condition or an 
original equipment manufacturer (OEM) that allow the usage of alternative fuel or 
that further produce, handle, store, and/or utilize alternative fuels; 
c. “Biomass Energy Systems” refer to energy systems which use biomass 
resources to produce heat, steam, mechanical power or electricity through either 
thermochemical, biochemical or physiochemical processes; 
d. “Biomass Resources” refer to plants and plant materials, trees, crop 
residues, wood and bark residues, and animal manure or any organic matter that 
can be used in bioconversion process; 
e. “Board of Investments” or “BOI” refers to an attached agency of the 
Department of Trade and Industry created under Republic Act No. 5186, as 
amended; 
f. “Department of Budget and Management” or “DBM” refers to the 
government agency created pursuant to Executive Order No 25, as amended; 
g. “Department 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 herein; 
h. “Department of Finance” or “DOF” 
refers to the government agency created 
pursuant to Executive Order No. 127, as amended; 
i. “Department of Science and Technology” or “DOST” refers to the 
government agency created pursuant to Executive Order No. 128; 
j. “Department of Trade and Industry” or “DTI” refers to the government 
agency created pursuant to Executive Order No. 133; 
k. “Department of Tourism” or “DOT” refers to the government agency created 
pursuant to Executive Order No. 120; 
1. “Distribution of Electricity” refers to the conveyance of electricity from 
transmission facilities or embedded generators to end-users by a Distribution 
Utility through its distribution system pursuant to the provision of Republic Act 
No.9136 and its implementing rules and regulations; 
m. “Distribution Utility” refers to an 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; 
n. “Energy Regulatory Commission” or “ERC” refers to the regulatory agency 
created pursuant to Republic Act No. 9136; 
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0. “Generation Facility” refers to a facility, for the production of electricity; 
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; 
q. “Geothermal Energy Systems” refer to machines or other equipment that 
converts geothermal energy into useful power; 
r. “Geothermal Resources” mean (a) all products of geothermal processes, 
embracing indigenous stem hot water and hot brines; (b) steam and other gases, 
hot water and hot brines resulting from water, gas, or other fluids artificially 
introduced into geothermal formations; (c) heat or associated energy found in 
geothermal formations; and (d) any by-product derived from them; 
s. “Government Share” refers to the amount due the National Government and 
Local Government Units from the value of renewable energy resources; 
t. “Green Energy Rating Program” refers to a program that identifies and 
recognizes project developers, investors, operators and/or end-users that have 
participated in the implementation of most successful RE projects and activities; 
u. “Green Pricing” refers to pricing scheme wherein electricity consumers agree 
to pay a premium price for electricity generated using RE sources and 
technologies; 
v. “Main 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 otherwise be determined by the ERC in 
accordance with the implementing rules and regulations of Republic Act No. 
91 36; 
w. “Hybrid Systems” refer to any power or energy generation facility which 
makes use of two or more types of technologies utilizing both conventional 
and/or renewable fuel sources, such as but not limited to integrated wind/diesel 
systems, integrated solarlwind systems, biomass/fossil fuel systems, hydrolfossil 
fuel systems, integrated solar/biomass systems, integrated wind/fossil fuel 
systems, with a minimum of ten (10%) of the annual energy output provided by 
the RES components of the hybrid systems; 
x. “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; 
y. “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; 
z. “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; 
aa. “Independent Power Producer” or “IPP” refer to a power generating entity 
which is not owned by NPC; 
bb. 
“Large or Conventional Hydroelectric Power Plants” or “Large or 
Conventional Hydro Plants” refer to electric power-generating plants which (a) 
utilize the kinetic energy of falling or running water (run-of-river or impounding 
hydropower plants) to turn a turbine generator producing electricity; and (b) have 
installed capacities of more than 10,000 kilowatts; 
cc. “Micro-hydroelectric Power Plants” or “Micro-hydro Plants” refer to 
electric power-generating plants which (a) utilize the kinetic energy of falling or 
running water (run-of-river hydropower plants) to turn a turbine generator 
producing electricity; and (b) have installed capacities of not more than 100 
kilowatts; 
dd. “Mini-Grid Systems” refer to electrical systems composed of interconnected 
distribution and transmission lines, substations and related facilities that are 
installed at remote locations and are not connected to the Main Grid; 
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3a 
ee. “Mini-hydroelectric Power Plants” or “Mini-hydro Plants” refer to electric 
power-generating plants which (a) utilize the kinetic energy of falling or running 
water (run-of-river hydropower plant) to turn a turbine generator producing 
electricity; and (b) have installed capacities of more than 100 kilowatts but not 
more than 10,000 kilowatts; 
ff. 
