Republic Act No. 9513 (2008) PDF

# Republic Act No. 9513 ## An Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: ## Chapter I ### Title and Declaration of Policies...

# Republic Act No. 9513 ## An Act Promoting the Development, Utilization and Commercialization of Renewable Energy Resources and for Other Purposes Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: ## Chapter I ### Title and Declaration of Policies - **Section 1.** Short Title. This Act shall be known as the "Renewable Energy Act of 2008". It shall hereinafter be referred to as the "Act". - **Section 2.** Declaration of Policies. It is hereby declared the policy of the State to: - **(a)** Accelerate the exploration and development of renewable energy resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy sources, including hybrid systems, to achieve energy self-reliance, through the adoption of sustainable energy development strategies to reduce the country's dependence on fossil fuels and thereby minimize the country's exposure to price fluctuations in the international markets, the effects of which spiral down to almost all sectors of the economy; - **(b)** Increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of renewable energy systems, and promoting its efficient and cost-effective commercial application by providing fiscal and nonfiscal incentives; - **(c)** Encourage the development and utilization of renewable energy resources as tools to effectively prevent or reduce harmful emissions and thereby balance the goals of economic growth and development with the protection of health and the environment; and - **(d)** Establish the necessary infrastructure and mechanism to carry out the mandates specified in this Act and other existing laws. - **Section 3.** Scope. This Act shall establish the framework for the accelerated development and advancement of renewable energy resources, and the development of a strategic program to increase its utilization. - **Section 4.** Definition of Terms. As used in this Act, the following terms are herein defined: - **(a)** "Biomass energy systems" refers to energy systems which use biomass resources to produce heat, steam, mechanical power or electricity through either thermochemical, biochemical or physico-chemical processes, or through such other technologies which shall comply with prescribed environmental standards pursuant to this Act. - **(b)** "Biomass resources" refers to non-fossilized, biodegradable organic material originating from naturally occurring or cultured plants, animals and micro-organisms, including agricultural products, by-products and residues such as, but not limited to, biofuels except corn, soya beans and rice but including sugarcane and coconut, rice hulls, rice straws, coconut husks and shells, corn cobs, corn stovers, bagasse, biodegradable organic fractions of industrial and municipal wastes that can be used in bioconversion process and other processes, as well as gases and liquids recovered from the decomposition and/or extraction of non-fossilized and biodegradable organic materials. - **(c)** "Board of Investments (BOI)" refers to an attached agency of the Department of Trade and Industry created under Republic Act No. 5186, as amended. - **(d)** "Co-generation systems" refers to facilities which produce electrical and/or mechanical energy and forms of useful thermal energy such as heat or steam which are used for industrial, commercial heating or cooling purposes through the sequential use of energy. - **(e)** "Department of Energy (DOE)" refers to the government agency created pursuant to Republic Act No. 7638 whose functions are expanded in Republic Act No. 9136 and further expanded in this Act. - **(f)** "Department of Environment and Natural Resources (DENR)" refers to the government agency created pursuant to Executive Order No. 192. - **(g)** "Department of Finance (DOF)" refers to the government agency created pursuant to Executive Order No. 127, as amended. - **(h)** "Department of Science and Technology (DOST)" refers to the government agency created pursuant to Executive Order No. 128. - **(i)** "Department of Trade and Industry (DTI)" refers to the government agency created pursuant to Executive Order No. 133. - **(j)** "Distributed generation" refers to a system of small generation entities supplying directly to the distribution grid, any one of which shall not exceed one hundred kilowatts (100 kW) in capacity. - **(k)** "Distribution of Electricity" refers to the conveyance of electricity by a Distribution Utility through its distribution system pursuant to the provision of Republic Act No. 9136. - **(l)** "Distribution Utility (DU)" refers to any electric cooperative, private corporation, government-owned utility or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with its franchise and Republic Act No. 9136. - **(m)** "Electric Power Industry Reform Act of 2001" or Republic Act No. 9136 refers to the law mandating the restructuring of the electric power sector and the privatization of the National Power Corporation (NPC). - **(n)** "Energy Regulatory Commission (ERC)" refers to the independent quasi-judicial regulatory agency created pursuant to Republic Act No. 9136. - **(o)** "Generation Company" refers to any person or entity authorized by the ERC to operate facilities used in