FOURTEENTH CONGRESS OF THE 
First Regular Session 
REPUBLIC OF THE PHILIPPINES 
SENATE 
S.B.No. 2 1  
f\EGEIVED BY:- 
Introduced bv SENATOR EDGARDO J. ANGARA 
EXPLANATORYNOTE 
Philippines, which is situated on the periphery of the Asia-Pacific belt 
and which boasts a successful track record of exploiting local abundant 
geothermal energy, exhibits a vast, well-mapped potential for New and 
Renewable Energy (NRE) resources. These indigenous NRE which include, 
among others, biomass, solar, wind, geothermal, hydropower and ocean 
energy, and other emerging energy sources are considered as both clean 
sources of energy and a viable alternative to providing electricity to off-grid 
barangays. 
To date, the Philippines is already a major user of NREs. In fact, NREs 
as an alternative to conventional / fossil-fuel based energy source, represent 
the country’s single energy source contributing around 28% of the total 
energy requirements. But since we still depend greatly on imported energy 
and fuel products (constituting 72% of our energy demands) and there are 
about 10,000 unelectrified barangays in the country, there exist a pervading 
need for the government to intensify efforts to tap indigenous energy sources 
to cope up with the increasing energy requirements. 
Specifically, the country’s wind energy potential is over 70,000 MW, 
PAGASA showing the national average mean wind power density of about 
30.8 watts per square meter (W/m2); using solar panels, we can generate 169 
wattdm2 for our solar energy applications, with an average solar radiation 
based on sunshine duration of 161.7 W/m2 with a range of 128-203 W/m2; the 
aggregate micro-hydro power potential is about 27.8 MW located in various 
areas of the country; our ocean energy resource area is 1,000 kms2 which is 
attributed mainly on the Philippines’s archipelagic nature, with an estimated 
potential capacity of about 265 million M W  and biomasspotential will save 
us over 80 million barrels of fuel oil equivalent in the next four (4) years 


Thus said, the contribution of the utilization of NRE as an alternative 
indigenous energy resource to the country’s energy requirements cannot be 
overemphasized. 
This Bill seeks to strengthen and institutionalize current efforts to 
implement and develop decentralized, area-based and integrated energy 
program for the promotion, production, commercialization and utilization of 
renewable energy systems by providing benefits and incentives to entities 
and stakeholders engaged in the manufacture, distribution and use of these 
NREs. 
These proposed reforms in our power sector is envisioned as a response 
to the perennial problems in the industry, with electricity tariffs that are 
among the highest in Asia, to speed up the extension of service coverage to all 
barangays by 2010 as well as the connection of all potential consumers by 
2018, bringing electricity to all of 10.17 million potential consumers by 2025, 
and ultimately, achieving the Philippine vision of a sustainable energy 
system with renewables taking a lead in the process. 
Indeed, it is high time that we pass this bill. 
&zJ 
/A 
EDGARDO J. ANGARA 
Senator 


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FOURTEENTH CONGRESS OF THE 
I 
First Regular Session 
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REPUBLIC OF THE PHILIPPINES 
JlJ! 30 P3 56 
Introduced by SENATOR EDGARDO J. ANGARA 
AN ACT STRENGTHENING THE PHILIPPINE ENERGY PLAN 
FOR THE EXPLORATION, DEVELOPMENT, AND UTILIZATION 
OF NEW AND RENEWABLE ENERGY SYSTEMS USING 
INDIGENOUS 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 POLICY 
SECTION 1. Short Title. This Act shall be known as the 
“Renewable Energy Resources Act of 2007.” 
SECTION 2. Declaration of Policies. It is hereby declared the 
policy of the State to: 
a) 
Advance the goals of energy self-sufficiency, energy affordability, 
rural electrification, energy security in the country’s energy 
requirements both in electric power and fuel; 
Reduce reliance on generation systems powered by imported fuels to 
minimize the effects of price fluctuations in the international market 
to the economy; 
Promote and encourage the use of renewable energy sources by 
institutionalizing its use, including the development of national and 
local capabilities in the use of renewable energy systems, and 
providing fiscal and non-fiscal benefits thereto; 
Promote and prioritize the utilization of renewable energy resources 
for non-power application; 
b) 
c) 
d) 
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e) 
Adopt full cost accounting principIes in the generation of electricity 
to rationalize the cost inherent in power generation and 
consequently, reduce harmful emissions generated therefrom; AND 
Establish the necessary infrastructure to carry out the mandate set 
herein and other laws. 
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Towards this end, the State shall promote the exploration, 
development, and utilization of new and renewable energy systems (NRES) 
by: 
a) Setting up mechanisms to develop local capabilities in the 
development and use of indigenous renewable energy sources; 
b) Generating a conductive business environment to encourage 
investments and allow easier participation of the private sector in 
the development of renewable energy resources; 
c) Promoting the development and use of indigenous renewable 
energy resources in consonance with environmental protection; 
d) Developing opportunities for all stakeholders to participate in the 
planning and implementation of renewable energy projects and 
priorities; AND 
e) Promoting greater private sector investment and allow easier 
participation in the implementation of renewable energy projects 
and activities. 
SECTION 3. Scope. This Act shall estahlish the framework for the 
rationalization of all the cost related to the generation of electricity, the grant 
of fiscal and non-fiscal incentives to Renewable Energy components, projects 
and operations and the program to increase its utilization. 
