PH raises RE sourcing requirement

The Department of Energy (DOE) has mandated distribution utilities, electric cooperatives and retail electricity suppliers to source starting next year 2.52 percent of their annual energy demand from renewables, nearly three times the current allotment.

This increased the percentage of utilization of renewables for on-grid areas from 1 percent under the Renewable Portfolio Standards (RPS), in line with the government’s aspiration to promote renewable energy (RE).

The adjusted annual percentage increment under the RPS will take effect in 2023, as stated in department circular No. 2022-09-0030 signed by Energy Secretary Raphael Lotilla on Sept. 23.

RPS is a market-based policy requiring electricity suppliers to source a fraction of their electricity from eligible RE facilities. This is among the policy mechanisms outlined in Republic Act No. 9513 or the Renewable Energy Act of 2008, aimed at scaling up the utilization of nonconventional energy sources. It is also designed to provide a guaranteed market for renewables.

The circular also mandated an annual review of percentage increment to monitor compliance, and adjustments in case of constraints in the timely completion of eligible RE plants.

“The increase in the utilization of renewable energy in our power generation mix would encourage more investors and end-users to develop and utilize domestic energy sources,” Lotilla said.

Fund flows

Around P270.8 million of investments have flowed into the local RE space, based on the latest data provided by the DOE.

Solar investments accounted for nearly half of the total amount at P130.4 million. Wind came in second with P52.9 million, followed by: hydropower, P38.7 million; biomass, P38.2 million and geothermal, P10.5 million.

As of June this year, the agency has awarded a total of 998 renewable energy contracts with a total installed capacity of 5,460.59 megawatts (MW) and potential capacity of 61,613.81 MW.

“Private sector investments are central in achieving our renewable energy targets and vision. To date, the share of renewable energy in the power generation mix is 22 percent. Our target share is 35 percent by 2030 and 50 percent by 2040,” added Lotilla.

To attain the RE target, the National Renewable Energy Program released by the DOE said the country’s installed capacity should be increased to 102,231 MW by 2040 coming from existing, committed and new build capacities.

“Simulations showed that new-build capacities from RE, with a total of 52,826 MW, have to be added,” it said.

It is broken down as follows: solar (27,162 MW), wind (16,650 MW), hydro (6,150 MW), geothermal (2,500 MW) and biomass (364 MW).

The updated NREP also recommended the installation of new gas plants, deemed as a cleaner energy source to aid in the energy transition, with a total capacity of 18,859 MW.

Prior to updating the RPS circular, the government in 2020 allowed full foreign ownership of large-scale geothermal projects through the Financial and Technical Assistance Agreements, as long as the minimum investment is $50 million.

The DOE also retained the two-year-old moratorium on greenfield or new coal-fired power plants.