the generation of electricity. - **(p)** "Generation Facility" refers to a facility for the production of electricity and/or thermal energy such as, but not limited to, steam, hot or cold water. - **(q)** "Geothermal energy" as used herein and in the context of this Act, shall be considered renewable and the provisions of this Act is therefore applicable thereto if geothermal energy, as a mineral resource, is produced through: (1) natural recharge, where the water is replenished by rainfall and the heat is continuously produced inside the earth; and/or (2) enhanced recharge, where hot water used in the geothermal process is re-injected into the ground to produce more steam as well as to provide additional recharge to the convection system. - **(r)** "Geothermal Energy Systems" refers to machines or other equipment that converts geothermal energy into useful power. - **(s)** "Geothermal Resources" refers to mineral resources, classified as renewable energy resource, in the form of: (i) all products of geothermal processes, embracing indigenous steam, hot water, and hot brines; (ii) steam and other gases, hot water, and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations; (iii) heat or associated energy found in geothermal formations; and (iv) any by-product derived from them. - **(t)** "Government Share" refers to the amount due the National Government and local government units from the exploitation, development, and utilization of naturally-occurring renewable energy resources such as geothermal, wind, solar, ocean and hydro excluding biomass. - **(u)** "Green Energy Option" refers to the mechanism to empower end-users to choose renewable energy in meeting their energy requirements. - **(v)** "Grid" refers to the high voltage backbone system of interconnected transmission lines, substations, and related facilities, located in each of Luzon, Visayas, and Mindanao, or as may otherwise be determined by the ERC in accordance with Republic Act No. 9136. - **(w)** "Hybrid Systems" refers to any power or energy generation facility which makes use of two (2) or more types of technologies utilizing both conventional and/or renewable fuel sources, such as, but not limited to, integrated solar/wind systems, biomass/fossil fuel systems, hydro/fossil fuel systems, integrated solar/biomass systems, integrated wind/fossil fuel systems, with a minimum of ten (10) megawatts or ten percent (10%) of the annual energy output provided by the Renewable Energy (RE) component. - **(x)** "Hydroelectric Power Systems" or "Hydropower Systems" refers to water-based energy systems which produce electricity by utilizing the kinetic energy of falling or running water to turn a turbine generator. - **(y)** "Hydroelectric Power Development" or "Hydropower Development" refers to the construction and installation of a hydroelectric power-generating plant and its auxiliary facilities, such as diversion structure, headrace, penstock, substation, transmission, and machine shop, among others. - **(z)** "Hydroelectric Power Resources" or "Hydropower Resources" refers to water resources found technically feasible for development of hydropower projects which include rivers, lakes, waterfalls, irrigation canals, springs, ponds, and other water bodies. - **(aa)** "Local government share" refers to the amount due the local government units from the exploitation, development and utilization of naturally-occurring renewable energy resources. - **(bb)** "Micro-scale Project" refers to an RE project with capacity not exceeding one hundred kilowatts (100 kW). - **(cc)** "Missionary Electrification" refers to the provision of basic electricity service in unviable areas with the aim of bringing the operations in these areas to viability levels. - **(dd)** "National government share" refers to the amount due the national government from the exploitation, development and utilization of naturally-occurring renewable energy resources. - **(ee)** "National Power Corporation (NPC)" refers to the government corporation created under Republic Act No. 6395, as amended by Republic Act No. 9136. - **(ff)** "National Transmission Corporation (TRANSCO)" refers to the corporation created pursuant to Republic Act No. 9136 responsible for the planning, construction, and centralized operation and maintenance of high voltage transmission facilities, including grid interconnection and ancillary services. - **(gg)** "Net-Metering" refers to a system, appropriate for distributed generation, in which a distribution grid user has a two-way connection to the grid and is only charged for his net electricity consumption and is credited for any overall contribution to the electricity grid. - **(hh)** "Non-power applications" refers to renewable energy systems or facilities that produce mechanical energy, combustible products such as methane gas, or forms of useful thermal energy such as heat or steam, that are not used for electricity generation, but for applications such as, but not limited to, industrial/commercial cooling, and fuel for cooking and transport. - **(ii)** "Ocean Energy Systems" refers to energy systems which convert ocean or tidal current, ocean thermal gradient or wave energy into electrical or mechanical energy. - **(jj)** "Off-Grid Systems" refers to electrical systems not connected to the wires and related