SECTION 4. Definition of Terms. For purposes of this Act: 
a) “Affiliated Renewable Energy Centers (AREC)” shall refer to 
institutions established by the DOE to provide extension and technical 
services at the national and local levels in the promotion and 
dissemination of renewable energy technologies. Specifically, it refers 
to any university, college, non-government organization or private 
volunteer organization certified by the DOE upon its compliance with 
the technical and legal requirements that shall be imposed by DOE; 
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b) “Alternative Fuels / Alternative Fuel Systems” refer to use of 
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materials, machinery and I or equipment to generate power using non- 
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petroleum fuels. The machinery and / or equipment may be modified 
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from its original condition or an original equipment manufacturer 
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(OEM) that allow the usage of alternative fuel or that further produce, 
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handle, store, and / or utilize alternative fuels; 
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c) “Biomass Energy Systems” shall refer to energy systems that use 
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biomass resources generated by extensive agriculture, livestock, and 
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forestry industries to produce heat, steam, mechanical power, 
electricity, fuels and fuel additives, either through thermochemical, 
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biochemical, or physiochemical processes; 
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d) “Biofuels” shall refer to liquid fuels and blending components 
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produced from biomass feedstocks, such as: ethanol from corn, cassava, 
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sugarcane and biodiesel from coconut and vegetable oil, used primarily 
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for land, air and water transportation and other energy-using 
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equipment designed for various purposes such as substitute or 
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addictive to fossil-petroleum fuels; 
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e) “Biogas” shall refer to the gas produced from the anaerobic 
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decomposition or organic materials; 
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bioconversion process; 
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g) “Cooperating Research Institutions (CRI)” shall refer 
to 
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institutions doing research and development activities in collaboration 
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with the DOE for the advancement of New and Renewable Energy 
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Systems (NRES); 
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geothermal power plants; 
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i) “Department of Environment and Natural Resources (DENR)” 
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refers to the government agency created pursuant to Executive Order 
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No. 192; 
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“Biomass Resources” shall refer to natural or processed plants and 
plant materials, trees, crop residues, wood and bark residues, animal 
manure, and municipal solid waste or any organic that can be used in 
h) “Conuentional Energy Systems” shall refer to energy systems that 
use commercially-traded fuels such as petroleum products, coal and 
electricity produced from such fuels, including large-scale hydro and 
j) “Department of Finance (DOF)” refers to the government agency 
created pursuant to Executive Order NO. 127, as amended; 
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government agency created pursuant to Executive Order No. 128; 
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1) “Distribution of Electricity” refers to the conveyance of electric 
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power by a Distribution Utility through its distribution system 
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pursuant to the provisions of Republic Act No. 9136 and its 
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implementing rules and regulations; 
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m) “Distribution Utility” refers to any electric cooperative, private 
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corporation, government-owned utility or existing local government 
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unit which has an exclusive franchise to operate a distribution system 
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in accordance with its franchise and Republic Act No. 9136; 
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0) “Generation Facility” refers to a facility for the production of 
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electricity and I or thermal energy such as steam, hot or cold water; 
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p) “Geothermal Energy” refers to all geothermal fluids whether existing 
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naturally or formed by the artificial introduction of fluids into 
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naturally hot formation, heat energy in the earth, and any by-product 
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derived from them; 
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that converts geothermal energy into useful power; 
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r) “Geothermal Resources” shall refer to either i) all products of 
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geothermal processes, embracing indigenous steam, hot water and hot 
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brines; ii)) steam and other gases, hot water and hot brines resulting 
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from water, gas, or other fluids artificially introduced into geothermal 
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formations; iii) heat or associated energy found in geothermal 
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s) “Government Share” refers to the amount due the National 
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Government and Local Government Units from the exploitation, 
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Republic Act No. 9136; 
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k) “Department of Science and Technology (DOST)” refers to the 
n) “Energy Regulatory Commission (ERC)” refers to the independent 
regulatory agency created pursuant to Republic Act No. 9136; 
q) “Geothermal Energy Systems” refer to machines or other equipment 
formations; and iv) any by-product derived from them; 
development and utilization of naturally-occurring renewable energy; 
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 
u) “Hybrid Systems” shall refer to any power or energy generation 
facility which makes use of two or more types of technologies utilizing 
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both conventional and I or renewable fuel sources, such as but not 
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limited to integrated wind /diesel systems, integrated solar / wind 