“Minimum Renewable Electricity Generation” refers to the minimum 
percentage of the total annual electricity generated, transmitted and distributed to 
electricity customers in a specific jurisdiction and period that will be required to 
be sourced from RE-based power projects and technologies; 
gg. “Missionary Electrification” refers to the provision of electricity service in 
unviable areas with the aim of bringing the operations in these areas to viability 
levels; 
hh. “National Power Corporation” of “NPC” refers to the government 
corporation created under Republic Act No. 6395, as amended; 
ii. “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; 
jj. “Ocean Energy Systems” refer to energy systems which convert ocean or 
tidal current, ocean thermal gradient or wave energy into electrical or mechanical 
energy; 
kk. “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; 
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“On-Grid System” refer to electrical systems composed of interconnected 
transmission lines, substations and related facilities for the purpose of 
conveyance of bulk power on the Main Grid of the Philippines; 
mm. “Power Development Program’’ or “PDP” refers to the indicative plan for 
managing electricity demand through energy-efficient programs and for the 
upgrading, expansion, rehabilitation, repair and maintenance of power generation 
and transmission facilities, formulated and updated yearly by the DOE in 
coordination with the generation, transmission and distribution utility companies; 
nn. “Renewable Energy Developers” or “RE Developers” refer to Filipino 
individuak or a group of individuals formed in accordance with existing 
Philippine Laws engaged in the exploration, .development and utilization of 
renewable energy resources and actual operation of renewable energy 
systems/facilities; 
00. “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 such as fuel cells, 
hydrogen fuels, among others; 
pp. “Renewable Energy Systems” or “RES” refer to energy systems which 
convert renewable energy resources into useful energy forms, like electrical, 
mechanical, etc.; 
qq. “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; 
rr. “Rural Electrification” refers to the delivery of basic electricity services, 
consisting of power generation, subtransmission, andlor extension of associated 
power delivery system that would bring about important social and economic 
benefits to the countryside; 
ss. “Operating Contract” refers to a contract or agreement entered into by and 
between the Government and a Filipino individual, group of individuals or a 
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corporation organized under existing Philippine Laws, involving the exploration, 
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development and utilization of renewable energy resources; The details of the 
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implementation shall be contained in the Implementing Rules and Regulations of 
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this Act; 
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tt. “Operator” refers to a renewable energy developer, whether alone or in 
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consortium with others, involved in the exploration, development and utilization of 
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renewable energy resources under an operating contract agreement with the 
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Government; 
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uu. ‘‘Solar Energy” refers to the energy derived from solar radiation that can be 
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converted into useful thermal or electrical energy; 
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vv. “Solar Energy Systems” refer to energy systems which convert solar 
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energy into thermal or electrical energy; 
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ww. “Small Power Utilities Group” or “SPUG” refers to the functional unit of 
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the National Power Corporation mandated under Republic Act No. 9136 to 
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pursue missionary electrification function; 
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xx. “Transmission of Electricity” refers to the conveyance of electricity through 
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the high voltage backbone system; 
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yy. “Unviable Area” refers to a geographical area within the Franchise Area of a 
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Distribution Utility where immediate extension of distribution line is deemed not 
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feasible; 
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zz. “Wind Energy” refers to the energy that can be derived from wind that is 
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converted into useful electrical or mechanical energy; 
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aaa. “Wind Energy Systems” refer to the machines or other related equipment 
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that convert wind energy into useful electrical or mechanical energy; 
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bbb. “Waste-to-Energy Technologies” refer to systems which convert 
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biodegradable materials such as animal manure, agricultural waste, etc. into 
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useful energy through chemical processes such as anaerobic digestion, 
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fermentation and gasification, among others; 
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ccc. “Wholesale Electricity Spot Market” or “WESM” refers to the wholesale 
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electricity spot market created pursuant to Republic Act No. 9136; 
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CHAPTER II 
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ORGANIZATION 