facilities of the On-Grid Systems of the Philippines. - **(kk)** "On-Grid System" refers to electrical systems composed of interconnected transmission lines, distribution lines, substations, and related facilities for the purpose of conveyance of bulk power on the grid of the Philippines. - **(ll)** "Philippine Electricity Market Corporation (PEMC)" refers to the Corporation incorporated upon the initiative of the DOE composed of all Wholesale Electricity Spot Market (WESM) Members and whose Board of Directors will be the PEMC Board. - **(mm)** "Philippine National Oil Company (PNOC)" refers to the government agency created pursuant to Presidential Decree No. 334, as amended. - **(nn)** "Power applications" refers to renewable energy systems or facilities that produce electricity. - **(oo)** "Registered RE Developer" refers to a RE Developer duly registered with the DOE. - **(pp)** "Renewable Energy (Systems) Developers" or "RE Developers" refers to individual/s or a group of individuals formed in accordance with existing Philippine Laws engaged in the exploration, development and utilization of RE resources and actual operation of RE systems/facilities. - **(qq)** "Renewable Energy Market (REM)" refers to the market where the trading of the RE certificates equivalent to an amount of power generated from RE resources is made. - **(rr)** "Renewable Energy Policy Framework (REPF)" refers to the long-term policy developed by the DOE which identifies among others, the goals and targets for the development and utilization of renewable energy in the country. - **(ss)** "Renewable Portfolio Standards (RPS)" refer to a market-based policy that requires electricity suppliers to source an agreed portion of their energy supply from eligible RE resources. - **(tt)** "Renewable Energy Service (Operating) Contract (RE Contract)" refers to the service agreement between the Government, through the DOE, and RE Developer over a period in which the RE Developer has the exclusive right to a particular RE area for exploration and development. The RE Contract shall be divided into two (2) stages: the pre-development stage and the development/commercial stage. The preliminary assessment and feasibility study up to financial closing shall refer to the pre-development stage. The construction and installation of facilities up to operation phase shall refer to the development stage. - **(uu)** "Renewable Energy Resources (RE Resources)" refers to energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis, and whose renewal rate is relatively rapid to consider availability over an indefinite period of time. These include, among others, biomass, solar, wind, geothermal, ocean energy, and hydropower conforming with internationally accepted norms and standards on dams, and other emerging renewable energy technologies. - **(vv)** "Renewable Energy Systems (RE Systems)" refers to energy systems which convert RE resources into useful energy forms, like electrical, mechanical, etc. - **(ww)** "Rural Electrification" refers to the delivery of basic electricity services, consisting of power generation, sub-transmission, and/or extension of associated power delivery system that would bring about important social and economic benefits to the countryside. - **(xx)** "Solar Energy" refers to the energy derived from solar radiation that can be converted into useful thermal or electrical energy. - **(yy)** "Solar Energy Systems" refers to energy systems which convert solar energy into thermal or electrical energy. - **(zz)** "Small Power Utilities Group (SPUG)" refers to the functional unit of the NPC mandated under Republic Act No. 9136 to pursue missionary electrification function. - **(aaa)** "Supplier" refers to any person or entity authorized by the ERC to sell, broker, market or aggregate electricity to the end-users. - **(bbb)** "Transmission of Electricity" refers to the conveyance of electric power through transmission lines as defined under Republic Act No. 9136 by TRANSCO or its buyer/concessionaire in accordance with its franchise and Republic Act No. 9136. - **(ccc)** "Wind Energy" refers to the energy that can be derived from wind that is converted into useful electrical or mechanical energy. - **(ddd)** "Wind Energy Systems" refers to the machines or other related equipment that convert wind energy into useful electrical or mechanical energy. - **(eee)** "Wholesale Electricity Spot Market (WESM)" refers to the wholesale electricity spot market created pursuant to Republic Act No. 9136. ## Chapter II - Organization - **Section 5.** Lead Agency. The DOE shall be the lead agency mandated to implement the provisions of this Act. ## Chapter III - On-Grid Renewable Energy Development - **Section 6.** Renewable Portfolio Standard (RPS). - All stakeholders in the electric power industry shall contribute to the growth of the renewable energy industry of the country. Towards this end, the National Renewable Energy Board (NREB), created under Section 27 of this Act, shall set the minimum percentage of generation from eligible renewable energy resources and determine to which sector RPS shall be imposed on a per grid basis within one (1) year from the effectivity of this Act. - **Section 7.