Chevening Chat Series 4: REsolutions: Renewable Energy (RE

Chevening Chat Series 4: REsolutions: Renewable

Energy (RE) for Sustainable and Inclusive Development

20 January 2017; 1:00 PM - 5:00 PM at SEDA Hotel BGC

1Incentive Mechanism in the Renewable Energy Sector by Atty. Deborah Layugan. RESolutions: Renewable Energy (RE) for Sustainable and Inclusive Development: 01/20/2017

incentive mechanism in the renewable energy

sectorby: Atty. Deborah Anastacia Layugan

Market Operations Service Energy Regulation Commission; Chevening 2007-2008


DISCLAIMERThe slides in this presentation were prepared as talking points. It is possible that key substantive elements were delivered orally during presentation and are not present on the slides. Questions regarding content should be directed to the author. Moreover, the views expressed in presentations made at Chevening Chats Series or other CAFPI events are those of the speaker and not, necessarily, of CAFPI or its partner organizations. Presentations at CAFPI events, or the presence of organizations at CAFPI events, does not constitute an endorsement of the organization or speaker's views, products or services.

INCENTIVE MECHANISMS IN THE RENEWABLE ENERGY SECTOR Forum on “RESolutions: Renewable Energy Solutions for

Sustainable and Inclusive Development”

Debora Anastacia T. Layugan Market Operations Service

Energy Regulatory Commission


RE Law IncentivesFiscal Incentives:

✓ Income tax holiday ✓ Duty-free

importation ✓ Special realty tax

rates ✓ Corporate tax rate

after ITH ✓ Accelerated

depreciation ✓ Zero VAT

Non- Fiscal Incentives:

ON-GRID ✓ Renewable Portfolio

Standards ✓ Feed-in Tariff ✓ Renewable Energy Market ✓ Green Energy Option ✓ Net-metering Program

OFF-GRID ✓ Min. RE generation ✓ Cash incentives


Features of Feed-in Tariff Mechanism

Based on cost of a representative project

Technology-specific

20-year duration

Subject to degression and adjustments

Subject to review


Approved Feed-in Tariffs (FITs)

RE Technology Feed-In-Tariff (FIT) Rates (PhP/kWh)

Installation Targets (MW)

SOLAR 1 9.6800 50

SOLAR 2 8.6900 500

WIND 1 8.5300 200WIND 2 7.4000 400BIO-MASS 6.6300 250ROR HYDRO 5.9000 250


The Overall FIT Framework

TransCoFIT-ALL


The FIT-All Collected from Consumers

• Uniform ₱/kwh charge • Payable by all electricity users • Periodically calculated and set • Based on forecasted RE deliveries • Proceeds go to a fund administered by Transco

from where the RE payments will be sourced

TRANSCO ERC FIT-ALL


Particular PhP/kWh Remarks

FIT-ALL for CY’s 2014 and 2015 0.0406

ERC Case No. 2014-109 RC Decision dated 29 September 2015

FIT-ALL CY 2016 0.1240Provisional Authority ERC Case No. 2015-216 RC, Order dated 16 February 2016

FIT-ALL CY 2017 (New Application) 0.2291

ERC Case No. 2016-192 RC filed on 01 December 2016

Approved & Proposed Feed-In Tariff Allowance (FIT-All)


RE Technology

Installation Target (MW)

Subscribed Capacity (MW)*

Balance (MW)

No. of RE Plants*

Solar 500.00 525.95 -- 24

Wind 400.00 393.90 6.10 7

Biomass 250.00 155.60 94.40 10

ROR HYDRO 250.00 28.70 221.30 4* Based on Certificates of Endorsement (COEs) issued by the DOE as of 09 January 2017

Approved Installation Target & Level of Subscription


Net Metering for RE

DUs to enter into Net-Metering agreements with qualified end-users

ERC and NREB to develop interconnection standards and pricing methodology and

other commercial arrangements

Net metering Rules promulgated


Scope, Applicability & Qualification

• Applicable to on-grid systems. • Only for installation of < 100kW. • For eligible RE Technologies such as wind, solar, biomass or

biogas or other RE systems capable of being installed in the QE’s premises.

