THIRTEENTH CONGESS OF THE REPUBLIC) 
OF THE PHILIF’PTNES 
) 
Second Regular Session 
1 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
One of the most critical problems besetting the Philippine energy sector is the 
high cost of energy, which is directly caused by ihe 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 last 22 October 2003, 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. 
,' i 
@AM 
DEF*SOR 
SANTIAG~ 
w 


THIRTEENTH CONGRESS OF THE RJZPUE3LIC ) 
OF THE PHILIPPINES 
1 
6 K O  27 ;)d :jt 
Second Regular Session 
) 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
TO FURTHER PROMOTE THE! DEVELOPMENT, UTILIZATION AND 
COMMERCIALIZATION OF RENEWABLE ENERGY RESOURCES 
Be if enucfed by the Senate and the House of Kepresentatises of the Philippines in 
Congress assembled: 
SECTION 1. Shorf Tzitle. - This act shall be known as “Renewable Energy Act of 2006.” 
SECTION 2. Declaration oJPolicy. - It is the policy of the State to: 
(a) Promote the development of renewable energy resources to hrther reduce the 
country’s reliance on generation systems powered by imported fuels to minimize 
exposure of the economy to price fluctuations in the internationaf markets, the effects of 
which spiral down to almost all sectors of the economy; 
(b) Increase the utilization of renewable energy by institutionalizing its use, 
including tlie 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 tlie costs inherent in power generation. 
SECTION 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. 
1 


SECTION 4. Definition of lernfs. - As used in this Act, the following terms shall mean: 
(a) “Uioniass Energy Systems” refers to energy systems, which use biomass resources to 
produce heat, steam, mechanical power or electricity through either thermochemical, 
biochemical or physico-chemical processes. 
(b) “Bionzass Resources” refers 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. 
(c) “Board qf Investments” or “BO1”‘ refers to an attached agency of the Department of 
Trade and Industry created under Republic Act No. 5186, as amended. 
(d) ‘To-generation Systenzs” refers to facilities which produce electrical and/or 
mechanical energy and forms of usehl thermal energy such as heat or steam which are used for 
industrial, commercial heating or cooling purposes through the sequential use of energy. 
(e) “Departnient 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. 
(0 
“Departntent of Environnient and Natural Resources” or “DENR refers to the 
government agency created pursuant to Executive Order No. 192. 
(g) “Departnzcnt of Finance” or “DOF’ refers to the government agency created 
pursuant to Executive Order No. 127, as amended. 
(h) “Department of Science and Technology” or “DOSP’ refers to the government 
agency created pursuant to Executive Order No. 128. 
(i) “Departnicnt of Trade and Industry” or ‘‘DTT’ refers to the government agency 
created pursuant to Executive Order No. 133. 
(j) “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. 
2 


(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 Utility” 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 Contnzission” or “ERC refers to the independent quasi-judicial 
regulatory agency created pursuant to Republic Act No. 9136. 
(n)“Generntion Contpany” 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 and/or 
thermal energy such as but not limited to steam, hot or cold water. 
(p) “Geotlzermal Energy” refers to all geothermal fluids whether existing naturally or 
formed by the artificial introduction of fluids into naturally hot formation, beat energy in the 
earth, and any by-product derived from them. 
(q) “Geotlterinnl Encrby Systems” refers to machines or other equipment that converts 
geothermal energy into usehl power. 
(r) “Geotlzerntnl Resources” refers 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 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. 
3 


(s) “Governnient 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. 
(t) “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 ofRepublic Act No. 9136. 
(u) “Zlybrid Systenzs” refers 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 soladwind systems, 
biomass/fossil fuel systems, hydro/fossil fuel systems, integrated soladbiomass systems, 
integrated wind/fossil he1 systems, with a minimum of ten (10) megawatts or ten percent (10%) 
of the annual energy output provided by the Renewable Energy Systems components of the 
hybrid systems, whichever is lower. 
(v) “Hydroelectric Power Systenis” or “Hydropower Systems” refers to water-based 
energy systems which produce electricity by utilizing the kinetic energy of falling or running 
water to turn a turbine generator. 
(w) ‘%Tylroelectric Power Developnzenf’ or “Hydropower DeveIoptkxd’ 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. 
(x) “Hydroelectric Power Resources” or “Hydropower Resources” refers to water 
resources found technically feasible for development of hydropower projects, which include 
rivers, lakes, waterfalls, irrigation canals, springs, ponds and other water bodies. 
4 


