DOE starts termination of 105 RE contracts

FILE PHOTO: Department of Energy (DOE) facade. Images from DOE / INQUIRER FILES

The Department of Energy (DOE) on Sunday said it has started the termination process for the contracts of at least 105 renewable energy (RE) projects due to their proponents’ failure to meet the set timelines.

“The (Marcos) administration is committed to ensuring the efficient and timely execution of renewable energy projects by regularly assessing the progress of these projects and refining regulatory framework,” Energy Undersecretary Rowena Cristina Guevara said in a statement.

“If any contracts are deemed nonperforming, we will open them up to new developers who can effectively bring these projects into fruition. This strategy not only accelerates the development timeline but also strengthens investor confidence in the country’s renewable energy goals,” she added.

The DOE noted that out of the 105 projects, 88 faced delays in the predevelopment timeline, which means these were not making any headway.

These are broken down into 53 solar, 17 hydropower, 10 wind, five geothermal, and three biomass projects.

A “clear” termination process is being followed, the DOE noted.

The common reasons for the delays in the projects being canceled were the inability of private companies to obtain the rights to occupy and use the land for their undertaking and problems linking to the country’s electricity grid system that showed up after conducting system impact studies.

During a Senate hearing early this month on the DOE budget for 2025, Guevara noted that the most difficult aspect of RE projects is land acquisition, which has caused significant delays for many developers.

While the agency did not disclose the firms behind the projects being terminated, it said majority of the contracts were awarded in 2017 and 2019, or before the new rules on renewable projects were issued last June.

Revised guidelines

Guevara explained that previous guidelines did not require possessory rights on the land for service contracts, but under the new regulations, developers must now have these rights before being awarded the contracts.

One of the changes is the requirement to obtain a certificate of authority on the use of land before signing a renewable energy contract, giving companies leeway to obtain the necessary permits, surveys and prefeasibility activities.

The DOE said this would help developers prepare for the implementation of their projects and address potential issues.

For instance, companies holding solar energy service contracts are given two years to complete the predevelopment stage: securing permits, conducting surveys, performing feasibility studies, and securing possessory rights on the land.

The DOE stressed that “valid reasons” for any delay, such as force majeure, would receive an extension.

The government hopes to increase the RE share in the power mix to 50 percent by 2040 from the current 22 percent.

The DOE said it had awarded 1,435 service contracts with a capacity of about 156,700 megawatts to clean energy producers as of June 2024. INQ