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this Act: 
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a. Formulate, implement and regularly update a comprehensive Renewable 
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Energy Policy Framework (REPF) which shall be aimed at accelerating the 
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exploration, development and utilization of renewable energy sources to attain 
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the goals of energy self-sufficiency, energy affordability, rural electrification, 
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poverty eradication, social equity, economic development, income enhancement, 
Section 5. Implementing Agency and Its Powers and Functions. - In addition 
to its existing mandate, the DOE shall have the following powers and functions under 
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sustainability and environmental protection; 
b. Formulate and implement policies for the development, promotion and 
commercialization of applications of renewable energy resources; 
c. Establish a mechanism for the integration, rationalization and coordination of 
the various activities, projects and programs on renewable energy of all 
governmenf agencies and instrumentalities; 
d. Provide all necessary and appropriate support services in the implementation 
of the REPF including the facilitation of entry of foreign expertise and resources 
in order to accelerate the pace of technology transfer and development of local 
expertise, the launching of a vigorous information and promotion drive, updating 
of relevant environmental regulations, and the institution of delivery mechanisms 
for the dissemination of viably proven applications; 
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e. Develop and implement specific policies, mechanisms and procedures 
encouraging the participation of the private sector including IPPs, private 
individuals, civil society groups, non-governmental organizations, private 
volunteer organizations, academe and other interested parties; 
f. Be the sole and exclusive authority responsible for the regulation, promotion 
and administration of RE resources; 
g. Encourage the development of a program to quantify and certify Greenhouse 
Gas (GHG) 
Allowances from RE projects; 
h. Expedite processing, certification and approval of applications for RES 
projects thru the establishment of relevant model operating contracts, standards, 
procedures, terms and conditions; 
i. Charge reasonable fees in connection with the filing, processing, evaluation 
and approval of application for RES projects; 
j. Require the RE developer to post a bond or guarantee of sufficient amount in 
favor of the Government and with surety or sureties satisfactory to the DOE upon 
the faithful performance by the RE developer of any or all of the obligations under 
and pursuant to the RE operating contract within sixty (60) days after effective 
date of the contract; 
k. Within 6 months from approval of this Act, promulgate in consultation with all 
stakeholders, including other government agencies, such as the National Water 
Resources Board (NWRB), Department of Environment and Natural Resources- 
Environmental 
Management 
Bureau 
(DENR-EMB), 
Energy 
Regulatory 
Commission (ERC), Department of Finance (DOF), Department of Trade and 
Industry (DTI), among others, such rules and regulations as may be necessary to 
implement the objectives and provisions of this Act; 
I. Generally exercise all powers necessary or incidental to attain the purpose of 
this Act and other laws vesting additional powers on the DOE. 
Section 6. Institutionalization of Affiliated Renewable Energy Centers 
(ARECs). - There shall be established ARECs to serve as a support to the extension 
and technical services of the DOE in the field implementation of renewable energy 
projects pursuant to the objectives of this Act. An AREC can be a recipient of 
donationslgrants from DOE and other donor agencies so as to develop and strengthen 
their capabilities to effectively perform their responsibilities under the Renewable 
Energy Policy Framework. The Affiliated Non-conventional Energy Centers (ANECs) 
shall be known as ARECs upon evaluation and accreditation of the DOE. 
Section 7. Roles of Other Agencies and Institutions. - This Act mandates the 
following agencies and institutions to perform or carry out specific functions and 
responsibilities: 
a. Cooperating Research Institutions (CRls), duly accredited by the DOE, in 
collaboration with DOST shall implement research and development projects and 
activities consistent with the priorities in the REPF. Such activities include the 
conduct of research activities, pilot studies and demonstration projects as well as 
technical support and consultancy services; 
b. The National Transmission Corporation (TRANSCO) shall ensure the 
interconnection and access of RE generating facilities to the grid; 
c. ERC is mandated to set the rules in the computation of rates that allow fair 
economic returns for RE systems developers/ operators serving remote, off-grid 
and unviable areas; 
d. NPC-SPUG, in the performance of its missionary electrification functions, shall 
give priority to renewable energy sources and technologies for the energization 
of remote and rural areas; 
e. The BOI, in consultation with DOE and other stakeholders, shall include 
renewable energy projects and activities in its annual Investment Priorities Plan 
to attract both domestic and foreign investors; and 


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f. The DOF and the DBM shall provide sufficient fund allocation for the full 
implementation of this Act. 
CHAPTER 111 
ON-GRID RENEWABLE DEVELOPMENT 
Section 8. On-Grid Renewable Energy Generation. - The DOE shall develop 
and implement a Renewables Portfolio Standard (RPS) that mandates all grid-users, 
particularly the distribution utilities and electricity suppliers, a percentage utilization of 
electricity from eligible RES and targets fifty per cent (50%) RES capacity of the total 
generation on the Grid. The timetable and scheme of implementation for this target shall 
be stipulated in the REPF and Philippine Energy Plan. 