• End-user should be in good credit standing in the payment of electric bills to the DU.

• The RE System must be compliant with the standards set in the PEC, PDC, DSOAR and the Net-Metering Interconnection Standards.


Interconnection Set-Up

Either 2 uni-directional meters or one bi-directional meter. Third meter may also be installed to measure total RE generation.

Import Meter (delivered energy)

Export Meter (received energy)

REC Meter


http://www.google.com.ph/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=nbkfNeCJTiAtJM&tbnid=GeVYyMlx9JR9yM:&ved=0CAUQjRw&url=http://www.webdesign.org/photoshop/drawing-techniques/how-to-draw-the-cartoon-sun-exclusive-tutorial.16991.html&ei=zzEtUuPdGOmOigem3YGoCQ&bvm=bv.51773540,d.aGc&psig=AFQjCNGaqMMP4rXJGFZ1BQ013XdcXWiLtg&ust=1378779958032261

http://www.google.com.ph/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=SShkYLkC7lp7EM&tbnid=pd1qbJuMvJXpqM:&ved=0CAUQjRw&url=http://www.philippinestodayus.com/news/business/meralco-nets-p7-8-b-in-first-half/&ei=EjgtUvqdGKm0iQfRtICYAg&bvm=bv.51773540,d.aGc&psig=AFQjCNEaXT_HXPAwlmTCv2LwM-u5DTwSuw&ust=1378780827672559

Pricing MethodologyP5.6580

Generation Transmission Distribution End-User

P5.6580 P1.1839

SL: P0.4723 DSM: P1.9112 Subs: P0.1093 Tax: P0.9046 UC: P0.1188

P11.1106/kWh+ =+


http://www.google.com.ph/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=nbkfNeCJTiAtJM&tbnid=GeVYyMlx9JR9yM:&ved=0CAUQjRw&url=http://www.webdesign.org/photoshop/drawing-techniques/how-to-draw-the-cartoon-sun-exclusive-tutorial.16991.html&ei=zzEtUuPdGOmOigem3YGoCQ&bvm=bv.51773540,d.aGc&psig=AFQjCNGaqMMP4rXJGFZ1BQ013XdcXWiLtg&ust=1378779958032261

NET-METERING CUSTOMERS

GRID No. of Qualified End-Users*

Capacity (MWp)

Luzon 612 2.6938

Visayas 30 0.0966

Mindanao 1 0.0107

Total 643 2.8011

* As of 31 December 2016


Other On-grid Incentive Mechanisms

Renewable Portfolio Standards

Green Energy Option

Renewable Energy Market


Renewable Energy Investments


Scaling up of Variable Renewable Energy


POLICY FRAMEWORK

• Removal of the first-commissioned, first –entitled policy

• Shift from cost-based Feed-in Tariff to auction type mechanism

• Subsidy for the payment of FIT-allowance • Implementation of Renewable Portfolio

Standards and Renewable Energy Market


ChallengesNew industry, learning curve

Preparedness of stakeholders

Penetration management vis-à-vis capacity and pricing

Limited resources and capacity

Legislative nature of approval process

Scarce information dissemination activities


THANK YOU!

www.erc.gov.ph21

Incentive Mechanism in the Renewable Energy Sector by Atty. Deborah Layugan. RESolutions: Renewable Energy (RE) for Sustainable and Inclusive Development: 01/20/2017

Chevening Chat Series 4: REsolutions: Renewable

Energy (RE) for Sustainable and Inclusive Development

20 January 2017; 1:00 PM - 5:00 PM at SEDA Hotel BGC


DISCLAIMERThe slides in this presentation were prepared as talking points. It is possible that key substantive elements were delivered orally during presentation and are not present on the slides. Questions regarding content should be directed to the author. Moreover, the views expressed in presentations made at Chevening Chats Series or other CAFPI events are those of the speaker and not, necessarily, of CAFPI or its partner organizations. Presentations at CAFPI events, or the presence of organizations at CAFPI events, does not constitute an endorsement of the organization or speaker's views, products or services.

Documents

Chevening Chat Series 4: REsolutions: Renewable Energy (RE