SEVENTEENTH CONGRESS OF THE ) @

REPUBLIC OF THE PHILIPPINES —_) fe), Benate

Third Regular Session ) oe OMCice of tye Secretary
SENATE 18 AUG -2 AN 09

S.No. 1904 : 7 a

Introduced by SENATOR LEILA M. DE LIMA

AN ACT
PROMOTING THE USE OF RENEWABLE ENERGY IN HOMES BY
PROVIDING INCENTIVES AND CREDIT FACILITIES FOR
HOUSEHOLDS UTILIZING SMALL SOLAR POWER SYSTEMS

EXPLANATORY NOTE

‘The rising costs of non-renewable energy resources such as fossil fuels have
compelled our lawmakers to reconsider and re-examine the government's policies
concerning energy production and consumption. The nation’s pursuit towards a
more efficient and cost-effective means of generating energy for the population is
inextricably linked to broader social issues such as climate change and poverty,

according to the National Economic and Development Authority (NEDA).!

In 2016, the Department of Energy reported that approximately 24% of power
generated nationwide came from Renewable Energy (RE)-based generation
facilities.* Upon closer inspection, the data reveals that only 1% of all RE for the same
year was generated from solar photovoltaic systems. Nevertheless, utilizing the
untapped resource that is solar energy as a means to lowering energy costs and
reducing our carbon footprint is an endeavor that should be considered by the

government for the following reasons:

1) Generating electricity by way of harvesting solar energy is becoming
cheaper as the years go by. According to the International Renewable
Energy Agency (IRENA), the cost of power generation from solar

' NEDA BATS FOR RENEWABLE ENERGY TO REDUCE POVERTY. (2018, March 05). Retrieved from
hutp:/www.neda gov.ph/2018/03/05/neda-bats-for-renewable-energy-to-reduce-poverty
* 2016 Philippine Power Situation Report. (n.d.). Retrieved from http://www.doe.gov.ph/electric-power/2016-
philippine-power-situation-report

Ibid.



photovoltaic systems has fallen by 73% since 2010 and is projected to be
further cut by half in the year 2020.4 Furthermore, by 2020, all currently
commercialized renewable power generation technologies would be
generating at a cost of ranging from $0.03 to $0.10 per kWh as compared
with fossil fuels’ generating cost of approximately $0.05 to $0.17 per
kWh;s

2) Installation costs of solar panels have also begun to decline. From 2014 to

2017, the cost in installing a 1 kW solar panel dropped from 160,000 Php
to 120,000 Php, which shows a 25% reduction in expenses®;

3) Solar panels can effectively drive the demand for electricity down during
peak hours by providing households with alternative means of powering

appliances to combat the sweltering heat of the midday sun in the

Philippines; and

4) Solar panels are relatively easy to acquire, transport, and _ install;
sometimes only taking a few hours to a few days for larger arrays. This ease
of access is what makes solar panels unique from other energy sources —

renewable or otherwise.

The sooner the nation adopts policies promoting renewable energy sources,
the closer it is to achieving energy independence.

This bill seeks to institutionalize the provision of adequate incentive
mechanisms for small households in order to help ease and expedite their transition
to renewable energy sources and thus contribute to the nation’s pursuit towards

reducing its overall carbon footprint.

In view of the foregoing, approval of this measure is earnestly sought.

* Domingo, R. W. (n.d). Renewable energy costs falling sharply. Retrieved from
hitp:/Mousiness.inquirer.neV244169/renewable-energy-costs-falling-sharply

Ibid,
© Zabala, E. M. (n.d.). Home solar panels: A beginner's guide to saving electricity. Retrieved from
hutps://www.rappler.conv/ife-and-style/181068-solar-power-panels-things-need-to-know

v



Sonate

REPUBLIC OF THE PHILIPPINES ) SD ovaiee of he doeeetary

SEVENTEENTH CONGRESS OF THE ) ®
Third Regular Ses

ion )

SENATE 18 NG -2 ANN 09

s.No._ 1904 - ip

Introduced by SENATOR LEILA M. DE LIMA

AN ACT
PROMOTING THE USE OF RENEWABLE ENERGY IN HOMES BY
PROVIDING INCENTIVES AND CREDIT FACILITIES FOR
HOUSEHOLDS UTILIZING SMALL SOLAR POWER SYSTEMS

Be it enacted by the Senate and House of Representatives of the Philippines in

Congress assembled:

SECTION 1. Short Title. — This Act shall be known as the “Small Solar Power
System Incentives Act of 2018.”