Section 9. Minimum Renewable Electricity Generation Policy. - To create an 
initial market for RES facilities and promote greater environmental sustainability within 
the electric power industry, DOE and other industry participants shall develop a 
mechanism to implement a minimum electricity generation policy from renewable 
energy in the Wholesale Electricity Spot Market (WESM). The DOE shall determine the 
optimum value of said percentage share of renewable energy in the WESM based on 
the implementation of the Renewables Portfolio Standard. The DOE in consultation with 
other industry participants shall set the proper timing for the implementation of the 
same. 
Section I O .  lntermittent Renewable Energy Generation. - Specific for power 
generating facilities using intermittent RE sources such as wind and solar among 
others, the DOE, in coordination with TRANSCO and other industry participants, shall 
facilitate the interconnection of these facilities to the Main Grid and shall formulate 
production predictability incentive schemes (capacity forecast premium). 
Section 11. Green Pricing Advocacy. - The DOE shall provide the necessary 
Green Pricing Advocacy that promotes the choices and preferences of electricity end- 
users for environment-friendly renewable energy sources and technologies mechanism 
for the implementation of a Green Pricing Program. 
CHAPTER IV 
OFF-GRID RENEWABLE ENERGY MARKET 
Section 12. Off-grid Renewable Energy Development Program. - The 
utilization of renewable energy resources in power generation in energizing off-grid 
barangays and households shall be prioritized; Provided, However, that the same will 
promote social economic returns in said concerned areas. Consistent with the 
provisions of Section 70 of the Republic Act No. 9136 and the Rules and Regulations 
promulgated 
therefore, 
the 
DOE, 
NPC-SPUG 
and 
National 
Electrification 
Administration, through the Rural Electric Cooperatives established in accordance to 
Law, shall prioritize the type of renewable energy technologies and systems on a least- 
cost basis. The DOE shall endeavor to devise schemes for the standardization of 
renewable energy equipment for efficient utilization. 
Section 13. Off-Grid Renewable Energy Zones. - Consistent with the Policy 
herein provided, the President of the Republic of the Philippines is hereby empowered 
to establish off-grid renewable energy zones / sites / areas, where abundant renewable 
energy sources have been determined to exist, upon the recommendation of the DOE. 
Section 14. Promotion of Hybrid Systems. - The use of hybrid systems and 
applications for off-grid areas shall be pursued because of its potential effectiveness in 
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providing reliable supply of power for rural development. The DOE shall formulate 
policies and guidelines to remove barriers to the effective design and use of hybrid 
systems. Appropriate financial and fiscal incentives will likewise be granted as provided 
in Sections 20, 21 and 23 of this Act to firms and entities duly certified by DOE. 
CHAPTERV 
OTHER RENEWABLE ENERGY MARKETS 
Section 15. Promotion of Non-Power Renewable Energy Systems. - The 
DOE shall develop specific support programs for business entities, marketers and 
distributors of, among others, solar water heaters, windpumps, biomass-fired-thermal 
systems and other non-power renewable energy equipment such as engines, machines 
andlor equipment capable of using alternative fuels or fossilIalternative fuel blends as 
energy source. DOE shall ensure that these entities can also avail of the incentives 
provided for renewable energy markets and activities as specified under Section 24 of 
this Act. 
Section 16. Renewable Energy and Ecotourism. - The DOT, in collaboration 
with the DOE, shall develop technical and financing support programs for ecotourism 
projects using renewable energy systems and establish accreditation system for the use 
of environment-friendly renewable energy resources in facilities located or to be 
constructed in tourist spots, such as beaches, spas, resort areas, cultural centers, etc. 
The DOT and DOE shall prepare a priority list of ecotourism projects with renewable 
energy component to promote viable investments in remote and rural areas. The BO1 
shall incorporate the same in the annual preparation of its Investment Priorities Plan. 
CHAPTERVI 
GOVERNMENT SHARE 
Section 17. Uniform Government Sharing Scheme. - The Production Bonus, 
Special Privilege Tax under,Section 14 of Executive Order 462, as amended by 
Executive Order 232 and Section 10 (1) of Republic Act No. 7156; respectively, and 
other royalties on RE development projects, shall be equal to at least one and one half 
per centum (15%) of the gross proceeds. Accordingly, provisions of said Laws 
inconsistent herewith are hereby amended. 
The distribution and allocation of Government Share I Special Privilege Tax I 
Royalty shall be in accordance with the Sections 290, 292 and 294 of Republic Act No. 