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systems, biomass / fossil fuel systems, hydro / fossil fuel systems, 
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integrated solar / biomass systems, integrated wind / fossil fuel 
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systems, with a minimum of ten megawatts or ten percent (10%) of the 
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annual energy output provided by the RES components of the hybrid 
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systems, whichever is lower; 
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v) “Hydroelectric Power Systems or Hydropower Systems” shall 
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refer to water-based energy systems which 
produce electricity by 
utilizing the kinetic energy of falling or running water to turn a 
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turbine generator; 
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w) “Hydroelectric 
Power 
Development 
or 
Hydropower 
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Development” shall refer to the construction and installation of a 
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hydroelectric power-generating plant and its auxiliary facilities, such 
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as diversion structure, headrace, penstock, substation, transmission, 
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and machine shop, among others; 
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x) “Hydroelectric Power Resources or Hydropower Resources” shall 
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refer to resources found technically feasible for development of 
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hydropower projects which include rivers, lakes, waterfalls, irrigation 
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canals, springs, ponds and other water bodies; 
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y) “Large or Conventional Hydroeletric Power Plants or Large or 
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Conventional Hydro Plants” refer to electric power-generating 
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plants which i) utilize the kinetic energy of falling or running water 
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(run-of-river or impounding hydropower plants) to turn a turbine 
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generator producing electricity; and ii) have installed capacities of 
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more than 10,000 kilowatts (kWs); 
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z) “Micro-Hydro Power Systems” shall refer to small hydro-based 
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energy systems which utilize water turbines with an installed capacity 
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of less than 100 kilowatts (100 KWs) as may be determined by the 
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DOE, to convert the energy from running or falling water into 
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mechanical or electrical power; 
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Grid: 
aa)“Mini-Grid Systems” refer to electrical systems composed of power 
generating plant, distribution lines, substations and related facilities 
that are installed at isolated locations and are not connected to the 
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bb)“Mini-hydroelectric Power Plants or Mini-hydro Plants” refer to 
electric power-generating plants which i) utilize the kinetic energy of 
falling or running water (run-of-river hydropower plant) to turn a 
turbine generator producing electricity; and ii) have installed 
capacities of more than 100 kilowatts but not more than 10,000 
kilowatts; 
cc) “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; 
dd)“National Power Corporation (NPC)” refers to the government 
corporation created under Republic Act No. 6395, as amended; 
ee) “National Transmission Corporation (TRANSCO)” refers to the 
corporation created pursuant to Republic Act No. 9136 which is 
responsible for the planning, construction, and centralized operation 
and maintenance of high voltage transmission facilities, including grid 
interconnection and ancillary services; 
ff) “New and Renewable Energy Systems (NRES)” shall refer to 
indigenous, small-scale, decentralized and modular energy systems 
which include production and use of renewable energy resources to 
produce heat, steam, mechanical power, electricity, fuels or fuel 
additives, excluding large-scale hydro and geothermal power plants; 
gg) “Ocean Energy Systems” shall refer to energy systems that either 
convert ocean current to electrical energy, otherwise known as ‘wave 
and tidal power systems’ or convert thermal gradient from the 
ocean surface to the bottom into electrical energy, otherwise known as 
“Ocean Thermal Energy Conversion (OTEC) systems;” 
hh) 
“Off-Grid Systems” refer to electrical systems not connected to 
the wires and related facilities of the Grid; 
ii) “On-Grid Systems” refer 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; 
jj) “Oxygenate Gasoline” shall refer to gasoline formulated with added 
substance such as menthanol, ethanol and ethyl tertiary butyl ether 
(ETBE) to increase the oxygen content and octane rating and make the 
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fuel burn more cleanly, thereby reducing toxic tailpipe pollution, 
particularly carbon monoxide; 
kk) 
“Power Development Program (PDP)” shall refer to the 
indicative plan for managing electricity demand through energy- 
efficient programs and for the upgrading, expansion, rehabilitation, 
repair and maintenance of power generation and transmission 
facilities, formulated and updated annually by the Department in 
coordination with the generation, transmission and distribution utility 
companies; 
11) “Renewable Energy Developers or RE Developers” refer to an 
individual or a group of individuals formed in accordance with existing 
Philippine Laws engaged in the exploration, development and 
utilization of renewable energy resources and actual opemtion of 
renewable energy systems / facilities; 
mm) 
“Renewable Energy Resources” shall refer to indigenous 
resources, with a rapid renewable rate, and which do not have an 
upper limit on the total quantity to be used. These resources are 
renewed on a regular basis and shall include, among others, biomass, 
solar, wind, geothermal, hydropower and ocean energy, and other 
emerging energy sources using new technologies such as fuel cells and 
hydrogen cells; 
nn) 
“Renewable Energy Service (Operating) Contract or RE 
Contract” refers to the service agreement between the Government, 
thru the Department of Energy, and RE Developer over a period in 
which the RE Developer has the exclusive right to a particular RE area 
for exploration and development. The RE Contract shall be divided 
into two (2) stages: the pre-development stage and the development / 
commercial 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; 
00) “Renewable Energy Systems (RES)” refer to energy which convert 
renewable energy resources into useful energy forms, like electrical, 
mechanical, etc.; 
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pp)“Republic Act No. 9136 or Electric Power Industry Reform Act of 
2001 (EPIRA Law)”refers to the law mandating the restructuring of 
the electric power sector and the privatization of 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 of the countryside; 
rr) “Small Power Utilities Group (SPUG)”refers to the functional unit 
of the National Power Corporation mandated under Republic Act No. 
