FOURTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
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S E N A T E  
S.B.No. 1221 
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 the country’s need to source its energy from “traditional” 
sources such as imported fuel. The meteoric rise of the price per barrel of crude oil is caused by 
the growing global demand for energy and the vagaries of geopolitics within the oil producing 
region. 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, depress 
employment levels. Foreign exchange spent on imported fuel adds a fiscal strain on govenunent 
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.* 
* This is the substitute bill for the various renewable energy bills filed during the Thirteenth Congress (SBN 2562, 
under Committee Report No. 208 filed on 20 December 2006). 


FOURTEENTH CONGRESS OF THE REPUBLIC ) 
First Regular Session 
1 
OF THE PHILIPPINES 
) 
-? 
ii 
-5 p .4. :;> 7 
S.B. SEN3%1 
No. 
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.c . ! .. "L' 
t i .  .-+-- 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
PROMOTING AND ENHANCING THE DEVELOPMENT, UTILIZATION 
AND COMMERCIALIZATION OF RENEWABLE ENERGY RESOURCES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
CHAPTER I 
TITLE AND DECLARATION OF POLICIES 
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defined as follows: 
SECTION 1. Short Title. - This Act shall be known as the "Renewable Energy Act of 
SECTION 2. Declaration ofPolicies. - It is hereby declared the policy of the State to: 
a) Promote the development of renewable energy resources to further reduce the 
country's reliance on generation systems powered by imported fuels to minimize exposure of 
the economy to price fluctuations in the international markets, the effects of which spiral 
down to almost all sectors of the economy; 
b) Increase the utilization of renewable energy by institutionalizing its use, including 
the development of national and local capabilities in the use of renewable energy systems, by 
providing fiscal and non-fiscal incentives; and, 
c) Establish the necessary infrastructure and mechanism to carry out the mandates 
specified in this Act and other existing laws. 
SECTION 3. Scope. -This Act shall establish the framework for the advancement and 
accelerated development of renewable energy resources, including the grant of fiscal and non- 
fiscal incentives to all renewable energy activities; and the program to increase its utilization. 
SECTION 4. Definition of Terms. - The following terms as used in this Act shall be 
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a. “Biomass Energy Systems” refer to energy systems which use biomass resources 
to produce heat, steam, mechanical power or electricity through either 
thermochemical, biochemical or physico-chemical processes; 
b. “Biomass Resources” refer to natural or processed plants and plant materials, trees, 
crop residues, wood and bark residues, and animal manure or any organic or 
biodegradable matter that can be used in bioconversion process; 
c. “Board of Investments (BOI)” refers to an attached agency of the Department of 
Trade and Industry created under Republic Act No. 5 186, as amended; 
d. “Co-generation systems” refer to facilities which produce electrical and/or 
mechanical energy and forms of useful thermal energy such as heat or steam which 
are used for industrial, commercial heating or cooling purposes through the 
sequential use of energy; 
e. “Department of Energy (DOE)” refers to the government agency created pursuant 
to Republic Act No. 7638 whose functions are expanded in Republic Act No. 9136 
and further expanded in this Act, which shall be the lead agency mandated to 
implement the provisions of this Act; 
“Department of Environment and Natnral Resources (DENR)” refers to the 
government agency created pursuant to Executive Order No. 192 
g. “Department of Finance @OF)” refers to the government agency created pursuant 
to Executive Order No. 127, as amended; 
h. “Department of Science and Technology (DOST)” refers to the government 
agency created pursuant to Executive Order No. 128; 
i. “Department of Trade and Industry @TI)” refers to the government agency 
created pursuant to Executive Order No. 133; 
“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; 
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k. “Distribution of Electricity” refers to the conveyance of electricity by a 
Distribution Utility through its distribution system pursuant to the provision of 
Republic Act No. 9136 and its implementing rules and regulations; 
1. “Distribution Utility (DU)” refers to any electric cooperative, private corporation, 
government-owned utility or existing local government unit which has an 
exclusive franchise to operate a distribution system in accordance with its 
franchise and Republic Act No. 9136; 
m. “Energy Regulatory Commission (ERC)” refers to the independent quasi-judicial 
regulatory agency created pursuant to Republic Act No. 9136; 
n. “Generation Company” refers to any person or entity authorized by the 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. “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” refers to machines or other equipment that converts 
geothermal energy into useful power; 