7160, otherwise known as the “Local Government Code of 1991”;Provided, That, for the 
period of not exceeding five (5) years, the National Government Share, equivalent to 
sixty per cent (60%) of the production bonus, special privilege tax and royalty shall be 
waived for the country’s first 300-megawatt cumulative RE capacity additions starting 
from the date of approval of this Act. 
The government share, as provided in Presidential Decree No. 1442 and its 
Implementing Rules and Regulations, payable by the service contractor shall be equal 
to at least two per centum (2%) of the gross revenues of the contractor from the sale of 
geothermal steam. Such government share shall be made payable to the National 
Government and the Local Government Units on or before the 20th day of the month 
following the end of each calendar or fiscal quarter and shall be fully tax deductible. In 
case of integrated streamfield and power plant operation by a contractor, the 
government share of at least two per centum (2%) shall he based on the gross sales of 
geothermal steam used for generating power at a transfer price to be set by DOE based 
on a generally acceptable criteria to be prescribed by DOE. The share of the Local 


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Government Units from this government share shall be made by the service contractor 
in accordance with Republic Act No. 7160. 
CHAPTER VI1 
ENVIRONMENTAL COMPLIANCE 
Section 18. Compliance with Environmental Regulafions. - All renewable 
energy explorations, development, utilization, and RES operations shall be conducted in 
accordance with existing environmental regulations as prescribed by the DOE and/or 
any other government agency. 
Section 19. Mandatory Restoration Work. - In all cases where the proposed 
hydroelectric power development entails the closure or stoppage of existing water 
outlets, passageways, connections, conduits, apertures or the like from water source, it 
shall be mandatory for the hydropower operating contract holder to restore or 
reengineer such water outlets, passageways, connections, conduits, apertures or the 
like on its account or expense, and in such manner that existing users or appropriators 
shall not be permanently deprived of their use or appropriation. 
In all other cases where the proposed RE development projects shall affect the 
environment in any manner, the RE operating contract holder shall be mandated to 
implement appropriate restoration works in the affected areas to its original conditions. 
A RE operating contract holder in an area shall open a "Trust Account" jointly in 
the name of the contractor, the DOE and the concerned municipalitylies or citylies 
wherein an amount equivalent to at least one centavo (Php 0.01) per kilowatt-hour or 
electricity sold shall be deposited in a commercial bank on a quarterly basis to cover the 
cost of environmental assurance, restoration, re-engineering and rehabilitation works. 
This amount shall be determined by the Secretary of the DOE, in consultation with the 
concerned host communitylies and local government uniffs based on environmental 
assurance requirement of each project. 
CHAPTER IX 
GENERAL INCENTIVES 
Section 20. Incentives for Renewable Energy Projects and Activities. - All 
RE developers and operators of renewable energy facilities, as duly certified by the 
DOE and in consultation with the DOF and DTI, shall be entitled to the following 
privileges: 
a. Tax and Duty-free Imporfation of Machinery, Equipment and Materials. - 
Within the duration of a RE operating contract, importation of machinery and 
equipment, and materials and parts thereof, whether or not shipped with such 
machinery and equipment, including 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: 
1. not manufactured domestically in reasonable quantity and quality; 
2. directly and actually needed and shall be used exclusively in the RE 
facilities for transformation into energy, and transmission of electric energy 
to the point of use; and 
3. covered by shipping documents in the name of the duly registered 
Operator to whom the shipment will be directly delivered by customs 
authorities: 


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Provided further, that prior approval of the DOE is obtained before the 
b. Tax Credit on Domestic Capifal Equipment. - A tax credit equivalent to one 
hundred percent (100%) of the value of the value-added tax and custom duties 
that would have been paid on the 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 under sub-paragraph 2 of the immediately 
preceding paragraph (a). Provided further, that prior approval by the DOE was 
obtained by the local manufacturer. Provided finally, that the acquisition of such 
machinery, equipment, materials, and parts shall be made within the validity of 
the RE operating contract; 
c. Real Estate Tax Exemption. - Any provision of existing Laws to the contrary 
notwithstanding, all lands, including easements, civil; works, equipment, 
machinery, and other improvements of a registered RE developer actually and 
exclusively used for RES facilities shall be exempted from the payment of any 
real estate tax; Provided, That the activities they engage in exhibit high social 
economic returns and necessary to assist reasonable recovery of large 
investments; 
d. Value-added ’Tax Exemption. - The sale of electricity generated from RE 
facilities shall be exempt from the ten percent (10%) value-added tax based on 
the gross receipts; 
e. lncome Tax Holiday and Exemption. - Within seven I twelve (7) I (12) years 
following the actual commercial operation of a RE facility, the RE operating 
contract holder shall be fully exempt from income taxes levied by the National 
Government; 
f. RE Production fredicfabilify/Forecast fremium/Bonus. - RE contract holder 
shall be entitled to a share of RE Production PremiumIBonus proportionate to the 
actual power generation from its RE facility as determined by the DOE. For this 
purpose, there is hereby established a Production PremiumIBonus Fund and for 
which one centavo (Php 0.01) for every kilowatt-hour sold shall be collected from 
every generating facilities by the TRANSCO andlor system market operator. 
