Gov’t urged to improve energy regulatory framework

British Ambassador Stephen Lillie is urging the Aquino administration to improve the regulatory framework for the local renewable energy industry as limitations in foreign ownership and the slow progress in implementing critical policies are “complicating investments.”

Lillie explained on the sidelines of the UK Renewable Energy Systems and Solutions forum Tuesday that there were a lot of opportunities in the renewable energy sector in the Philippines as the country’s growing electricity demand dictated the need to invest in all kinds of energy sources.

“Unfortunately, there are limitations in Philippine law that complicate investments here such as the 40-percent equity cap [on foreign ownership], which is unhelpful. And also, the very slow progress in the [implementation of the] feed-in-tariff (FIT) is impeding progress,” Lillie noted.

“The business sector has made many submissions to the government to make clear its view that [foreign ownership cap] is one of the regulations that needs to be tackled to create a better business environment in the Philippines,” he pointed out. “Fundamentally, the Philippine government needs to take some steps to improve the regulatory framework. But I think, if we can [address those issues], then there’s a lot of interest from British companies.”

Despite these limitations, however, Lillie affirmed that many British companies remained interested in contributing to the growth of the Philippine renewable energy sector through their expertise and technology.

Following the passage of the Renewable Energy Law in 2008, only the FIT mechanism has so far been firmed up with the issuance of the rates for each renewable energy source. But while the rates have been issued, other regulatory policies have yet to be settled, particularly those concerning the collection and administration of these fees.

Recently, the Department of Energy also announced that it was adopting a “first come, first served” policy in allocating the limited 760-megawatt installation target for renewable energy projects. This means that renewable energy developers must take the risk of building the power plant first before securing from the government an allocation from the installation target for their projects.

The first developers to build their facilities and pass the criteria upon checking by the DOE will be qualified under the installation target—which refers to the total capacity of renewable energy projects that will be allowed to be constructed within a three-year period. This also means that their projects will be eligible for the FIT rates, which assure developers of fixed cash flow over a 20-year period.