9136 to pursue missionary electrification function; 
ss) “Solar Energy”shal1 refer to the radiant energy of the sun; 
tt) “Solar Energy Systems” shall refer to energy systems which directly 
tap and convert solar energy, either through solar thermal applications 
or through photovoltaic cells, into electricity; 
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“Transmission of Electricity” refers to the conveyance of 
electricity through the high voltage backbone system; 
vv) ‘Waste-to-Energy Technologies” shall refer to systems which 
convert biodegradable materials such as animal manure, agricultural 
waste, etc., into useful energy through chemical processes such as 
anaerobic digestion, fermentation and gasification, among others; 
ww) 
‘Wind Energy” shall refer to the kinetic energy of the wind 
converted into electrical or mechanical energy; AND 
xx) ‘Wind Energy Systems” shall refer to energy systems which use wind 
turbines to tap wind energy and convert it to mechanical power as in 
windmill or electrical power in wind turbine systems; 
CHAPTER I1 
ORGANIZATIONAL MANDATE 
SECTION 5. Lead Agency and Its Powers and Functions. In 
addition to its existing mandate under Republic Act 7638, as amended by 
Republic Act 9136 (EPIRA Law), the Department of Energy (DOE) shall have 
the following powers and functions under this Act: 
a) Formulate, maintain and regularly update an integrated and 
comprehensive Philippine Renewable Energy Program (PREP) aimed 
at stepping up the exploration, development and utilization of 
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requirements for the country; 
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foreign expertise and resources; 
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c) Establish a mechanism for the integration, rationalization and 
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coordination of the various activities, projects and programs on 
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renewable energy systems towards a self-sufficient, self-reliant energy 
b) Provide all the necessary and appropriate support services in the 
implementation of the PREP, including the facilitation of entry of 
renewable energy of all government agencies and instrumentalities; 
d) Develop and implement specific policies, mechanisms and procedures 
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encouraging the participation of the private sector including 
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Independent Power Producers (IPPs), private individuals, non- 
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governmental organizations (NGOs), private volunteer organizations, 
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and other interested parties; 
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e) Expedite the processing, certification and approval of applications for 
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RES projects through the establishment of relevant model operating 
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contracts, standards, procedures, terms and conditions; 
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f) Formulate, maintain and regularly update an information system of 
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renewable energy technologies and establishments with renewable 
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energy systems, within six (6) months from the effectivity of this Act; 
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g) Impose such reasonable fees and charges in connection with the filing, 
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processing, evaluation and approval of applications for New and 
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Renewable Energy Systems’ Projects; 
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h) Require the RE Developer to post a bond or guarantee of sufficient 
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amount in favor of the Government and with surety or sureties 
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satisfactory to the DOE upon the faithful performance by the RE 
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Developer of any or all of the obligations under and pursuant to the RE 
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operating contract within sixty (60) days after effective date of the 
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contract; 
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i) Within six (6) months from the approval of this Act, promulgate in 
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consultation with all stakeholders, including government agencies, 
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such as the National Water Resources Board (NWRB), Department of 
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Natural Resources-Environmental Management Bureau (DENR- 
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EMB), Energy Regulatory Commission (ERC), Department of Finance 
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(DOF), Department of Trade and Industry (DTI), among others, such 
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rules and regulations as may be necessary to implement the objectives 
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and provisions of this Act; AND 
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j) Exercise such powers and functions as are necessary or incidental to 
achieve the purposes of this Act. 
SECTION 6. Institutionalization of Affiliated Renewable Energy 
Centers (ARECS). - There shall be established ARECs to serve as a support 
to the extension and technical services of the DOE in the field 
implementation of renewable energy projects pursuant to the objectives of 
this Act. An AREC can be a recipient of donations or grants from the DOE 
and other donor agencies to develop and strengthen their capabilities to 
effectively perform their responsibilities under the Renewable Energy Policy 
Framework. The Affiliated Non-conventional Energy Centers (ANECs) shall 
be known as ARECs upon evaluation and accreditation of the DOE. 
CHAPTER I11 
ON-GRID RENEWABLE DEVELOPMENT 
SECTION 7. On-Grid Renewable Energy Generation. - The DOE 
shall develop and implement a Renewable Portfolio Standard (RPS) that 
shall be imposed on all non-RE generators of electricity and shall mandate all 
grid-users, particularly the distribution utilities and electricity suppliers, a 
percentage utilization of electricity from eligible RES and targets fifty 
percent (50%) RES capacity of the total generation on the Grid. The timetable 
and scheme of implementation for this target shall be stipulated in the REPF 
and the Philippine Energy Plan. 
SECTION 8. Full Cost Accounting. The DOE shall spearhead a 
multi-agency effort that shall determine the full cost involved in the 
generation of electricity. It shall then make all generators account for all the 
environmental, economic, health and other detrimental cost associated with 
or resulting from the production of electricity. 
The DOE shall develop and implement a program of collecting fees 
from all generating plants and such fees shall be used to support the 
development and operation of clean and renewable sources of energy. Said 
fees shall be based on the level of emissions and their detrimental effects and 
shall accrue to the Renewable Energy Trust Fund established herein. 
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SECTION 9. Renewable Energy Market (REM). - To facilitate 
compliance with the provisions of this Act, the Department shall, in 
consultation with the Wholesale Electricity Spot Market (WESM), establish a 
Renewable Energy Market and promulgate the Rules for the same. 
The Department, through the WESM shall also establish or appoint a 
Renewable Energy Registrar that shall issue, keep and verify Renewable 
Energy Certificates corresponding to energy generated from eligible 
Renewable Energy sources. Said certificates may be used for compliance with 
the RPS. 