Section 21. Hybrid and Cogeneration Systems. - The tax exemptions andlor 
incentives provided for in Section 20 shall be availed of by RE operating contract 
holders of hybrid and cogeneration systems, utilizing both RE sources and conventional 
energy; Provided, however, that tax exemptions and incentives shall apply only to the 
equipment, machinery andlor devices utilizing renewable energy sources. 
importation of such machinery, equipment, materials and parts are made; 
Section 22. Non-Fiscal Incentives for RE Developers. - Within ten (1 0) years 
following the effectivity of this Act, all RE operating contract holders shall have the 
following additional incentives, subject to the DOES review every three (3) years. 
a. friorify Dispatch - RES utilizing biomass, wind, solar, geothermal, hydro, and 
ocean energy shall have the first right to supply electrical energy, up to its 
maximum capacity, to any grid whether or not any fossil power generating facility 
is operating therein subject to the Renewables Portfolio Standards provided 
under Section 8 hereof. 
b. Exclusion from Payment of AnciUary Services - Any RES may be excluded 
from any obligation to pay ”Load Following and Frequency Regulation”, “Spinning 
Reserve”, “Back-up Reserves”, and “Energy Imbalances”; (or “to exclude RES 
from any requirement to provide ancillary serves”). 
c. Exclusion from Payment of lnterconnection and Wheeling Charges - Any RES 
may be excluded from any requirement to pay interconnection and wheeling 
charges as required under existing laws. 


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d. Exemption from The Universal Charge. - Power and electricity generated 
through 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. 
Section 23. incentives for R€ Commercialization - All manufacturers, 
fabricators 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. 
a. 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: (a) 
are not manufactured domestically in reasonable quantity and quality at 
reasonable prices; (b) are directly and actually needed and shall he used 
exclusively in the manufacture/fabrication of RE equipment; and (c) are covered 
by shipping documents in the name of the duly registered manufacturer/fabricator 
to whom the shipment will be directly delivered by customs authorities: Provided 
further, that prior approval of the DOE was obtained before the importation of 
such components, parts and materials were made; 
b. Tax Credit on Domestic Capital Components, Parts and Materials - A tax 
credit equivalent to one hundred percent (100%) of the value of the value-added 
tax and custom duties that would have been 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, materials and parts are directly 
needed and shall be used exclusively by the RE manufacturer, fabricator and 
supplier for the manufacture, fabrication and sale of RE equipment. Provided 
further, that prior approval by the DOE was obtained by the local manufacturer; 
c. Local Taxes - All duly recognized and accredited RE equipment 
manufacturers/fabricators shall be exempted from taxes and fees imposed by 
local government units, such as real estate tax on lands, local business tax, 
building permits fees, among others; Provided that the manufacturing/fabricating 
facilities are in compliance with the established performance standards certified 
by the DOE; 
d. Special Realty Tax Rates on Equipment and Machinery - Any provision of the 
Real Property Tax Code or any other Jaw to the contrary notwithstanding, realty 
and other taxes on civil works, equipment, machinery, and other improvements of 
a DOE recognized and accredited RE manufacturer, fabricator and supplier of 
RE equipment shall not one percent (I”/) 
of their original cost of such civil works, 
machinery, equipment, devices and/or other components; 
e. Value-added Tax Exemption - Exemption from the ten percent (10%) value- 
added tax on (i) the gross receipts derived from the sale of locally-manufactured 
RE equipment and components; (ii) imported and locally purchased machinery, 
equipment and devices described in items (a) and (b) hereof and (iii) other local 
Value-Added Tax: 
f. Income Tax Holiday and Exemption - For seven (7) years starting from the 
date of recognition/accreditation, a RE manufacturer, fabricator and supplier of 
RE equipment shall be fully exempt from income taxes levied by the National 
Government. 
