FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
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S E N A T E  
Senate Bill No. 
588 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
One of the hallmarks of a truly developed country is the availability of a 
This is the reason why the energy sector is 
sustainable source of energy. 
considered as one of the primary and essential industries in an economy. 
This measure seeks to promote and enhance the development, utilization 
and commercialization of renewable energy resources. It seeks to reduce the 
country's reliance on generation systems powered by imported fuels and to 
institutionalize the use of renewable energy on a sustainable level. 
The same measure was considered and deliberated upon in the plenary 
session during the Thirteenth Congress. Various stakeholders of the energy 
sector were already consulted in the drafting of this bill; hence, immediate 
approval of this measure is earnestly sought. 
Senator 


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FOURTEENTH CONGRESS OF THE REPUBLIC 
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OF THE PHILIPPINES 
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First Regular Session 
1 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
AN ACT 
PROMOTING AND ENHANCING THE DEVELOPMENT, UTILIZATION AND 
COMMERCIALIZATION OF RENEWABLE ENERGY RESOURCES 
Be it enacted by the Senate and 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 "Renewab/e 
Energy Act of 2007'. 
SEC 2. Declaration of Policies. - 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. 
SEC 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. 


SEC 4. Definition of Terms. - The following terms as used in this Act shall 
be defined as follows: 
Biomass Energy Systems refer to energy systems which use biomass 
resources to produce heat, steam, mechapical power or electricity 
through either thermochemical, biochemical or 
physico-chemical 
processes; 
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; 
Board of Investments (601) refers to an attached agency of the 
Department of Trade and Industry created under Republic Act No. 51 86, 
as amended; 
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; 
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 Natural Resources (DENR) refers to 
the government agency created pursuant to Executive Order No. 192 
Department of Finance (DOF) refers to the government agency created 
pursuant to Executive Order No. 127, as amended; 
Department of Science and Technology (DOST) refers to the 
government agency created pursuant to Executive Order No. 128; 
Department of Trade and Industry (DTI) 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; 
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; 
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; 
Energy Regulatory Commission (ERC) refers to the independent 
quasi-judicial regulatory agency created pursuant to Republic Act No. 
91 36; 


Generation Company refers to any person or entity authorized by the 
ERC to operate facilities used in the generation of electricity; 
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; 
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: 
Geothermal Energy Systems refers lo machines or other equipment 
that converts geothermal energy into useful power, 
Geothermal Resources refers to mineral resources, classified as 
renewable energy resource, in the form of: (a) all products of geothermal 
processes, embracing indigenous steam, hot water, and hot brines; (b) 
steam and other gases, hot water, and hot brines resulting from water, 
gas, or other fluids artificially introduced into geothermal formations; (c) 
heat or associated energy found in geothermal formations; and (d) any 
by-product derived from them; 
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; 
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; 
Hybrid Systems refer to any power or energy generation facility which 
makes use of two or more types of technologies utilizing both 
conventional andlor renewable fuel sources, such as, but not limited to, 
integrated solar wind systems, biomass fossil fuel systems, hydro/fossil 
fuel systems, integrated solid biomass systems, integrated wind/fossil 
fuel systems, with a minimum of ten ( I O )  megawatts or ten percent 
(10%) of the annual energy output provided by the RE component; 
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; 
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; 
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 refers to the government corporation 
created under Republic Act No. 6395, as amended by Republic Act No. 
91 36; 
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; 
Off-Grid Systems refer to electrical systems not connected to the wires 
and related facilities of the On-Grid Systems of the Philippines; 
ff) 
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 PEW Board; 
Renewable Energy (Systems) Developers or RE Developers refer to 
individual 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 systems/facilities; 
Renewable Energy Market (REM) refers to the market where the 
trading of 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; 
Renewable Energy Portfolio Standards (REPS) refer to a market- 
based policy that requires electricity suppliers to source an agreed 
portion of their energy supply from eligible RE resources; 
ii) 
jj) 
II) 


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 developmentkommercial 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, andlor extension of 
associated power delivery system that would bring about important social 
and economic benefits to the countryside; 
Solar Energy refers to the energy derived from solar radiation that can 
be converted into useful thermal or electrical energy; 
ss) Solar Energy Systems refer to energy systems which convert solar 
energy into thermal or electrical energy; 
Small Power Utilities Group (SPUG) refers to the functional unit of the 
NPC mandated under Republic Act No. 9136 to pursue missionary 
electrification function: 
rr) 
tt) 
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 buyerkoncessionaire in accordance with its 
franchise and Republic Act No. 9136; 
ww) Wind Energy refers to the energy that can be derived from wind that is 
converted into useful 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 (WESM) refers to the wholesale 
electricity spot market to be created pursuant to Republic Act No. 9136. 


