FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
SENATE 
I 
Introduced by Senator JUAN MIGUEL F. ZUBlRl 
Explanatory Note 
The spiraling and unpredictable prices of imported fossil fuels have 
continuously affected the stability of our economy. The increase in prices of 
crude oil and other fossil fuels in the world market would always result to a drain 
in our dollar reserves and increase in the prices of fuels and other basic 
commodities in the country. This would sometimes even result to a volatile 
political scenario, thus affecting the stability of the economy even more. 
That does not include the harmful effects of fossil fuels consumption to the 
environment and the populace. Carbon dioxide emissions, through the burning 
of fossil fuels, is a great contributory factor to global warming. Climatic changes 
and abnormal weather patterns are just some of the effects of global warming. 
The Philippines was not spared from the harmful effects of global warming and 
climatic changes. In recent years, we have seen the destructive powers of 
climatic changes and abnormal weather patterns which brought-in strong 
typhoons in the country and heavy rains that resulted to floodings and landslides. 
The aftermath of typhoons Milenyo in Luzon and Reming in Bico!, both 
occurred in 2006, as well as the landslides in Southern Leyte and Payatas 
brought about by heavy rains, which resulted to massive destructions and loss of 
lives are forever etched in our memories. 
To avoid these scenarios, the country's dependence on fossil fuels should 
be dramatically decreased. Fortunately, the Philippines has a great potential in 
developing and utilization of other energy resources which would decrease our 
dependence on imported fossil fuels. 
These are our renewable energy 
resources. These include, among others, biomass, solar, wind, hydropower, 
geothermal, and ocean energy, and other emerging energy sources. 


It is comforting to note that the 2005 Power Development Program 
envisions the increase in the generation and utilization of renewable energy in 
the country. With the government's thrust to develop these renewable energy 
resources, which would positively affect our economy and environment, 
is 
incumbent upon us in Congress to lay down the policy framework in this 
emerging industry in the energy sector. By providing the rules of the game, so to 
speak, we will encourage and help develop the generation and utilization of 
renewable energy in the country. Thus, benefiting our economy and environment 
in the long run. 
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It is in this light that immediate passage of this bill is earnestly sought. 
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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
S.B.NO. 1303 
Introduced by Senator JUAN MIGUEL F. ZUBlRl 
AN ACT 
PROMOTING THE DEVELOPMENT, UTILIZATION AND COMMERCIALIZATION OF 
RENEWABLE ENERGY RESOURCES AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
CHAPTER I 
TITLE AND DECLARATION OF POLICIES 
SECTION 1. Short Title. - This Act shall be known as the "Renewable Energy Act 
of 2007". It shall hereinafter be referred to as the "Act". 
SEC. 2. Declaration of Policies. - It is hereby declared the policy of the State to: 
a) 
Accelerate the development and increase the share of renewable energy 
resources in the country's energy consumption to achieve energy self-reliance 
through the exploration, development and utilization of renewable energy 
resources such as, but not limited to, biomass, solar, wind, hydro, geothermal, and 
ocean energy sources or hybrid systems; 
b) 
Increase the utilization of renewable energy with due regard to gender- 
sensitive approaches by institutionalizing its use, developing national and local 
capabilities in the use of renewable energy systems, and promoting its efficient 
utilization and widespread application by providing fiscal and non-fiscal incentives: 
c) 
Establish the necessary infrastructure to carry out the mandates specified 
in this Act and other relevant existing laws; and 
d) 
Promote sustainable development of energy supply, with due regard to 
protecting the climate, nature, and environment.. 
SEC. 3. Scope. - This Act shall establish the framework for the accelerated 
development and advancement of renewable energy resources, through the grant of 
fiscal and non-fiscal incentives to all Renewable Energy activities; and the development 
of a strategic program to increase its share and utilization. 