Section 24. Renewable Energy Trust Fund. - A Renewable Energy Trust Fund 
is hereby created to: 


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a. Finance the research, development, demonstration and promotion of the 
widespread use of renewable energy systems; 
b. Conduct resource assessment studies for biomass, solar, wind, hydro, tidal 
current, and ocean energy; and 
c. Conduct such other activities necessary to carry out the objectives of this Act. 
For this purpose, an amount of One Billion Pesos (Phpl,000,000,000.00) shall 
be allocated as seed money for the trust fund which shall be sourced from the following: 
A. Fine and penalties 
B. Mandatory RES Contributions 
C. Fees exacted pursuant to this Act 
D. Demonstration Earnings 
E. Grants 
F: Donations 
G: RE Production Predictability/Forecast PremiumlBonus 
The DOE shall manage and administer the said fund subject to existing 
government accounting and auditing procedures. The DOE, in consultation with other 
government units and agencies, is hereby authorized to manage and disburse the funds 
to be used solely for the purposes enumerated herein in the form of grants, loans, 
equity investments, loan guarantees, and insurance or to access other local or 
international funds pursuant to the provisions of this Act. 
CHAPTER X 
GENERAL PROVISIONS 
Section 25. Creation of Renewable Energy Bureau. - In accordance with the 
power of the Secretary and with the approval of the President, the Renewable Energy 
Bureau is hereby created for the effective management and administration of the 
renewable energy resources and development. The Renewable Energy Bureau shall 
have the following Divisions: Hydropower Division; Geothermal Division; Solar and Wind 
Division and Ocean and Biomass Division. 
The Renewable Energy Bureau shall have the following powers and functions: 
a. Assist in the formulation and implementation of policies for the efficient and 
economical transformation, conversion, processing, refining, market packaging 
and financing, transportation and storage of hydro, geothermal and other 
renewable energy resources such as wind, solar, biomass and ocean; and 
ensure their efficient and judicious utilization. 
b. Monitor sectoral energy consumption and conduct efficient utilization audit, 
technical training, energy management advisory services, and technology 
application projects on efficient energy utilization. 
c. Develop, promote and commercialize applications of biomass, solar, hydro, 
wind, wood and charcoal and other renewable energy resources including new 
and more efficient and economical transformation, conversion, processing, 
refining, marketing, distribution, transportation and storage technologies for 
renewable energy resources. 
d. Assist in the implementation of an integrated rural electrification program to 
effectively address the energy self-sufficiency in rural communities and 
implement, monitor and regularly review the implementation program for efficient 
administration. 
e. Provide information on renewable energy technologies and develop short-and 
long-term renewable energy technology development strategies. 
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f. Monitor the implementation of renewable energy projects in coordination with 
the Department of Environment and Natural Resources, National Water 
Resources Board, National Commission on Indigenous People and other 
government agencies to ensure compliance with the existing regulations and 
prescribed environmental standards. 
g. Monitor and supervise renewable energy projects implemented by government 
and private institutions including, affiliated renewable energy centers. 
Section 26.Product Standards and Testing Procedures. - The DOE, in 
consultation with the Bureau of Product Standards, shall if necessary, establish product 
standards and testing procedures for selected renewable energy products, equipment, 
devices and accessories in consonance with existing international renewable energy 
testing and product standards. The DOE and DTI shall jointly identify and designate 
laboratories and research facilities as accredited renewable energy testing laboratories 
to undertake the testing and labeling of renewable energy products, systems and 
devices according to the approved standards and procedures. 
Section 27. Manpower Development Program. - The DOE, in coordination 
with other government units and agencies, shall ensure sustained manpower 
development programs to increase the education, expertise, training, skills and 
awareness of planners, implementors, trainors, technicians, and beneficiaries in the 
national and local levels in appropriate aspects of renewable energy development and 
utilization. 
All foreign RE technology suppliers shall be required to conduct technology 
transfer activities to their proposed users and beneficiaries of the technology. The DOE 
shall ensure that capacity building sessions are incorporated into the work plan of the 
foreign technology suppliers prior to project implementation. 