SECTION 10. Intermittent Renewable Energy Generation. - 
Specific for power generating facilities using intermittent RE sources such as 
wind and solar among others, the DOE, in coordination with TRANSCO and 
other industry participants, shall facilitate the interconnection of these 
facilities to the main Grid and shall formulate production predictability 
incentive schemes (capacity forecast premium). 
SECTION 11. Green Energy Option. A Green Energy Option 
program which provides end-users the option to choose renewable energy 
sources, shall be made available to all end-users, Towards this end, the DOE 
shall establish the necessary support and facilities and the modification of 
the Implementing Rules and Regulations (IRRs), WESM Rule or any other 
rule or regulation to implement the right to choose Renewable Energy. 
End-users with a monthly average peak demand of at least one 
hundred kilowatts (100 kWs) for the preceding twelve months, may also 
directly contract for RE-based energy upon the promulgation of the IRRs 
thereof by the DOE; Provided, That the availing parties shall have at least 
one hundred kilowatts (100 kWs) as the RE Contract demands or source at 
least fifty-one percent (51%) of its requirements from RES, whichever is 
higher. 
In line herewith, the Distribution Utilities, TRANSCO, WESM and all 
other parties involved in bringing about the success of the Green Energy 
Option cited above or any other variant promulgated by the DOE shall 
ensure and provide the workings for the physical connection and commercial 
arrangements required. 


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intheRPS. 
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required. 
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CHAPTER IV 
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OFF-GRID RENEWABLE ENERGY MARKET 
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SECTION 13.Off-grid Renewable Energy Development Program. 
26 - The utilization of renewable energy resources in power generation in 
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energizing off-grid barangays and households shall be prioritized; Provided, 
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However, that the same will promote social economic returns in said 
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concerned areas. Consistent with the provisions of Section 70 of the Republic 
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Act No. 9136 and the Rules and Regulations promulgated therefore, the DOE, 
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NPC-SPUG and National Electrification Administration , through the Rural 
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Electric Cooperatives established in accordance to Law, shall prioritize the 
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type of renewable energy technologies and systems on a least-cost basis. The 
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DOE shall endeavor to devise schemes for the standardization of renewable 
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energy equipment for efficient utilization. 
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SECTION 12. Net Metering Agreements. A distribution utility shall, 
subject to technical considerations, enter into net-metering agreements with 
qualified distribution grid users at the user’s request, up to a distributed 
generation market share of one percent (1%) of peak distribution grid 
demand. To qualify, a distribution grid user must generate their own power 
from renewable sources which shall be less than one hundred kilowatts, and 
shall meet any regulation set forth by the DOE. 
The distribution utility will charge qualified users for no more than 
their net energy consumption at the standard retail rate. Likewise, it is 
obliged to credit net contributors at the prevailing bulk generation rate. 
Thereupon, the distribution utility will be entitled to any renewable energy 
production certificate resulting from RE distributed generation for sale or use 
The DOE shall promulgate the qualification requirements within one 
(1) year after the passage of this Act. 
In line herewith, the Distribution Utilities, TRANSCO, WESM, and all 
other parties involved in bringing about the success of the Net Metering cited 
above or any other variant promulgated by the DOE shall ensure and provide 
the workings for the physical connection and commercial arrangements 
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CHAPTER V 
OTHER RENEWABLE ENERGY MARKETS 
SECTION 14. Promotion of Non-Power Renewable Energy 
Systems. - The DOE shall develop specific support programs for business 
entities, marketers and distributors of, among others, solar water heaters, 
windpumps, biomass-fired thermal systems and other non-power renewable 
energy equipment such as engines, machines and/or equipment capable of 
using alternative fuels or fossil/alternative fuel blends as energy source. DOE 
shall ensure that these entities can also avail of the incentives provided for 
renewable energy markets and activities as specified under Section 24 of this 
Act. 
SECTION 15. Renewable Energy and Ecotourism. - The DOT, in 
collaboration with the DOE, shall develop technical and financing support 
programs for ecotourism projects using renewable energy systems and 
establish accreditation system for the use of environment-friendly renewable 
energy resources in facilities located or to be constructed in tourists spots, 
such as beaches, spas, resort areas, cultural centers, etc. The DOT and DOE 
shall prepare a priority list of ecotourism projects with renewable energy 
component to promote viable investments in remote and rural areas. The BO1 
shall incorporate the same in the annual preparation of its Investment 
Priorities Plan. 
CHAPTER VI 
GOVERNMENT SHARE 
SECTION 
16. 
Uniform Government 
Sharing 
Scheme. - 
Notwithstanding any law to the contrary, all government shares from the 
proceeds of the exploration, development and utilization of RE generation 
projects shall be rationalized in accordance with the following: 
a. The government’s share shall be equal to at least two per centum (2%) 
of the gross revenues of the contractor for the exploration, development 
and utilization of geothermal resources and one and one half per 
centum (1.5%) of the gross revenues for other RE resources; 
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b. There shall be a reduction of the government’s share in RE generation 
projects that are not yet commercially viable and are constructed in 
accordance with the DOES Renewable Energy Policy Framework; 
c. Sharing scheme between the national and local governments as set 
forth in the Local Government Code shall be duly respected; and 
d. The DOF shall assist the DOE in the formulation of the rules and 
regulations to implement this provision. 