** Feed-In Tariff System. - To accelerate the development of emerging renewable energy resources, a feed-in tariff system for electricity produced from wind, solar, ocean, run-of-river hydropower and biomass is hereby mandated. Towards this end, the ERC in consultation with the National Renewable Energy Board (NREB) created under Section 27 of this Act shall formulate and promulgate feed-in tariff system rules within one (1) year upon the effectivity of this Act which shall include, but not limited to, the following: - **(a)** Priority connections to the grid for electricity generated from emerging renewable energy resources such as wind, solar, ocean, run-of-river hydropower and biomass power plants within the territory of the Philippines; - **(b)** The priority purchase and transmission of, and payment for, such electricity by the grid system operators; - **(c)** Determine the fixed tariff to be paid to electricity produced from each type of emerging renewable energy and the mandated number of years for the application of these rates, which shall not be less than twelve (12) years; - **(d)** The feed-in tariff to be set shall be applied to the emerging renewable energy to be used in compliance with the renewable portfolio standard as provided for in this Act and in accordance with the RPS rules that will be established by the DOE. - **Section 8.** Renewable Energy Market (REM). To facilitate compliance with Section 6 of this Act, the DOE shall establish the REM and shall direct PEMC to implement changes to the WESM Rules in order to incorporate the rules specific to the operation of the REM under the WESM. - **Section 9.** Green Energy Option. The DOE shall establish a Green Energy Option program which provides end-users the option to choose RE resources as their sources of energy. In consultation with the NREB, the DOE shall promulgate the appropriate implementing rules and regulations which are necessary, incidental or convenient to achieve the objectives set forth herein. - **Section 10.** Net-metering for Renewable Energy.- Subject to technical considerations and without discrimination and upon request by distribution end-users, the distribution utilities shall enter into net-metering agreements with qualified end-users who will be installing the RE system. ## Chapter IV - Off-Grid Renewable Energy Development - **Section 12.** Off-Grid Areas. Within one (1) year from the effectivity of this Act, NPC-SPUG or its successors-in-interest and/or qualified third parties in off-grid areas shall, in the performance of its mandate to provide missionary electrification, source a minimum percentage of its total annual generation upon recommendation of the NREB from available RE resources in the area concerned, as may be determined by the DOE. ## Chapter V - Government Share - **Section 13.** Government Share. The government share on existing and new RE development projects shall be equal to one percent (1%) of the gross income of RE resource developers resulting from the sale of renewable energy produced and such other income incidental to and arising from the renewable energy generation, transmission, and sale of electric power except for indigenous geothermal energy, which shall be at one and a half percent (1.5%) of gross income. ## Chapter VI - Environmental Compliance - **Section 14.** Compliance with Environmental Regulations. All RE explorations, development, utilization, and RE systems operations shall be conducted in accordance with existing environmental regulations as prescribed by the DENR and/or any other concerned government agency. ## Chapter VII - General Incentives - **Section 15.** Incentives for Renewable Energy Projects and Activities. RE Developers of renewable energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non-power applications, as duly certified by the DOE, in consultation with the BOI, shall be entitled to the following incentives: - **(a)** Income Tax Holiday (ITH) - For the first seven (7) years of its commercial operations, the duly registered RE developer shall be exempt from income taxes levied by the National Government. - **(b)** Duty-free Importation of RE Machinery, Equipment and Materials Within the first ten (10) years upon the issuance of a certification of an RE developer, the importation of machinery and equipment, and materials and parts thereof, including control and communication equipment, shall not be subject to tariff duties - **(c)** Special Realty Tax Rates on Equipment and Machinery Any law to the contrary notwithstanding, realty and other taxes on civil works, equipment, machinery, and other improvements of a registered RE Developer actually and exclusively used for RE facilities shall not exceed one and a half percent (1.5%) of their original cost less accumulated normal depreciation or net book value. - ** (d)** Net Operating Loss Carry-Over (NOLCO) The NOLCO of the RE Developer during the first three (3) years from the start of commercial operation which had not been previously offset as deduction from gross income shall be carried over as a deduction from gross income for the next seven (7) consecutive taxable years immediately following the year of such loss. - **(e)** Corporate Tax Rate After seven (7) years of ITH, all RE Developers shall pay a corporate tax of ten percent (10%) on its net taxable income as defined in the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337. - **(f)** Accelerated