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defined: 
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and primarily used for thermal and power generation; 
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resources to produce heat, steam, mechanical power or electricity; 
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(c) “Biomass Resources” refers to non-fossilized, biodegradable, organic 
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material originating from plants, animals, and micro-organisms. Also products, 
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by-products, residues from agriculture such as but not limited to biofuels, 
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bagasse, rice hulls, coconut husks and shells, corn stovers, non-fossilized and 
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biodegradable organic fractions of industrial and municipal wastes, as well as 
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gases and liquids recovered from the decomposition andlor extraction of non- 
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fossilized and biodegradable organic material. 
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amended; 
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energy; 
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(h) “Department of Finance” or “DOF” refers to the government agency created 
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(i) “Department of Science and Technology” or “DOST” refers to the 
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(j) “Department of Trade and Industry” or “DTI” refers to the government 
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( I )  “Distribution Utility’’ refers to any electric cooperative, private corporation, 
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government-owned utility or existing local government unit which has an 
SEC. 4. Definition of Terms. -As used in this Act, the following terms are herein 
(a) “Biofuels” refers to bioethanol, biodiesel and other fuels made from biomass 
(b) “Biomass Energy Systems” refers to energy systems which use biomass 
(d) “Board of Investments” or “BOI” refers to an attached agency of the 
Department of Trade and Industry created under Republic Act No. 5186, as 
(e) “Cogeneration systems” refers to facilities which produce electrical and/or 
mechanical energy and forms of useful thermal energy such as heat or steam 
which are used for heating or cooling purposes through the sequential use of 
(f) “Department of Energy” or “DOE” refers to the government agency created 
pursuant to Republic Act No. 7638 whose functions were expanded in R.A. 
9136 and further expanded in this Act; 
(9) “Department of Environment and Natural Resources or DENR refers to 
the government agency created pursuant to Executive Order No. 192; 
pursuant to Executive Order No. 127, as amended; 
government agency created pursuant to Executive Order No. 128; 
agency created pursuant to Executive Order No. 133; 
(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; 


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exclusive franchise to operate a distribution system in accordance with its 
franchise and Republic Act No. 9136; 
(m)“Energy Regulatory Commission” or “ERC” refers to the independent 
quasi-judicial regulatory agency created pursuant to Republic Act No. 9136; 
(n) “Generation Company” refers to any person or entity authorized by the 
Energy Regulatory Commission (ERC) to operate facilities used in the 
generation of electricity; 
(0) “Generation Facility” refers to a facility for the production of electricity 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; 
(4) ”Geothermal Energy Systems” refer to machines or other equipment that 
(r) “Geothermal Resources” refers to mineral resources, classified as renewable 
energy resource, in the form of: (1) all products of geothermal processes, 
embracing indigenous steam, hot water and hot brines; (2) steam and other 
gases, hot water and hot brines resulting from water, gas, or other fluids 
artificially introduced into geothermal formations; (3) heat or associated energy 
found in geothermal formations; and (4) 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; 
converts geothermal energy into useful power; 
(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 of Republic Act No. 
91 36; 
(u) “Hybrid System” 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 solar/wind systems, biomasslfossil fuel 
systems, hydro/fossil fuel systems, integrated solar/biomass systems, 
integrated wind/fossil fuel systems, based on fen percent (10%) of the annual 
energy output provided by the RES components of the hybrid systems; 
(v) “Hydroelectric Power Systems” or “Hydropower Systems” refers to water- 
based energy systems which produce electricity by utilizing the kinetic energy 
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of falling or running water to turn a turbine generator, compliant with World 
Commission on Dams standards; 
(w)“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; 
(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; 
(y) “Market Operator” refers to an autonomous group, constituted by the DOE, 
with equitable representation from electric power industry participants, that 