The DOE shall ensure that in any instance, the production sharing it 
imposes shall not further penalize the RE Developer in terms of financial 
obligations to the Philippine government as compared to other non-RE power 
producer. 
CHAPTER VI1 
ENVIRONMENTAL COMPLIANCE 
SECTION 17. Compliance with Environmental Regulations. - 
All RE exploration, development, utilization, and RES operations shall be 
conducted in accordance with existing environmental regulations as 
prescribed by the DENR. 
SECTION 18. Mandatory Restoration Work. - In all cases where 
the proposed hydroelectric power development entails the closure or stoppage 
of existing water outlets, passageways, connections, conduits, apertures or 
the like from the water source, it shall be mandatory for the hydropower 
operating contract holder to restore or reengineer such water outlets, 
passageways, connections, conduits, apertures or the like on its account or 
expense, and in such manner that existing users or appropriators shall not be 
permanently deprived of their use or appropriation. 
In the event that the restoration is deemed not economically and 
technically feasible, the RE Developer shall instead enter into an agreement, 
under the guidance and supervision of the DOE, for the adequate and 
reasonable compensation of existing users. 
In all other cases where the proposed RE development projects shalI 
affect the environment in any manner, the RE operating contract holder shall 
be mandated to implement appropriate restoration works in the affected 
areas to its original conditions. 
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CHAPTER M 
GENERAL INCENTIVES 
SECTION 19. Incentives for Renewable Energy Projects and 
Actiuities. - All RE Developers, operators, and users of RE facilities 
including expansion activities, for both power and non-power applications, as 
duly certified by the DOE and in consultation with the DOF and DTI, shall be 
entitled to the following privileges: 
a. Tax and Duty-Free Importation of Machinery, Equipment and 
Materials. - Within the duration of a RE operating contract, 
importation of machinery and equipment, and materials and parts 
thereof, whether or not shipped with such machinery and equipment, 
including control and communication equipment, shall not be subject 
tariff duties and value-added tax: Provided, However, that the said 
machinery, equipment, materials and parts are: 1) not manufactured 
domestically in reasonable quantity and quality; 2) directly and 
actually needed and shall be 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 prior 
approval of the DOE is obtained before the importation of such 
machinery, equipment, materials and parts are made; 
b. Tax Credit on Domestic Capital Equipment. - 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 machinery, 
equipment, materials and parts had these items been imported shall 
be given to a RE operating contract holder who purchases machinery, 
equipment, materials and parts from a domestic manufacturer for 
purposes set forth under the preceding paragraph (a) (2); 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; 
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c. Real Estate Tax Exemption. - Notwithstanding any law to the 
contrary, all lands, including easements, civil works, equipment, 
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machinery, and other improvements of a registered RE developer 
actually and exclusively used for RES facilities shall be exempted from 
the payment of any real estate tax; Prouided, That the activities they 
engage in exhibit high social economic returns and necessary to assist 
reasonable recovery of large investments; 
d. Income Tax Holiday and Exemption. - For the first eight (8) years of 
its actual commercial operation, the RE operating contract holder shall 
be fully exempt from income taxes levied by the National Government; 
and 
e. RE Production Predictability / Forecast Premium / Bonus. - RE 
contract holder shall be entitled to a share of RE Production 
Premium/Bonus proportionate to the actual power generation from its 
RE facility as determined by the DOE. For this purpose, there is 
hereby established a Production PremiumIBonus Fund and for which 
one centavo (Php 0.01) for every kilowatt-hour sold shall be collected 
from every generating facilities by the TRANSCO and/or system 
market operator. 
SECTION 20. Hybrid and Cogeneration Systems. The tax 
exemptions and/or incentives provided for in Section 20 shall be availed of by 
RE operating contract holders of hybrid and cogeneration systems, utilizing 
both RE sources and conventional energy; Prouided, However, That tax 
exemptions and incentives shall apply only to the equipment, machinery and 
/ or devices utilizing RE sources. 
SECTION 21. Intermittent RE Resources. Subject to technical and 
financial feasibility considerations and WESM rules, qualified RE generating 
units with intermittent RE sources shall enjoy priority dispatch status. The 
DOE shall, in consultation with the industry participants promulgate the 
rules and regulations therefore. 
SECTION 22. 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. 
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(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 to importation tariff and 
duties and value added tax; Provided, However, That said components, 
parts and materials are: i) not manufactured domestically in 
reasonable quantity and quality at reasonable prices; ii) actually, 
directly and exclusively used in the manufacture / fabrication of RE 
equipment; and iii) covered by shipping documents in the name of the 
duly registered manufacturer / fabricator to whom the shipment will be 
directly delivered by customs authorities: Prouided, Further, that prior 
approval of the DOE was obtained before the importation of such 
components, parts and materials were made; 
@) Tax Credit on Domestic Capital Components, Parts and Materials.- 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 
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, also, That prior approval by the DOE was 
obtained by the local manufacturer; 
(c) Local Taxes - AI1 duly recognized and accredited RE equipment 
manufacturer / fabricator shall be exempted from taxes and fees 
imposed by local government units, such as real estate tax on lands, 
local business tax, building permits fees, among others; Provided, That 
the manufacturing / fabricating facilities are in compliance with the 
established performance standards certified by the DOE; 
(d) Special Realty Tax Rates on Equipment and Machinery.- Any provision 
of the Real Property Tax Code or any other law to the contrary 
notwithstanding, realty and other taxes on civil works, equipment, 
machinery, and other improvements of a DOE recognized and 
accredited RE manufacturer, fabricator and supplier of RE equipment 
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shall not one percent (1%) of their original cost of such civil works, 
machinery, equipment, devices and/or other components; 
(e) Value-Added Tux Exemption. - Exemption from the ten percent (10%) 
value-added tax on (i) the gross receipts derived from the sale of 
locally-manufactured RE equipment and components; (ii) imported and 
locally purchased machinery, equipment and devices described in 
items (a) and (b) hereof; and (iii) other local Value-Added Tax; 
(0 Income Tax Holiday and Exemption. - For eight (8) years starting from 
the date of recognition I accreditation, a RE manufacturer, fabricator 
and supplier of RE equipment shall be fully exempt from income taxes 
levied by the national Government. 