r. “Geothermal 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; 
s. “Government Share” refers to the amount due the National Government and Local 
Government Units from the exploitation, development, and utilization of naturally- 
occurring renewable energy resources; 
“Green Energy Option” refers to the mechanism to empower end-users to choose 
renewable energy in meeting their energy requirements; 
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u. “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. 9136; 
v. “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 soladwind systems, 
biomass/fossil fuel systems, hydro/fossil fuel systems, integrated solarbiomass 
systems, integrated windfossil fuel systems, with a minimum of ten (10) 
megawatts or ten percent (10%) of the annual energy output provided by the RE 
component; 
w. “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; 
x. “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; 
y. “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; 
z. “Micro-scale Project” refers to an RE? project with capacity not exceeding one 
hundred (1 00) kilowatts; 
aa. “Missionary Electrification” refers to the provision of basic electricity service in 
unviable areas with the aim of bringing the operations in these areas to viability 
levels; 
bb. “National Power Corporation (NPC)” refers to the government corporation created 
under Republic Act No. 6395, as amended by Republic Act NO. 9136; 
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cc. “National Transmission Corporation (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; 
dd. “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; 
ee. “Ocean Energy Systems” refer to energy systems which convert ocean or tidal 
current, ocean thermal gradient or wave energy into electrical or mechanical 
energy; 
ff. “Off-Grid Systems” refer to electrical systems not connected to the wires and 
related facilities of the On-Grid Systems of the Philippines; 
gg. “On-Grid System” 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; 
hh. “Philippine Electricity Market Corporation (PEMC)” refers to the Corporation 
incorporated upon the initiative of the DOE composed of all WESM Members and 
whose Board of Directors will be the PEM Board; 
ii. “Renewable Energy (Systems) Developers or RE Developers” refer to individualk 
or a group of individuals formed in accordance with existing Philippine Laws 
engaged in the exploration, development and utilization of RE resources and actual 
operation of RE systemdfacilities; 
jj. “Renewable Energy Market (REM)” refers to the market where the trading o f  the 
RE certificates equivalent to an amount of power generated from RE! resources is 
made; 
kk. “Renewable Energy Policy Framework (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; 
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11. ”Renewable Portfolio Standards” refer to a market-based policy that requires 
electricity suppliers to some an agreed portion of their energy supply from 
eligible RE resources; 
mm. “Renewable Energy Service (Operating) Contract (RE Contract)” refers to the 
service agreement between the Government, thru the DOE, 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 development/commercial stage. The 
preliminary assessment and feasibility study up to financial closing shall refer to 
the pre-development stage. The construction and installation of facilities up to 
operation phase shall refer to the development stage; 
nn. “Renewable Energy Resources (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, geothermal, ocean energy, and run-of-river hydropower 
conforming with internationally-accepted norms and standards on dams, and other 
emerging energy technologies; 
00. “Renewable Energy Systems (RE Systems)” refer to energy systems which 
convert RE resources into useful energy forms, like electrical, mechanical, etc.; 
pp. “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; 
qq. “Rural Electrification” refers to the delivery of basic electricity services, consisting 
of power generation, sub-transmission, and/or extension of associated power 
delivery system that would bring about important social and economic benefits to 
the countryside; 
rr. “Solar Energy” refers to the energy derived from solar radiation that can be 
converted into useful thermal or electrical energy; 
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ss. “Solar Energy Systems” refer to energy systems which convert solar energy into 
thermal or electrical energy; 
tt. “Small Power Utilities Group (SPUG)” refers to the functional unit of the NPC 
mandated under Republic Act No. 9136 to pursue missionary electrification 
function; 
uu. “Supplier” refers to any person or entity authorized by the ERC to sell, broker, 
market or aggregate electricity to the end-users; 
vv. “Transmission of Electricity” refers to the conveyance of electric power by 
TRANSCO or its buyer/concessionaire in accordance with its fianchise and 
Republic Act No. 9136; 
ww. “Wind Energy” refers to the energy that can be derived from wind that is 
converted into usehl electrical or mechanical energy; 
xx. “Wind Energy Systems” refer to the machines or other related equipment that 
convert wind energy into useful electrical or mechanical energy; 