undertake the preparatory work and initial operation of the wholesale electricity 
spot market; 
(z) “Missionary Electrification” refers to the provision of basic electricity service 
in unviable areas with the aim of bringing the operations in these areas to 
viability levels; 
(aa) 
“National Power Corporation” or “NPC” refers to the government 
corporation created under Republic Act No. 6395, as amended; 
“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; 
(bb) 
(cc) 
“Net Metering” refers to a system, , in which 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 Systems” refers to energy systems which convert ocean 
or tidal current, ocean thermal gradient or wave energy into electrical or 
mechanical energy; 
“Off-Grid 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; 
(ff) “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; 
“Renewable Energy (Systems) Developers” or “RE Developers” refers 
to individual/s or a group of individuals formed in accordance with existing 
(ee) 
(gg) 
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Philippine laws and duly registered with the DOE engaged in the exploration, 
production, development and utilization of renewable energy resources and/or 
actual operation of renewable energy systems/facilities; 
(hh) 
“Renewable Energy Policy Framework” or “REPF” refers to the long- 
term policy developed by the DOE which identifies among others, the goals 
and targets for the development and utilization of renewable energy in the 
country; 
(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 and/or the RE Developer and other private entity 
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 
developmentkommercial 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; 
(kk) 
“Renewable Energy Systems” or “RES” 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 Industry Reform Act of 2001” 
refers to the law mandating the restructuring of the electric power sector and 
the privatization of the NPC; 
(mm) “Rural Electrification” refers to the delivery of basic electricity services, 
consisting of power generation, subtransmission, and/or extension of 
associated power delivery system that would bring about important social and 
economic benefits to the countryside; 
(nn) 
“Small-Scale Distributed Generation” refers to a system of small 
generation entities supplying directly to the distribution grid, any one of which 
shall not exceed 100 kWin capacity; 
“Solar Energy” refers to the energy derived from solar radiation that can 
(00) 
be converted into useful thermal or electrical energy; 
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(pp) 
“Solar Energy Systems” refers to energy systems which convert solar 
energy into thermal or electrical energy; 
“Small Power Utilities Group” or “SPUG” refers to the functional unit of 
the National Power Corporation mandated under Republic Act No. 9136 to 
pursue missionary electrification function; 
(qq) 
(rr) “Transmission of Electricity” refers to the conveyance of electricity through 
(ss) 
“Wind Energy” refers to the energy that can be derived from wind that is 
(tt) “Wind Energy Systems” refers to the machines or other related equipment 
“Wholesale Electricity Spot Market” or “WESM” refers to the wholesale 
the high-voltage backbone system; 
converted into useful electrical or mechanical energy; 
that convert wind energy into useful electrical or mechanical energy; 
(uu) 
electricity spot market created pursuant to Republic Act No. 9136; 
CHAPTER II 
ORGANIZATION 
SEC. 5. Lead Agency. - The DOE shall be the lead agency mandated to 
implement the provisions of this Act. 
CHAPTER 111 
ON-GRID RENEWABLE ENERGY DEVELOPMENT 
SEC. 6 Feed-ln Sysfern - To stimulate the economic development of renewable 
energy, a Feed-In System for electricity produced for each type of renewable energy 
technology is hereby mandated. Towards this end, the NREB created under Section 19 
of this Act, shall: 
a) Prioritize connections to the grid for general electricity supply of power 
plants generating electricity from renewable energy sources within 
territory of the Philippines; 
b) Prioritize the purchase and transmission of and payment for, such 
electricity by grid market operators; 
c) Determine the fixed tariff to be paid to electricity produced from each 
type of renewable energy and mandated number of years within a 
minimum of twelve (12) years; 
d) Formulate the tariff that will allow the economic operation of the 
renewable energy sources; 
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e) Establish the Feed-In System to be unbureaucratic as possible to allow 
efficient use of financial resources and to attract RE industry investors 
for the development of manufacturing facilities; and 
f) Implement a nationwide equalization scheme for the quantity of 
electricity purchased and paid for. 
SEC. 7. Renewable Portfolio Standard (RPS). - All stakeholders in the electric 
power industry shall contribute to the growth of the renewable energy market of the 
country. Towards this end, the National Renewable Energy Board (NREB), created under 
Section 19 of this Act, shall set the minimum percentage of power sourced from eligible 
Renewable Energy by distribution utilities to be imposed on a per grid basis within two (2) 
years from the effectivity of this Act, subject to the approval of the Joint Congressional 
Power Commission under Section 23 of this Act. 