(y) “Market Operator” refers to an autonomous group, constituted by the DOE, with 
equitable representation from electric power industry participants, that undertake the preparatoiy 
work and initial operation ofthe wholesale electricity spot market. 
(z) “Missionary EkctriJication” 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” of “NPC‘ refers to the government corporation 
created under Republic Act No. 6395, as amended. 
(bb) “National Transnzission 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. 
(dd) “Ocean Energy Systenzs” refers to energy systems which convert ocean or tidal 
current, ocean thermal gradient or wave energy into electrical or mechanical energy. 
(ee) “OfJGrid Systems” refers to electrical systems not connected to the wires and 
related facilities of any Mini-Grid System or the On-Grid Systems of the Philippines. 
(i.t) “On-Grid Systenzs” refers 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. 
(gg) “Renewable Energy (Systenzs) Developers” or “RE Developers’’ refers to 
individualh 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 systemsKacilities. 
5 


(hh) “Renewable Energy Policy Franzcwork” 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. 
(ii) “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 pre- 
development stage and the developmentlcommercial stage. The preliminary 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. 
(jj) “Renewable Energy Resources” or “RE Resources” refers 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 Sysfenzs” or “REF refers to energy systems, which convert 
renewable energy resources into useful energy forms, like electrical, mechanical, etc. 
(11) “Republic Act No. 9136 or “Electric Power lndustry Reform Act of 2001” refers to 
the law mandating the restructuring of the electric power sector and the privatization of the NPC. 
(rnm) “Rural EZectriJication” refers to the delivery of basic electricity services, 
consisting of power generation, subtransmission, and/or extension of associated power delivery 
system that would bring about important social and economic benefits to the countryside. 
(nn) “Sular Energy” refers to the energy derived from solar radiation that can be 
converted into useful thermal or electrical energy. 
6 


(00) “Solar Energy Sysfenzs” refer to energy systems which convert solar energy into 
thermal or electrical energy. 
(pp) “Snzall Power Utilities Group” or “SPUG‘ refers to the i‘bnctional unit of the 
National Power Corporation mandated under Republic Act No. 9136 to pursue missionary 
electrification function 
(qq) “Transnzission 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 usehl electrical or mechanical energy. 
(ss) “Wind Energy Sysfenzs” refers to the machines or other related equipment that 
convert wind energy into useful electrical or mechanical energy. 
(tt) “ Wholesale Electricity Spot Market” or “ WESW refers to the wholesale electricity 
spot market to be created pursuant to Republic Act No. 9136. 
CHAPTER 11 
ORGANIZATION 
SECTION 5. Lead Agency. - The DOE shall be the lead agency mandated to implement 
the provisions ofthis Act. 
CHAPTER I11 
ON-GRID RENEWABLE ENERGY DEVELOPMENT 
SECTION 6. 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 WS is hereby 
7 


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 over the 
next ten (1 0) 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). 
SECTION 7. 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. 
SECTION 8. Fit// 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 o f  electricity. 
8 


SECTION 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 W S M  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 10OkW 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. 
SECTlON 10. Net-metering and Distributed Generation for Renewable Energv. - 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 lOOkw in peak capacity, and shall meet any specific regulation, which may be 
issued by the DOE, in consultation with electric power industIy 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. 
9 


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. 
CHAPTER IV 
OFF-GRID RENEWABLE ENERGY DEVELOPMENT 
SECTION 11. Off-Grid Areas. - In the performance of its mandate to provide missionary 
electrification, the SPUG, successors-in-iiiterest and/or 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. 
CHAPTER V 
GOVERNMENT SHARE 
SECTION 12. 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. 
10 


CHAPTER VI 
ENVIRONMENTAL COMPLIANCE 
SECTION 13. Compliance with Environmental Regulations. - All renewable energy 
explorations, development, utilization, and RES operations shall be conducted in accordance 
with existing environmental regulations as prescribed by the DENR andor any other government 
agency. 
CHAPTER VI1 
GENERAL INCENTIVES 
SECTION 14. Incentivesjar Renewable Energy Projects and Activities. - RF: 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: 
A. Tax Zero and Duty-free Importation of RE Machinery, Equipment and Materials. - 
Within the first ten (10) years of an RE operating contract, importation of machinery 
and equipment, and materials and parts thereof, including it control and 
communication equipment, shall no be subject to tariff duties, and value-added tax: 
Provided, however, that the said machinery, equipment, materials and parts are: 
(i) not manufactured 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 
(iii)covered by shipping documents in the name of the duly registered 
Operator to whom the shipment will be directly delivered by customs 
authorities. 
1 1  


Providedj’iirfher, 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: 
(1) If made to another RE developer enjoying tax and duty exemption on 
imported capital equipment; 
(2) 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; 
(3) Exportation of the capital equipment, machinery, spare parts or source 
document or those required for RE development; and 
(4) For reasons of proven technical obsolescence 
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: Providedhrther, 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: Providedjna/&, 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. Otherwise, it shall no longer be 
subject to the payment of the taxes and duties waived thereon. 
12 