yy. “Wholesale Electricity Spot Market (WESMJ” refers to the wholesale electricity 
spot market to be created pursuant to Republic Act No. 9136; 
CHAPTER I1 
ON-GRID REEWABLE ENERGY DEVELOPMENT 
SECTION 5. Renewable Portfolio Standard (RPS). - All stakeholders in the electric 
power industry shall contribute to the growth of the REM of the country. To provide impetus 
in the acknowledged market-driven electric power industry, an RPS is hereby imposed on all 
suppliers of electricity. Towards this end, the DOE shall, upon the recommendation of the 
National Renewable Energy Board (NREB) created under Section 18 of this Act, formulate 
and promulgate the RPS Rules on a per grid basis within three (3) years upon the effectivity 
of this Act which shall include, but not be limited to, the following: 
a) Types of RE resources and identification and certification of generating facilities 
using said resources that shall be required to comply with the RF’S obligation; 
b) 
Yearly minimum RPS requirements upon the establishment of the RPS Rules; 


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c) 
Annual minimum incremental percentage of electricity sold by each electricity 
supplier which is required to be sourced from eligible RE resources and which 
shall not be less than one percent (1%) per year over the next ten (10) years; and, 
Means of compliance by mandated electricity suppliers of the minimum 
percentage set by the government to meet the RPS requirements including direct 
generation from eligible RE resources, contracting for energy sourced from 
eligible RE facilities, or trading in the REM under Section 6 of this Act. 
d) 
Immediately upon effectivity of this Act, DOE shall, jointly with electric power 
industry participants, likewise develop and implement a preparedness program to inform, 
educate and prepare all stakeholders in the industry. 
The ERC shall enforce the impleinentation of the RPS Rules by undertaking necessary 
activities such as certifying generating facilities using eligible RE; resources, prescribing 
reportorial obligations related to RPS compliance and administration of penalties for non- 
compliance or violation of RPS Rules, among others. 
Further, ERC shall be responsible for 
the haudling of complaints that may arise between and among parties from any transactions 
related to RPS compliance by electricity suppliers. 
The RPS shall apply only to newly-installed capacity upon the effectivity of this Act 
and may be complied with by either directly generating from renewable sources, contracting 
for energy sourced from RE facilities or trading for renewable energy in the REM. 
SECTION 6. Renewuble Energy Market (REM). - To facilitate compliance with 
Section 5 of this Act, the DOE shall establish the REM and shall direct PEMC to implement 
changes to the WESM Rules in order to incorporate the rules specific to the operation of the 
REM under the WESM. 
The PEMC shall, under the supervision of the DOE, establish a Renewable Energy 
Registrar that shall issue, keep and verify RE Certificates corresponding to energy generated 
from eligible RE resources. Such certificates will be used for compliance with the RF'S. For 
this purpose, a transaction fee, agreed upon by the industry participants, may be imposed by 
PEMC. 
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SECTION 7. Green Energy Option. - The DOE shall establish a Green Energy Option 
program which provides end-users the option to choose RE resources. In consultation with the 
NREB, the DOE shall promulgate the appropriate implementing rules and regulations which 
are necessary, incidental or convenient to achieve the objectives set forth herein. 
Upon the determination of the DOE of its technical viability, end users with a monthly 
average of at least lOOkW may directly contract for RE based energy. 
Consistent herewith, TRANSCO, DUs, PEMC and all relevant parties are hereby 
mandated to provide the mechanisms for the physical connection and commercial 
arrangements necessary to ensure the succcss of the Green Energy Option. 
SECTION 8. Net-metering for Renewable Energy. 
- Subject to technical 
considerations and without discrimination and upon request by distribution end-users, the 
distribution utilities shall 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. 
The ERC, in consultation with electric power industry participants, shall establish net 
metering interconnection standards and pricing methodology within six (6) months upon the 
effectivity of this Act. 
The distribution utility shall be entitled to any Renewable Energy Certificate resulting 
from RE distributed generation for sale or use in the RPS. 
The DOE, ERC, TRANSCO, DUs, PEMC 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 for Renewable Energy 
program, consistent with the Grid and Distribution Codes. 
SECTION 9. Transmission and Distribution System Development. - TRANSCO or its 
buyer/concessionaire and all DUs, shall include the required connection facilities for RE- 
based power facilities in the Transmission and Distribution Development Plans, provided that 
such facilities are economically-viable, subject to the approval of the DOE. The connection 
facilities of RE power plants, including the extension of transmission and distribution lines, 
shall not be subject to deep-connection charging policies in rate-making. 