SECTION 23. Period of Grant of Fiscal Incentives. The fiscal 
incentives granted under this Act shall apply only to the first 2,500 mW 
capacity sources from RE upon approval of this Act or shall cease to have 
force and effect twenty (20) years after the approval of this Act, whichever 
comes first. Thereafter, the tax treatment applicable to the parties concerned 
prior to the passage of this Act shall thereafter apply. 
SECTION 24. Renewable Energy One Stop Shop (REOSS). There 
is hereby created a Renewable Energy One Stop Shop (REOSS) under the 
administration and direct supervision of the DOE through its appointed 
Undersecretary, which shall facilitate in the processing and approval of 
permits, among others. 
To facilitate the development of RE projects, the DOF, DENR, National 
Power Corporation - Small Power Utilities Group (NPC-SPUG), TRANSCO, 
all Government Financial Institutions (GFIs), the private sector, academe, 
non-governmental organizations and other involved agencies shall extend 
technical assistance and designate a representative to the REOSS. 
SECTION 25. Renewable Energy Trust Fund (RETF). - A 
Renewable Energy Trust Fund, to be administered by the DOE as a special 
account in any of the GFI, is hereby established for the development and 
utilization of renewable energy resources. The RETF shall be exclusively 
used to: 
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(a) Finance the research, development, demonstration and promotion of 
the widespread use or renewable energy systems for power and non- 
power applications; 
(b) Conduct resource and market assessment studies for biomass, solar, 
wind, hydro, tidal current, and ocean energy; 
(c) Directly subsidize the development and operation of new RE resources 
to provide for their competitiveness in the market; Provided, That the 
grant thereof shall be done through a competitive and transparent 
manner; 
(d) Create and operate the REOSS, where an RE database and all related 
laws, rules and regulations shall be made available to RE proponents 
and stakeholders; Prouided, That no more than two per centurn (2%) of 
the Fund shall be used for this purpose; 
(e) Propagate RE knowledge by training, accrediting, and providing 
benefits to ARECs; AND 
(f) Such other activities as are necessary or incidental to carry out the 
provisions of this Act. 
For this purpose, there shall be appropriated an amount of One Billion 
Pesos (Php 1,000,000,000.00) from the General Appropriations Act (GAA). 
The RETF shall be sourced from: 
a. Fines and penalties; 
b. Mandatory RES Contributions; 
c. Fees exacted pursuant to this Act; 
d. Demonstration Earnings; 
e. Grants; 
f. Donations; and 
g. RE Production Predictability/Forecast PremiumlBonus. 
The DOE shall, manage and administer the said fund subject to 
existing government accounting and auditing procedures. Further, the DOE, 
in consultation with other government units and agencies, is hereby 
authorized to manage and disburse the funds to be used solely for the 
purposes enumerated herein in the form of grants, loans, equity investments, 
loan guarantees, and insurance or to access other local or international funds 
pursuant to the provisions of this Act. 
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CHAPTER X 
GENERAL PROVISIONS 
SECTION 26. Creation of Renewable Energy Bureau (REB). - In 
accordance with the power of the Secretary and with the approval of the 
President, the Renewable Energy Bureau is hereby created for the effective 
management and administration of the renewable energy resources and 
development. The Renewable Energy Bureau shall have the following 
Divisions: Hydropower Division; Geothermal Division; Solar and Wind 
Division and Ocean and Biomass Division. 
The REB shall have the following powers and functions: 
a. Assist in the formulation and implementation of policies for the 
efficient and economical transformation, conversion, processing, 
refining, market packaging and financing, transportation and storage 
of hydro, geothermal and other renewable energy resources such as 
wind, solar, biomass and ocean, and ensure their efficient and judicious 
utilization; 
b. Monitor sectoral energy consumption and conduct efficient utilization 
audit, technical training, energy management advisory services, and 
technology application projects on efficient energy utilization; 
c. Develop, promote and commercialize applications of biomass, solar, 
hydro, wind, wood and charcoal, and other renewable energy resources 
including new and more efficient and economical transformation, 
conversion, 
processing, 
refining, 
marketing, 
distribution, 
transportation and storage technologies for renewable energy 
resources; 
d. Assist in the implementation of an integrated rural electrification 
program to effectively address the energy self-sufficiency in rural 
communities and implement, monitor and regularly review the 
implementation program for efficient administration; 
e. Provide information on renewable energy technologies and develop 
short-and long-term renewable energy technology development 
strategies; 
f. Monitor the implementation of renewable energy projects in 
coordination with the DENR, National Water Resources Board 
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government agencies to ensure compliance with the existing 
regulations and prescribed environmental standards; AND 
g. Monitor and supervise renewable energy projects implemented by 
government and private institutions including, affiliated renewable 
energy centers. 
