‘Clear govt policies key to reaping rewards of RE law’

by Lenie Lectura – December 14, 2015

from Business Mirror

THE National Grid Corp. of the Philippines (NGCP) stressed the importance of the government’s role in reaping the benefits of the seven-year-old renewable-energy (RE) law.

NGCP President and CEO Henry Sy Jr. said the enforcement of government policies is as important as the investments poured in by the private sector.

“Much has been said about the benefits of renewable energy, most especially in developing countries like the Philippines. However, for us to reap the benefits of renewable energy, we need more than investments on power plants, transmission facilities and other infrastructure. Clear policies, stringent regulation and commensurate incentives are equally important in the
effective implementation of the RE law,” Sy said during the Philippine Energy Summit last week. RE was among the issues discussed during the summit held on Friday.

In December 2008 the Philippines enacted Republic Act (RA) 9513, also known as the Renewable Energy Act of 2008. The law affirmed the government’s commitment to accelerate the exploration and development of Philippine RE resources. RA 9513 declared the state’s policy to achieve energy security by reducing reliance on fossil fuels and minimizing exposure to price fluctuations in oil markets. The government agencies tasked to implement the law include the Department of Energy, the Energy Regulatory Commission and the National Renewable Energy Board.

RA 9513 also seeks to increase the utilization of RE resources by developing national and local capabilities in the use of RE systems, and promoting their efficient and effective application by offering fiscal and nonfiscal incentives.

These incentives include: income-tax holiday; duty-free importation of renewable machinery, equipment and materials; special realty tax rates; net operating loss carryover; corporate tax rate of 10 percent; accelerated depreciation of plant, machinery and equipment; zero-percent value-added tax rate; tax exemption on carbon credits; and cash incentive for missionary electrification. Industry stakeholders, however, are still facing tough challenges, including high up-front cost and technologies, and inaccessible financial packages.

Sy said open dialogue and
exchange are very essential in an industry, such as the power sector, that is composed of varied stakeholders with different interests. “It is high time that industry players start the conversations going and work toward cleaner and more sustainable energy sources, and toward a successful and competitive energy industry that is at par with, if not better than, Asean counterparts,” Sy said.

“Today, we take a look at the opportunities that the Philippine power industry faces, starting with the rapidly changing global energy outlook; the possibility of one Asean grid; the prospects for gas and its emergent role in the generation sector; and the direction we need to take to improve and maximize the spot market,” he added.

Last month the Department of Energy reported that it has awarded 616 RE contracts to date. As of end-October this year, the agency said that these contracts have a potential generation capacity of 12,128.30 megawatts (MW) as against a total installed capacity of 2,950.86MW.