CHAPTER II 
ON-GRID RENEWABLE ENERGY DEVELOPMENT 
SEC 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 
RPS obligation; 
b) Yearly minimum RPS requirements upon the establishment of the RPS 
Rules; 
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 (70) years; and, 
d) 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. 
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 implementation of the RPS Rules by undertaking 
necessary activities such as certifying generating facilities using eligible RE 
resources, prescribing reportorial obligations related to RPS co mpliance and 
administration of penalties for non-compliance or violation of RF'S Rules, among 
others. Further, ERC shall be responsible for the handling 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. 
SEC 6. Renewable 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 RE 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 RPS. For this purpose, a transaction fee, agreed upon by 
the industry participants, may be imposed by PEMC. 
SEC 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. 
monthly average of at least 100 KW may directly contract for RE based energy. 
Upon the determination of the DOE of its technical viability, end users with a 
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 success of the Green Energy 
Option. 
SEC 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 RE 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. 
SEC 9. Transmission and Distribution System Development. - TRANSCO 
or its buyerlconcessionaire 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. 
CHAPTER 111 
OFF-GRID RENEWABLE ENERGY DEVELOPMENT 
SEC 10. Off-Grid Areas. - Within two (2) years from the effectivity of this Act, 
NPC-SPUG or its successors-in-interest andlor 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 from 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 seweltake 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 
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. 
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 
SEC 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 and/or any other concerned government agency. 
CHAPTER VI 
GENERAL INCENTIVES 
SEC 13. Incentives for Renewable Energy Projects and Activities. - As 
duly certified by the DOE, RE developers of renewable 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 (1 0) 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: 
1. 
Not manufactured domestically nor locally available in 
reasonable quantity and quality; 


2. 
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, 
3. 
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 (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; 
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: 
(2) 
(3) 
Exportation of the capital equipment, machinery, spare parts or 
source document or those required for RE development; and 
For reasons of proven technical obsolescence 
(4) 
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, fininally, 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 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 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 RE operating contract. 
c. Special Realfy 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. lncome 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 (BIR) shall require an RE developer 
availing of the ITH or Net Operating Loss Carry-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 andlor 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. 
e. 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. RE developers availing of the ITH as in this Act provided shall 
not be entitled to avail of the NOLCO. 
f. 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. 
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 RE 
operating contract holders 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 andlor devices 
utilizing RE resources. 
SEC 15. lntermiftenf 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. 
SEC 16. lncenfives 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 andlor 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 of the duly registered 
manufacturer I 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 VAT 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; 
lncome Tax Holiday and Exemption. - For six (6) years starting 
from the date of recognition I accreditation, an RE manufacturer, 
fabricator and supplier of RE equipment shall be fully exempt from 
income taxes levied by the National Government. 
b. 
c. 


SEC 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 
SEC 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 
DENR, the Presidents or the duly designated representatives of the NPC, 
TRANSCO and PEMC; and one (1) representative each from the following 
sectors: RE developers, Government Financial Institutions (GFls), 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, thru the RE 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 andlor 
augment the existing plantilla of the REMD shall be determined by the Board, 
subject to approval by the Department of Budget and Management (DBM) and to 
existing civil service rules and regulations. 
The NREB shall have the following powers and functions: 
(a) 
Evaluate and recommend to the DOE the mandated RPS and 
minimum RE generation capacities in off-grid areas, as it 
deems appropriate; 
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; 
Monitor and review the implementation of the NREP, including 
compliance with the RPS and minimum RE generation 
capacities in off-grid areas; 
Oversee and monitor the utilization of the Renewable Energy 
Trust Fund created p ursuant to Section 19 of this Act and 
administered by the DOE; and, 
Perform such other functions, as may be necessary, to attain 
the objectives of this Act. 
(b) 
( 4  
(d) 
(e) 


SEC 19. Renewable Energy Trust Fund (RETF). - A RETF 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 
GFls. The RETF shall be exclusively used to: 
a) 
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 RE 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, 
b) 
c) 
d) 
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 use 
or allocation thereof shall, as far as practicable, be done through in a competitive 
and transparent manner. 
The RETF shall be funded from: 
a) 
Proceeds from the emission fees collected from all generating 
facilities consistent with Republic Act No. 8749 or the Philippine 
Clean Air Act; 
One and a half percent (1.5%) of the net annual income of the 
Philippine Charity Sweepstakes Office; 
One and a half percent (1.5%) of the net annual income of the 
Philippine Amusement and Gaming Corporation; 
One and a half percent (1.5%) of the net annual dividends 
remitted to the National Treasury of the Philippine National Oil 
Company and its subsidiaries; 
e) 
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; 
b) 
c) 
d) 


9 
One and a half percent (1.5?h) 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 
9) 
h) 
SEC 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. 
CHAPTER Vlll 
FINAL PROVISIONS 
SEC 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. 
SEC 22. Prohibited Acfs. -The following acts shall be prohibited: 
a) Non-compliance or violation of the RF'S 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. 
SEC 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 23, 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 (PI 00,000.00) to One Hundred Million Pesos (PlOO,OOO,OOO.OO), 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 andlor any other concerned 
government agency. 
SEC 24. Official 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. 
SEC 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. 
SEC 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. 
SEC 27. Effectivity Clause. - This Act shall take effect fifteen (1 5) days after 
its publication in at least two (2) newspapers of general circulation. 
Approved,