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; 
C. 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 inless developed areas as defined by the 
N E B .  
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 ofthe initial availment of the ITH. 
The Bureau of Internal Revenue (SIR) shall require an RE developer availing of 
the IT13 or NOLCO to secure a ceitificate of eligibility from the DOE before filing an 
official copy of its Income Tax Return (ITR) with the BOI. 
13 


Failure to secure certification and/or file the IT15 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 availinent for the taxable period. 
E. 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 he 
entitled to NOLCO. 
RE developers availing of the ITH as in this Act provided shall be entitled 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. 
G. 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 
SECTION 15. Hybrid und Cogeneration Systems. - The tax exemptions and/or incentives 
provided for in Section 14 of this Act shall be availed of by RE operating contract holders of 
I4 


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, machinerj 
and/or devices utilizing renewable energy resources. 
SECTION 16. Intermittent I= 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. 
SECTION 17. Incentives for RE 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. Tux and Duty-free Znzportatiun of Cumpunents, Parts and Muteriuls. - All 
shipments necessary for the manufacture and/or fabrication of RE equipment and components 
shall be exempted to importation tariff and duties and value adde4d 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/fabricator to whom the shipment will 
be directly delivered by customs authorities: Providedfurther, That prior approval by the DOE 
was obtained before the importation of such components, parts and materials were made; 
15 


B. Tax Credit on Domestic Ciipitul Components, Parts and Materials. - A tax credit 
equivalent to one hundred percent (100%)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. 
C. Income Tav Holiday and Exemption. - For six (6) years starting from the date of 
recognitiodaccreditation, an RE manufacturer, fabricator and supplier of RE equipment shall be 
filly exempt from income taxes levied by the National Government. 
SECTION 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. 
CHAPTER VI11 
GENERAL PROVISlONS 
SECTION 19. Creation of 
the National Renewable Energy Board (NWB). - 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 and the Secretaries or the 
designated Udersecretaries 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 
("C), 
national Transmission Corporation (TRANSCO), and Market Operator; and one (1) 
16 


representative each from the following sectors: renewable energy developers, Government 
Financial Institutions (GFIs), 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 th4e 
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 approval of the Department of Budget and Management 
(DBM) and existing civil service rules and regulations. 
The N E B  shall have the following powers and hnctions: 
A. Approve the National Renewable Energy Program, as formulated by the DOE; 
R. Evaluate and set the mandated Renewable Portfolio Standards and minimum RE 
generation capacities in off-grid areas, as it deems appropriate; 
C. 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; 
D. 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; 
17 


E. Oversee and monitor the collection and utilization of the Renewable Energy Trust 
Fund as administered by the Department; and 
F. Perform such other functions, as may be necessary, to attain the objectives of this 
Act. 
SECTION 20. Renewable Energy Trust Fund (RETFJ. 
~ 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: 
(a) 
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; 
Conduct nationwide resource and market assessment studies for biomass, solar, 
wind, hydro, tidal current, and ocean energy; 
Propagate RE knowledge by accrediting, tapping, training, and providing benefits to 
institutions, entities and organizations which can extend the promotion and 
dissemination ofRE benefits to the national and local levels; and 
Fund such other activities necessary or incidental to the attainment of the objectives 
of this Act. 
(b) 
(c) 
(d) 
(e) 
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 in a competitive and transparent manner. 
The RETF shall be funded from: 
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Proceeds from the emission fees collected from all generating facilities consistent 
with Republic Act No. 8749 or the Philippine Clean Air Act; 
One and Yi percent (1.5%) of the net annual income of the Philippine Charity 
Sweepstakes Office; 
One and % 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 % 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. 
SEC. 21. Financial 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 governnient 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. 
SEC. 22. Adoption of Waste-to-Energy Zechnologies. - The DOE shall, where 
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, 
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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 anaerohic digestion, fermentation and 
gasification, among others. 
CHAPTER IX 
FINAL PROVISIONS 
SEC. 23. Implementing 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. 
SEC. 24. Cungmssjonal Owmight 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. 
SEC. 25. Penally 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 (PlO0,OOO.OO) or twice the amount of damages or costs avoided for non-compliance, 
whichever is higher. 
SEC. 26. Oflcial Develupmeni Assisfunce. - The provision of Executive Order No. 230 
of 1986 and the rules and regulations governing the evaluation and authorization for the 
availment of OfXcial Development Assistance notwithstanding the privatization of renewable 
energy facilities as provided for in this Act shall be eligible for foreign loans and grants without 
firther evaluation by the NEDA Board, subject to Section 21, Article XI1 of the Constitution. 
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SECTION 27. SeparabiliQ Clause. - If any provision of this Act is held invalid or 
unconstitutional, the remainder of the Act or the provision not otherwise affected shall remain 
valid and subsisting. 
SECTION 28. Repealing Clause. - Any law, 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. 
SECTION 29. Efecthzl), Clause. - This Act shall take effect fifteen (15) days aRer its 
publication in at least two newspapers of general circulation. 
Approved, 
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