Provided that such minimum 
percentage shall not be less than the average share of power from renewable energy 
sources three (3) years prior to the effectivity of this Act. 
Thereafter, the DOE shall, in consultation with the sector concerned, 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 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). 
SEC. 8. Green Energy Option. - A Green Energy Option Program, which shall 
provide end-users the option to choose renewable energy resources, shall be made 
available to all end-users. Towards this end, the ERC shall, in collaboration with the 
National Renewable Energy Board, the PEMC and the industry players, cause the 
necessary modification of the Implementing Rules and Regulations, WESM Rules or any 
relevant Rules or Regulations. 
End users with a monthly average peak demand of at least 100kW may directly 
contract for RE-based energy with the power generator. Provided that end-users with a 
monthly average peak demand of less than 100kW may contract for RE-based energy 
with the distribution utility. 
Consistent herewith, the National Transmission Corporation, the Distribution 
Utilities, the PEMC, and all relevant parties are hereby mandated to provide the 
appropriate mechanisms for the physical connection and commercial arrangements 
necessary to ensure the success of the Green Energy Option. 
SEC. 9. Net-meferfng and Distributed Generation for Renewable Energy. - The 
distribution utilities shall, upon request and subject to technical considerations and 
without discrimination, enter into net-metering agreements with distribution grid users. 
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The distribution utility shall charge qualified users their net energy consumption at 
the standard retail rate and shall credit net contributors of energy from renewable 
sources at the prevailing average bulk generation rate. 
The distribution utility shall be entitled to any renewable energy production 
certificate resulting from distributed RE generation for sale or use in the RPS. 
Consistent herewith, the National Transmission Corporation, the Distribution 
Utilities, 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 and Distributed Generation for Renewable Energy program. 
CHAPTER IV 
OFF-GRID RENEWABLE ENERGY DEVELOPMENT 
SEC. I O .  Off-Grid Areas. - In the performance of its mandate to provide 
missionary electrification, the SPUG, successors-in-interest 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 
SEC. 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. Provided further that the government share shall be collected ten ( I O )  
years from the commencement of commercial operations of the RE development 
projects. 
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CHAPTER VI 
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ENVIRONMENTAL COMPLIANCE 
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SEC. 12. Compliance with Environmental Regulations. - All renewable energy 
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explorations, development, utilization, and RES operations shall be conducted in 
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accordance with existing environmental regulations as prescribed by the DENR and/or 
any other government agency. 
CHAPTER VI1 
GENERAL INCENTIVES 
SEC. 13. Incentives for Renewable Energy Projects and Activities. - 
RE 
developers of renewable energy facilities, including hybrid systems, in proportion to their 
RE component, for both power and non-power applications, as duly certified by the DOE, 
shall be entitled to the following privileges: 
(a) Tax and Duty-free Importation of RE Machinery, Equipment and Materials. - 
Within the first ten (IO) years upon issuance of a certification of an RE 
developer by the DOE, the importation of machinery and equipment, and 
materials and parts thereof, 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 nor locally available in reasonable 
(2) directly and actually needed and used exclusively in the RE developer’s 
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 RE 
developer to whom the shipment will be directly delivered by customs 
authorities: 
Provided further, That the above-mentioned certification is obtained before the 
importation of such machinery, equipment, materials and parts are made; 
Such certification by 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 date of importation, any of the following conditions must 
be present: 
quantity and quality; 
If made to another RE developer enjoying tax and duty exemption on 
imported capital equipment; 
If made to another RE developer, upon payment of any taxes and 
duties due on the net book value of the capital equipment to be sold; 
Exportation of the capital equipment, machinery, spare parts or 
source documents or those required for RE development; and 
For reasons of proven technical obsolescence. 
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When the aforementioned sale, transfer or disposition is made under any of the 
conditions provided for in the foregoing paragraphs other than paragraph (ii), 
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 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. 