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CHAPTER I11 
OFF-GRID RENEWABLE ENERGY DEVELOPMENT 
SECTION 10. Off-Grid Areas. - Within two (2) years from the effectivity of this Act, 
NPC-SPUG or its successors-in-interest and/or qualified third parties in off-grid areas shall, in 
the performance of its mandate to provide missionary electrification, source a minimum 
percentage of its total annual generation upon recommendation of the NREB &om available 
RE resources in the area concerned, as may be determined by the DOE. 
As used in this Act, successors-in-interest refer to entities deemed technically and 
financially capable to servehake over existing NPC-SPUG .areas. 
Eligible RE generation in missionary areas shall be eligible for the provision of RE 
Certificates defined in Section 6 of the Act. 
CHAPTER IV 
GOVERNMENT SHARE 
SECTION 11. 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. 
To further promote the development of RE projects, the government hereby waives its 
share from the proceeds of micro-scale projects for communal purposes and non-commercial 
operations, which are not greater than one hundred (100) kilowatts. 
CHAPTER V 
ENVIRONMENTAL COMPLIANCE 
SECTION 12. Compliance with Environmental Regulations. - All RE? explorations, 
development, utilization, and RE systems operations shall be conducted in accordance with 
existing environmental regulations as prescribed by the DENR andor any other concerned 
government agency. 
CHAPTER VI 
GENERAL INCENTIVES 
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SECTION 13. Incentives for Renewable Energy Projects and Activities. - As duly 
certified by the DOE, RE developers of renewable energy facilities, including hybrid systems, 
for both power and non-power applications, shall be entitled to the following incentives in 
proportion to their RE components: 
a. 
Value-Added Tax, Duty-free Importation and Subsequent Sale 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 its control and communication equipment, shall 
not be subject to tariff duties and value-added tax; Provided, however, That the 
said machinery, equipment, materials and parts are: 
(9 
(ii) 
(iii) 
not manufactured domestically nor locally available in reasonable 
quantity and quality; 
directly and actually needed and used exclusively in the RE facilities 
for transformation into energy, and transmission of electric energy to 
the point of use; and, 
covered by shipping documents in the name of the duly registered 
Operator to whom the shipment will be directly delivered by customs 
authorities: 
Provided further, That approval by 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, 
however, That if such sale, transfer or disposition is made within the first five 
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; 
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(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; 
Provided further, That if the RE developer sells, transfers or disposes the 
aforementioned imported items without prior approval within five (5) years 
from the date of importation, the RE developer and the vendee, transferee, or 
assignee shall be solidarily liable to pay twice the amount of tax and duty 
exemption given it: Provided, finally, That even if the sale, transfer or 
disposition of the capital equipment, machinery or spare parts is approved after 
five (5) years kom 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. 
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 would have been paid on the RE machinery, equipment, 
materials and parts had these items been imported shall be given to an 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 approvd by the DOE was obtained by the local 
manufacturer; Provided further, That the acquisition of such machinery, 
equipment, materials, and parts shall be made within the validity of the RE 
operating contract. 
Special Realty Tax Rates on Equipment and Machinery. - Any law to the 
contrary notwithstanding, realty and other taxes on civil works, equipment, 
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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. 
Income Tax Holiday (ITH) and Exemption. - For the first six (6) years of its 
commercial operations, the RE operating contract holder shall be exempt from 
income taxes levied by the National Government; Provided, That the RE 
developer complies with the following: (1) large capital investments or 
sizeable employment generation, or (2) use high level of technology, or (3) 
located in less developed areas as defined by the NREB. 
Additional investments in the project shall be entitled to ITH equivalent to 
such investments and may be entitled to additional income tax holiday for as 
long as investment is made in the same project, upon approval by the DOE: 
Provided, That the entitlement period for additional investments shall not 
exceed three times the period of the initial availment of the ITH. 
The Bureau of Internal Revenue (BE) shall require an RE developer availing 
of the ITH or Net Operating Loss Caw-Over (NOLCO) to secure a certificate 
of eligibility from the DOE before filing an official copy of its Income Tax 
Return (ITR) with the BOI. 