Sec. 2. Declaration of Policy. — It is the policy of the State to promote the
utilization of renewable energy resources to reduce dependence on imported energy
from fossil fuels, and to promote its efficient and cost-effective commercial
application by providing fiscal and non-fiscal incentives to effectively prevent or
reduce harmful emissions, and thereby balance the goals of economic growth and

development with the protection of health and the environment.

Sec. 3. Definition of Terms. ~ For the purposes of this Act, the following

terms shall mean:

A) Small Solar Power System — rooftop-installed solar-powered
equipment, devices, and systems, for residential use to generate electricity;

B) Eligible Participant — any individual who owns a house and is
determined by the government to be eligible pursuant to the purposes of this Act;

©) Rebates = the refund or repayment by the government to a taxpayer
who has duly paid his taxes derived from yearly profits arising from property,

profession, trades or offices or taxes taken from his income, wages, profits and the



like. The rebate shall be in the form of cash or similar instrument that could readily
be available for use by the beneficiary;

D) 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.

Sec. 4. Fiseal Incentives. —

A) _ The Department of Finance (DOF) and concerned agencies shall draw-
up appropriate mechanisms for the grant of subsidies, establishment of guarantee
funds, tax credits, and rebates on the purchase and installation of small solar power
system for residential use. These incentive mechanisms shall be implemented in
tranches beginning from a subsidy of 75% of the basic cost for the installation of
small solar power systems in the first three years of this Act’s implementation, 50%
on the next three years, and 25% on the seventh year onward.

B) The installation of small solar power systems shall be granted expedited
plan checks and shall be exempt from the payment of building permit fees. The total
cost of the solar power system shall further be excluded from the computation and
payment of real property taxes.

C) All eligible participants shall be entitled to any or all of the foregoing
incentives, as may be applicable; Provided, That, in no case shall a participant be
allowed to avail or recover total incentives and rebates in excess of the actual cost
incurred in installing the small solar power system.

Sec. 5. Financial Assistance. — There is hereby established under this Act a
program, to be jointly administered by the National Renewable Energy Board
(NREB), the Home Development Mutual Fund (HDMF), the Government Service
Insurance System (GSIS), and the Social Security System (SSS), which shall provide
for a solar rooftop credit and financing program, accessible to all eligible HDMF,
GSIS, and SSS members. Such programs shall include the installation of small solar
power systems among the costs for home construction and improvement eligible for
financing.

Sec. 6. Net Metering. — Residential use of small solar power systems with
installed capacity in excess of their domestic consumption shall be allowed to enter

into net metering agreements with distribution utilities without discrimination. The

2



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NREB shall promulgate the mechanisms for this purpose within one year from the
approval of this Act.

Sec. 7. Implementing Rules and Regulations. — The DOF, in
coordination with DOST, DOE, and NREB shall issue the necessary rules and
regulations for the implementation of this Act.

Sec. 8. Separability Clause. - Should any provision of this Act be found
unconstitutional by a court of law, such provision shall be severed from the
remainder of this Act, and such action shall not affect the enforceability of the

remaining provisions of this Act.

Sec, 9. Repealing Clause. - All laws, decrees, letters of instruction,
resolutions, orders or parts thereof which are inconsistent with the provisions of this
Act are hereby repealed, modified or amended accordingly

Sec. 10. Effeetivity Clause. - This Act shall take effect fifteen (15) days after
its publication in two (2) newspapers of general circulation.

Approved,