(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 duly registered RE 
developer 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, materials, and 
parts shall be made within the validity of the DOE certification; 
(c) Special Real Property Tax Rates on Machinery, Equipment and Other 
lmprovemenfs. - Any law or local ordinance to the contrary notwithstanding, 
real property tax on machinery, equipment 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) lncome Tax Holiday and Exemption. - For the first six (6) years of its 
commercial operations, the duly registered RE developer shall be exempt from 
income taxes levied by the National Government. 
Additional investments in the project shall be entitled to income tax holiday 
equivalent to such investments and may be entitled to additional income tax 
holiday for as long as investment is made in the same project; Provided, That 
the entitlement period for additional investments shall not exceed three times 
the period of the initial availment of the ITH. 
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An RE developer availing of the ITH or NOLCO shall be required to secure a 
certificate of eligibility from the DOE before filing an official copy of its Income 
Tax Return (ITR) with the Bureau of Internal Revenue (BIR). 
Failure to secure certification and/or file the ITH or NOLCO availment for 
validation by the DOE 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. 
(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 
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. 
RE developers availing of the ITH as provided in this Act shall not be entitled to 
avail of the NOLCO. 
(0 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 would 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 andlor for 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. 
(h) VAT Zero-Rated. - The sale of power or fuel generated from renewable 
sources of energy such as, but not limited to, biomass, solar, wind, 
hydropower, geothermal, ocean energy, and other emerging energy sources 
using technologies such as fuel cells and hydrogen fuels, shall be VAT zero- 
rated, pursuant to Section 6, paragraph B, sub-paragraph 7 of Republic Act 
No. 9337: Provided. That the sale of such renewable sources of energy as fuel 
shall likewise be VAT zero-rated. 
(i) Exemption from TRANSCO'S Wheeling Charge. - Power and electricity 
generated through the RES for the generator's own consumption and/or for 
distribution in the grid areas shall be exempted from the payment of the 
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relevant transmission and sub-transmission wheeling charges as provided for 
under Sections 19 and 24 of Republic Act No. 9136. 
SEC. 14. Hybrid and Cogeneration Systems. - The tax exemptions and/or 
incentives provided for in Section 13 of this Act shall be availed of by duly registered RE 
developers of hybrid and cogeneration systems, utilizing both RE sources and 
conventional energy: Provided, however, That the tax exemptions and incentives shall 
apply only to the equipment, machinery and/or devices utilizing renewable energy 
resources. 
SEC. 15. Carbon Monoxide Emission Standard for Biomass Fuels. - Any law to 
the contrary notwithstanding, the processes, fuel burning equipment and/or industrial 
plants that use biomass shall comply with the carbon monoxide emission standard fo be 
set by the DENR upon prior consultation with various stakeholders. 
SEC. 16. lntermittenf RE Resources. - 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 runoff river hydro, wind, 
ocean energy. 
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. 
SEC. 17. lncentives for RE Commercialization. - All manufacturers, fabricators 
and suppliers of locally-produced RE equipment, components and materials 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 customs duties and 
value added tax: Provided, however, That the said components, parts and 
materials are: (a) not manufactured domestically in reasonable quantity and 
quality at competitive prices; (b) directly and actually needed and shall be 
used exclusively in the manufacture/fabrication of RE equipment; and (c) 
covered by shipping documents in the name of the duly registered 
manufacturer/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; 
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(b) 
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 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, 
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; 
h o m e  Tax Holiday and Exemption. - For six (6) years starting from the 
date of recognitionlaccreditation, an RE manufacturer, fabricator and 
supplier of RE equipment shall be fully exempt from income tax levied by 
the National Government. 
(c) 
SEC. 18. Application of Fiscal Incentives. - Renewable energy shall be 
automatically included in the list of industries under the Investment Priorities Plan (IPP) 
upon the effectivity of this Act. 
CHAPTER VI11 
GENERAL PROVISIONS 
SEC. 19. Creafion of the National Renewable Energy Board (NREB). - 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 undersecretaries or assistant secretaries of the 
Department of Trade and Industry (DTI), Department of Finance (DOF) and Department 
of Environment and Natural Resources (DENR); the Presidents or the duly designated 
representatives of the National Power Corporation (NPC), National Transmission 
Corporation (TRANSCO), and 
PEMC; and one (1) representative each from the 
renewable energy developers, Government Financial Institutions (GFls), and non- 
governmental organizations, duly endorsed by their respective industry associations and 
appointed by the President of the Republic of the Philippines, as members. 