Failure to secure certification and/or file the ITH or NOLCO availment for 
validation by the BO1 within forty-five (45) days from the last day of statutory 
filing date for ITR shall cause the forfeiture of the availment for the taxable 
period. 
Net Operating Loss Carry-Over (NOLCO). - The NOLCO 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 carried over as a deduction from gross income for the next five 
(5) consecutive taxable years immediately following the year of such loss: 
Provided, however, That operating loss resulting from the availment of 
incentives provided for in this Act shall not be entitled to NOLCO. 
d. 
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RE developers availing of the ITH as in this Act provided shall not be entitled 
to avail of the NOLCO. 
Accelerated Depreciation. - If, and only if, an RE project fails to receive an 
ITH before full operation, may it apply for Accelerated Depreciation in its tax 
books and be taxed based on such; Provided, That if it applies for Accelerated 
Depreciation, the project or its expansions shall no longer be eligible for an 
ITH. Accelerated depreciation of plant, machinery, and equipment that are 
reasonably needed and actually used for the exploration, development and 
utilization of RE resources may be depreciated using a rate not exceeding 
twice the rate which would have been used had the annual allowance been 
computed in accordance with the rules and regulations prescribed by the 
Secretary of the Department of Finance and the provisions of the National 
Internal Revenue Code (NIRC) of 1997, as amended. 
f. 
SECTION 14. Hybrid and Cogeneration Systems. - The tax exemptions and/or 
incentives provided for in Section 13 of this Act shall be availed of by RE operating contract 
holders of hybrid and cogeneration systems utilizing both RE sources and conventional 
energy; Pyovided, however, That the tax exemptions and incentives shall apply only to the 
equipment, machinery andor devices utilizing RE resources. 
SECTION 15. Intermittent RE resources. - TRANSCO, in consultation with 
stakeholders, shall determine the maximum penetration limit of the Intermittent RE-based 
power plants to the Grid, through technical and economic analysis. Subject to limitations 
imposed by the need to ensure reliability and safety of the grid and taking into account any 
economic impact, qualified RE generating units with intermittent RE resources shall enjoy the 
benefit of priority dispatch in accordance with the WESM Rules, as amended. 
As used in this Act, RE generating unit with intermittent RE resources refers to a RE 
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. 
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SECTION 16. 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. 
Tax and Duty-free Importation of Components, Parts and Materials. - All 
shipments necessary for the manufacture and/or fabrication of RE equipment 
and components shall be exempted from importation tariff and duties and value 
added tax: Provided, however, That the said components, parts and materials 
are: (i) not manufactured domestically in reasonable quantity and quality at 
competitive prices; (ii) 
directly and actually needed and shall be used 
exclusively in the manufacture/fabrication of RE equipment; and (iii) covered 
by 
shipping 
documents 
in 
the 
name 
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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; 
Tax Credit on Domestic Capital 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 would have been paid on the components, 
parts and materials had these items been imported shall be given to an 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, 
Income Tax Holiday and Exemption, - For six (6) years starting from the date 
of recognitiom'accreditation, an RE manufacturer, fabricator and supplier of RE 
b. 
c. 
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equipment shall be fully exempt from income taxes levied by the National 
Government. 
SECTION 17. Period of Grant of Fiscal Incentives. - The fiscal incentives granted 
under this Act shall apply only to the first 2,500 MW of 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 VI1 
GENERAL PROVISIONS 
SECTION 18. Creation of the National Renewable Energy Board (NREB). - The 
NREB is hereby created. It shall be composed of the Secretary of the DOE or his designated 
Undersecretary as chairman and the Secretaries or the designated Undersecretaries or 
Assistant Secretaries of the DTI, DOF and D E W  the Presidents or the duly designated 
representatives of the NPC, TRANSCO and PEMC; and one (I) representative each from the 
following sectors: RE developers, Government Financial Institutions (GFIs), private 
distribution utilities, electric cooperatives, suppliers, 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 from 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, thm the Renewable Energy Management Division 
(REMD), and shall directly report to the Office of the Secretary or the Undersecretary of the 
Department, as the case maybe, on matters pertaining to the activities of the NREB. The 
number of staff of the Technical Secretariat and the creation of corresponding positions 
necessary to complement and/or augment the existing plantilla of the REMD shall be 
determined by the Board, subject to approval by the Deparhnent of Budget and Management 
(DBM) and to existing civil service rules and regulations. 