Section 28. Information Management. - The DOE shall create, maintain and 
regularly update an information system of renewable energy resources, technologies, 
suppliers, companies and projects for the purposes of, but not limited to: 
I .  Formulation of annual energy and power development plans of the country; 
2. Information dissemination to the public who are interested to invest in 
renewable energy generation projects or in research and development studies, 
etc; 
3. Monitoring and evaluation of existing technologies and projects; and 
4. Formulation of appropriate policies. 
As such, the information system shall be backed up by a reliable database and 
shall include all relevant information for the development and commercialization of 
renewable energy systems. The DOE shall be responsible for the development of the 
institutional mechanism to ensure sustained maintenance and upgrading of the 
information exchange system 
Section 29. Information Dissemination and Education Program. - The DOE 
is hereby mandated to conduct outreach program that will disseminate information on 
renewable energy development and utilization. The DOE in collaboration with other 
government agencies, particularly the Office of the Press Secretary-Philippine 
Information Agency, shall conduct nationwide promotional campaigns to educate and 
raise the national consciousness on the greater advantages and benefits of the 
widespread use of renewable energy towards energy self-sufficiency, environmental 
protection, etc. 
Section 30. Financial Assistance Program. - Government financial institutions 
such as the Development Bank of the Philippines (DBP), the Philippine National Bank 


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(PNB), the Government Service Insurance System (GSIS), the Land Bank of the 
Philippines (LBP) and other private and government institutions that are now engaged 
or may hereafter engage in financing of renewable energy projects shall in accordance 
with and to the extent allowed by the enabling provisions of their respective charters or 
applicable laws, accord high priority to applications for financial assistance by 
individuals, enterprises, and industries participating in RE development, utilization and 
commercialization, duly recommended and endorsed by the DOE. 
Section 31. Adoption of Waste-to-Energy Technologies in Livestock Farm 
and Slaughterhouses. - For pollution control purposes, large-scale livestock farms and 
slaughterhouses shall he required to adopt waste-to-energy facilities such as biogas 
systems. The DOE shall facilitate the provision of technical assistance, in coordination 
with existing private companies and suppliers, in the adoption of the technology. The 
DOE shall coordinate with the DENR for the regular monitoring and compliance to this 
Drovision. 
Section 32. Demonstration Project Earnings. - The DOE shall have the option 
to use earnings derived from the operation of RE demonstration projects to fund solely 
additional pilot and demonstration projects. 
Section 33. Program Appropriations. - The amount necessary for the 
implementation of this Act shall be taken from the current fiscal year's appropriation of 
the DOE. Thereafter, such sum as may be necessary for the operation and 
maintenance of the Renewable Energy Policy Framework shall be included in the 
annual budget of the DOE under the General Appropriations Act. Any unutilized funds at 
the end of the fiscal year shall be reallocated back to the program. 
CHAPTER XI 
FINAL PROVISIONS 
Section 34. lmplernenting Rules and Regulations. - The DOE shall 
promulgate the rules and regulations necessary to implement the provisions of this Act 
within six (6) months after its effectivity. 
Section 35. Reportorial Requirements. - The CRls, ARECs, private entities 
engaged in renewable energy business operations and other concerned agencies and 
institutions are hereby required to provide the DOE all information that it may deem 
necessary and in accordance with the regulations for the effective monitoring, 
management and development of the overall Renewable Energy Policy Framework. 
The information and technical data shall remain confidential for a period stipulated in the 
regulations, which shall not exceed five (5) years. The DOE, therefore, shall formulate 
reportorial system for the scope and frequency of submission of the said information. 
Section 36. Penalty Clause. - The DOE shall formulate and promulgate 
appropriate penalties to any person who willfully violates violations of rules or 
regulations provided in this Act shall, upon conviction, be punished by a fine of not less 
than One hundred thousand pesos (P100,000.00), or by imprisonment of not less than 
two (2) years but not more than five (5) years, or both, at the discretion of the court; 
Provided, That if the violations committed by a juridical person the penalty provided 
shall be imposed on the official or employee thereof responsible for the violation;. 
Provided, That if the violation is committed by a government official or employee 
including those in government-owned or controlled corporations he/she shall, in an 
additional to the promulgated penalties provided, be subject to disciplinary 
administrative proceedings and penalties. 
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Section 37. Official Development Assistance. - The provision of Executive 
Order No. 230 of 1986, on the power of the NEDA Board, 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. 
Section 38. Separability Clause. - If for any reason or reasons, my part or 
provisions of this Act shall be held unconstitutional or invalid, no other part or provision 
hereof shall be affected thereby. 
Section 39. Repealing Clause. - All laws, orders, doctrines, decrees, rules and 
regulations or parts thereof, including EO 462, EO 232, RA 7156, RA 7160, and PD 
1442, among others, inconsistent with any of the provisions of this Act are hereby 
repealed, amended or modified accordingly. 
Section 40. Effectivity Clause. -This Act shall take effect fifteen (15) days after 
its complete publication in at least two (2) newspapers of general circulation. 
Approved,