Depreciation If, and only if, an RE project fails to receive an ITH before full operation, it may apply for Accelerated Depreciation in its tax books and be taxed based on such. - **(g)** Zero Percent Value-Added Tax Rate The sale of fuel or power generated from renewable sources of energy shall be subject to zero percent (0%) value-added tax (VAT). - **(h)** Cash Incentive of Renewable Energy Developers for Missionary Electrification A RE developer, established after the effectivity of this Act, shall be entitled to a cash generation-based incentive per kilowatt-hour rate generated, equivalent to fifty percent (50%) of the universal charge for power needed to service missionary areas where it operates the same, to be chargeable against the universal charge for missionary electrification. - **(i)** Tax Exemption of Carbon Credits All proceeds from the sale of carbon emission credits shall be exempt from any and all taxes. - **(j)** Tax Credit on Domestic Capital Equipment and Services A tax credit equivalent to one hundred percent (100%) of the value of the value-added tax and custom duties that would have been paid on the RE machinery, equipment, materials and parts had these items been imported shall be given to an RE operating contract holder who purchases machinery, equipment, materials, and parts from a domestic manufacturer for purposes set forth in this Act. ## Chapter VIII - General Provisions - **Section 27.** Creation of the National Renewable Energy Board (NREB). The NREB is hereby created. - **Section 28. **Renewable Energy Trust Fund (RETF). A Renewable Energy Trust Fund is hereby established to enhance the development and greater utilization of renewable energy. - **Section 29.** Financial Assistance Program. Government financial institutions such as the Development Bank of the Philippines (DBP), Land Bank of the Philippines (LBP), Phil-Exim Bank and other government financial institutions shall, in accordance with and to the extent allowed by the enabling provisions of their respective charters or applicable laws, provide preferential financial packages for the development, utilization and commercialization of RE projects as duly recommended and endorsed by the DOE. - **Section 30.** Adoption of Waste-To-Energy Technologies. The DOE shall, where practicable, encourage the adoption of waste-to-energy facilities. - **Section 31.** Incentives for RE Host Communities/LGUS. Eighty percent (80%) of the share from royalty and/or government share of RE host communities/LGUs from RE projects and activities shall be used directly to subsidize the electricity consumption of end-users in the RE host communities/LGUs whose monthly consumption do not exceed one hundred kilowatt hours (100 kWh). - **Section 32.** Creation of the Renewable Energy Management Bureau. ## Chapter IX - Final Provisions - **Section 33.** Implementing Rules and Regulations (IRR). Within six (6) months from the effectivity of this Act, the DOE shall, in consultation with the Senate and House of Representatives Committees on Energy, relevant government agencies and RE stakeholders, promulgate the IRR of this Act. - **Section 34.** Congressional Oversight. Upon the effectivity of this Act, the Joint Congressional Power Commission created under Section 62 of Republic Act No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" shall exercise oversight powers over the implementation of this Act. - **Section 35.** Prohibited Acts. The following acts shall be prohibited: - **(a)** Noncompliance or violation of the RPS rules; - **(b)** Willful refusal to undertake net metering arrangements with qualified distribution grid users; - **(c)** Falsification or tampering of public documents or official records to avail of the fiscal and non-fiscal incentives provided under this Act; - **(d)** Failure and willful refusal to issue the single certificate referred to in Section 26 of this Act; and - **(e)** Noncompliance with the established guidelines that the DOE will adopt for the implementation of this Act. - **Section 36.** Penalty Clause. Any person who willfully commits any of the prohibited acts enumerated under this Act, shall be imposed with the penalties provided herein. - **Section 37.** Appropriations. Such sums as may be necessary for the initial implementation of this Act shall be taken from the current appropriations of the DOE. - **Section 38.** Separability Clause. If any provision of this Act is held invalid or unconstitutional, the remainder of the Act or the provision not otherwise affected shall remain valid and subsisting. - **Section 39.** Repealing Clause. Any law, presidential decree or issuance, executive order, letter of instruction, administrative rule or regulation contrary to or inconsistent with the provisions of this Act is hereby repealed, modified or amended accordingly. - **Section 40. **Effectivity Clause. This Act shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation. Approved, PROSPERO N. NOGRALES Speaker of the House of Representatives MANNY VILLAR President of the Senate This Act was finally passed by the Senate and the House of Representatives on October 8, 2008. MARILYN B. BARUA-YAP Secretary General House of Representatives EMMA LIRIO REYES Secretary of the Senate Approved, 16 2008 GLORIA MACAPAGAL-ARROYO President of the Philippines