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The NREB shall have the following powers and functions: 
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(a) Evaluate and recommend to the DOE the mandated RPS and minimum RE 
generation capacities in off-grid areas, as it deems appropriate; 
(b) Recommend specific actions to facilitate the implementation of the National 
Renewable Energy Program (NREP) to be executed by the DOE and other 
appropriate agencies of government; 
(c) Monitor and review the implementation of the NREP, including compliance with 
the RPS and minimum RE generation capacities in off-grid areas; 
(d) Oversee and monitor the utilization of the Renewable Energy Trust Fund created 
pursuant to Section 19 of this Act and administered by the DOE; and, 
(e) Perform such other functions, as may be necessary, to attain the objectives of this 
Act. 
SECTION 19. Renewable Energy Trust Fund (RETF). - 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 GFIs. The 
RETF shall be exclusively used to: 
Finance the research, development, demonstration, and promotion of the 
widespread and productive use of RE 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 the power and 
non-power applications of renewable energy systems; 
Propagate RE knowledge by accrediting, tapping, training, and providing benefits 
to institutions, entities and organizations which can extend the promotion and 
dissemination of RE benefits to the national and local levels; and, 
Fund such other activities necessary or incidental to the attainment of the 
objectives of this Act. 
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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 use or allocation thereof shall, as far as 
practicable, be done through in a competitive and transparent manner. 
The RETF shall be funded from: 
Proceeds from the emission fees collected from all generating facilities consistent 
with Republic Act No. 8749 or the Philippine Clean Air Act; 
One and % percent (1.5%) of the net annual income of the Philippine Chanty 
Sweepstakes Office; 
One and !h percent (1.5%) of the net annual income of the Philippine Amusement 
and Gaming Corporation; 
One and !h 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 BIR shall assist the DOE in 
formulating the Rules and Regulations to implement this provision; 
One and !h 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. 
SECTION 20. 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 government financial institutions shall, in accordance with and to 
the extent allowed by the enabling provisions of their respective charters or applicable laws, 
provide preferential packages for the development, utilization and commercialization of RE 
projects as duly recommended and endorsed by the DOE. 
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CHAPTER VI11 
FINAL PROVISIONS 
SECTION 21. Implementing Rules and Regulations (IRR). - Within six (6) months 
from the effectivity of this Act, the DOE shall, in consultation with the Senate and House 
Committees on Energy, relevant government agencies and RE! stakeholders, promulgate the 
IRR of this Act. 
SECTION 22. PruhibitedActs. - The following acts shall be prohibited: 
a) Non-compliance or violation of the Tips rules; 
b) Willful refusal to undertake net metering arrangements with qualified 
distribution grid users; 
c) Falsification or tampering of public documents or official records to avail of 
the fiscal and non-fiscal incentives provided under this Act; and 
d) Non-compliance with the established guidelines that DOE will adopt for the 
implementation of this Act. 
SECTION 23. Penalty Clause. - Any person, who Willfully aids or abets the 
commission of a crime prohibited herein or who causes the commission of any such act by 
another shall be liable in the same manner as the principal. 
In the case of association, partnership or corporations, the penalty shall be imposed on 
the partner, president, chief operating officer, chief executive officer, directors or officers 
responsible for the violation. 
The commission of any prohibited acts provided for under Section 22, upon conviction 
thereof, shall suffer the penalty of imprisonment of from one (1) year to five (5) years, or a 
fine ranging from a minimum of One Hundred Thousand Pesos (~100,000.00) to One 
Hundred Million Pesos (PlO0,000,000.00), or twice the amount of damages caused or costs 
avoided for non-compliance, whichever is higher, or both upon the discretion of the court. 
The DOE is further empowered to impose administrative fines and penalties for any 
violation of the provisions of this Act, its IRR and other issuances relative to this Act. 
This is without prejudice to the penalties provided for under existing environmental 
regulations prescribed by the DENR and/or any other concerned government agency. 
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SECTION 24. Oficial Development Assistance (ODA). - The provision of Executive 
Order No. 230 of 1986 and the rules and regulations governing the evaluation and 
authorization for the availment of ODA notwithstanding the privatization of RE 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 25. Separability 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 26. 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 27. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in at least two (2) newspapers of general circulation. 
Approved, 
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