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, thru the Renewable Energy Management Division, and 
shall directly report to the Office of the Secretary or the Undersecretary of the 
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Department, as the case maybe, on matters pertaining to the activities of the NREB. The 
number of staff of the Technical Secretariat and the creation of corresponding positions 
necessary, to complement and/or augment the existing plantilla of the Renewable Energy 
Management Division shall be determined by the Board, subject to approval by the 
Department of Budget and Management (DBM) and existing civil service rules and 
regulations. 
The NREB shall have the following powers and functions: 
a) 
DOE; 
Approve the National Renewable Energy Program, as formulated by the 
Formulate and promulgate the Fixed Tariff System Rules within one (1) 
year upon the effectivity of this Act; 
Recommend specific actions in facilitating the implementation of the 
National Renewable Energy Program to be executed by the DOE and other 
appropriate agencies of government: 
Monitor and review the implementation of the National Renewable Energy 
Program, including the compliance with the Renewable Portfolio Standards 
and minimum RE generation capacities in off-grid areas: 
Oversee and monitor the collection and utilization of the Renewable Energy 
Trust Fund as administered by the Department: 
Formulate and oversee the implementation of a program which shall fast- 
track investments in Renewable Energy; 
Perform such other functions, as may be necessary, for the effective 
implementation of this Act. 
SEC. 20. 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 GFI. The RETF shall be exclusively used to: 
Finance the research, development, demonstration and promotion of the 
widespread and productive use of renewable energy systems for power and 
non-power applications; 
Support the development and operation of new RE resources to improve 
their competitiveness in the market: Provided, That the grant thereof shall 
be done through a competitive and transparent manner; 
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 
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promotion and dissemination of RE benefits to the national and local levels; 
and 
(e) Fund such other activities necessary or incidental to the attainment of the 
objectives of this Act. 
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 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; 
Fifly percent (50%) of the national government share from geothermal 
operations; 
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 one half percent (1.5%) of the proceeds of the national 
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 Assisfance 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. 
CHAPTER IX 
FINAL PROVISIONS 
SEC. 23. Implementing Rules and Regulafions. - Within six (6) months from the 
effectivity of this Act, the DOE shall, in collaboration with 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 Power Commission. 
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SEC. 24. Congressional Oversight - Upon the effectivity of this Act, the Joint 
Congressional Power Commission created under Section 62 of R.A. No. 9136, otherwise 
known as the "Electric Power Industry Reform Act of 2001" shall, in addition to its existing 
functions, oversee the implementation of this Act. 
SEC. 25. Penalty Clause. - Any person found in violation, through an act of 
commission or omission, of the provisions of this Act shall pay a minimum penalty of One 
Hundred Thousand Pesos (PlOO,OOO.OO) 
or twice the amount of damages or costs 
avoided for non-compliance, whichever is higher. 
SEC. 26. Official Development Assistance. - The provision of Executive Order No. 
230 of 1986 and the rules and regulations governing the evaluation and authorization for 
the availment of Official Development Assistance notwithstanding, the privatization of 
renewable energy facilities as provided for in this Act shall be eligible for foreign loans 
and grants without further evaluation by the NEDA Board, subject to Section 21, Article 
XI1 of the Constitution. 
SEC. 27. Separability Clause. - If for any reason, any provision of this Act or any 
part thereof shall be held unconstitutional or invalid, the other parts or provisions of this 
Act, which are not affected thereby, shall remain in force and effect. 
SEC. 28. Repealing Clause. - All laws, decrees, orders, rules and regulations or 
parts thereof, inconsistent with any of the provisions of this Act are hereby repealed, 
amended or modified accordingly. 
complete publication in at least two (2) newspapers of general circulation. 
SEC. 29. Effectivity Clause. -This Act shall take effect fifteen (1 5) days after its 
APPROVED, 
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