SECTION 27. Product Standards and Testing Procedures. - The 
DOE shall, whenever necessary and in consultation with the Bureau of 
Product Standards, shall if necessary, establish product standards and 
testing procedures for selected renewable energy products, equipment, 
devices and accessories, in accordance with existing international renewable 
energy testing and product standards. The DOE and DTI shall jointly 
identify and designate laboratories and research facilities as accredited 
renewable energy testing laboratories to undertake the testing and labeling 
of renewable energy products, systems and devices according to the approved 
standards and procedures. 
SECTION 28. 
Technology and Manpower Development 
Program. - The DOE, in coordination with other government units and 
agencies, shall ensure sustained technology, manufacturing and manpower 
development programs to increase the education, expertise, training, skills 
and awareness of planners, implementors, inventors, trainors, technicians 
and beneficiaries in the national and local levels in appropriate aspects of 
renewable energy development and utilization. 
All foreign RE technology suppliers and manufacturers shall be 
required to conduct technology transfer activities to their proposed users and 
beneficiaries of the technology. The DOE shall ensure the capacity building 
sessions are incorporated into the work plan of the foreign technology 
suppliers prior to project implementation. 
SECTION 29. Information Management.- The DOE shall create, 
maintain and regularly update an information system of renewable energy 
resources, technologies, suppliers, companies and projects for the purposes of, 
but not limited to: 
(1) Formulation of Annual energy and power development plans of the 
country; 
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(2) Information dissemination to the public who are interested to invest in 
renewable energy generation projects or in research and development 
studies, etc.; 
(3) Monitoring and evaluation of existing technologies and projects; and 
(4) Formulation of appropriate policies. 
As such, the information system shall be backed up by a reliable 
database and shall include all relevant information for the development and 
commercialization of renewable energy systems. The DOE shall be 
responsible for the development of the institutional mechanism to ensure 
sustained maintenance and upgrading of the information exchange system. 
SECTION 30. Financial Assistance Program. - Government 
financial institutions (GFIs) such as the DeveIopment Bank of the 
Philippines (DBP), Philippine National Bank (PNB), Government Service 
Insurance System (GSIS), Land Bank of the Philippines (LBP) and other 
government institutions that shall, in accordance with and to the extent 
allowed by the enabling provisions of their respective charters or applicable 
laws, accord high priority to applications for the development, utilization and 
commercialization of RE projects, duly recommended and endorsed by the 
DOE. 
SECTION 31. Adoption of Waste-to-Energy Technologies in 
Livestock Farms and Slaughterhouses. - The DOE shall, whenever 
practicable, require large-scale livestock farms and slaughterhouses to adopt 
waste-to-energy facilities such as biogas systems. It shall likewise facilitate 
the provision on technical assistance in the adoption of the waste-to-energy 
technologies in coordination with private companies. The DOE shall 
coordinate with the DENR for the regular monitoring and compliance of this 
provision. 
CHAPTER XI 
FINAL PROVISIONS 
SECTION 32. Implementing Rules and Regulations (IRRs). - 
Within six (6) months from the effectivity of this Act, the DOE shall, in 
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collaboration with all RE stakeholders, promulgate the Implementing Rules 
and Regulations. 
SECTION 33. Penalty Clause. - The DOE shall formulate and 
promulgate appropriate penalties to any person who willfully violates 
violations of rules or regulations provided in this Act shall, upon conviction, 
be punished by a fine of not less than one hundred thousand pesos (P 
100,000.00), or by imprisonment of not less than two (2 ) years but not more 
than five (5) years, or both, at the discretion of the court; Provided, Howeuer, 
That if the violations committed by a juridical person the penalty provided 
shall be imposed on the official or employee thereof responsible for the 
violation; Provided, Further, That if the violation is committed by a 
government official or employee including those in government-owned or 
controlled corporations, he / she shall, in an addition to the promulgated 
penalties provided herein, be subject to disciplinary administrative 
proceedings and penalties. 
SECTION 34. Official Development Assistance. - The provision of 
Executive Order No. 230 of 986, on the power of the NEDA Board, 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. 
SECTION 35. Separability Clause. If for any reason any provision 
of this Act is declared unconstitutional or invalid, such parts not affected 
thereby shall remain in full force and effect. 
SECTION 36. Repealing Clause. - All laws, orders, doctrines, 
decrees, rules and regulations or parts thereof, including Executive Order No. 
462 (Ocean, Solar and Wind), Executive Order No. 232, Republic Act No. 
7156 (Mini-Hydro Act), Republic Act No. 7160 (Local Government Code), and 
Presidential Decree No. 1442 (Geothermal Act), among others, inconsistent 
with any of the provisions of this Act are hereby repealed, amended or 
modified accordingly. 
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Approved, 
SECTION 37. Effectiuity Clause. This Act shall take effect fifteen 
(15) days after its full and complete publication in the Official Gazette or in 
at least two (2) newspapers of general circulation. 
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