Renewable Energy 2025 Comparisons

It is an express policy of the state to accelerate the development of renewable energy (RE) resources pursuant to Republic Act (RA) No 9513, otherwise known as the Renewable Energy Act of 2008 (“RE Act”). Accordingly, the Department of Energy (DOE) issued the Philippine Energy Plan 2023–2050, a comprehensive plan to achieve, among other things, a clean energy future for the Philippines. Under the Philippine Energy Plan, the Philippines aims to achieve an RE target mix of 35% by 2030 and 50% by 2040. The DOE reports that, as of 15 June 2025, of a total of 126,941 GWh gross power generated, 28,193 GWh or 22% was generated by RE plants.

To date, there are no bans or projects to phase out any of the conventional sources of electricity. However, pursuant to the Renewable Portfolio Standards (RPS) policy, electricity suppliers, meaning distribution utilities and retail electricity suppliers, are required to secure a certain percentage of their power from eligible RE sources.

Relatedly, the Philippine National Nuclear Energy Safety Act was passed by Congress in June 2025. In this regard, the DOE has issued a draft Department Circular outlining the framework for incorporating nuclear energy into the Philippines’ power generation mix whereby renewable and nuclear sources of energy shall be utilised in tandem.

Currently, there is much interest in solar and wind energy in the Philippines.

In 2022, the DOE issued Department Circular No DC2022-11-0034, amending the Implementing Rules and Regulations of the RE Act, and thereby removing the nationality restrictions on the exploration, development and utilisation of certain types of RE resources such as solar, wind, biomass and ocean/tidal energy. This development is consistent with the issuance by the Department of Justice of its Opinion No 21, series of 2022, which states that the exploration, development and utilisation of solar, wind and ocean/tidal energy should not be subject to the nationality restrictions under the Philippine Constitution.

These issuances have resulted in the interest of foreign investors in solar and wind energy projects in the Philippines, as well as in ocean/tidal energy projects.

The DOE reported record-breaking RE capacity additions in 2024. In 2024 alone, the Philippines is reported to have generated 794.34 MW of additional RE capacity, exceeding the 759.82 MW combined capacity added in the previous years of 2021, 2022 and 2023 (230.10 MW, 328.18 MW and 201.54 MW, respectively).

Factors leading to this include:

• the integration of all applications and permitting processes for energy projects, including RE projects, into the Energy Virtual One-Stop Shop system, allowing for a quicker processing time;
• policy directives such as the RPS, which mandates that electricity suppliers source an agreed-upon portion of their energy from eligible RE sources; and
• the declining costs of RE technology, making renewables more competitive with fossil fuels.

The overarching law for the Philippine power industry is RA No 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA). EPIRA, among other things, provides for the reform of the power industry based on the following state policies:

• first, to ensure and accelerate the total electrification of the Philippines;
• second, to ensure the quality, reliability, security and affordability of the supply of electric power; and
• third, to ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market.

Specific to the RE, the RE Act was passed with, among other objectives, the express policy to accelerate the exploration and development of RE resources so that the Philippines may achieve energy self-reliance through the adoption of sustainable energy development strategies to reduce the country’s dependence on fossil fuels and thereby minimise the country’s exposure to price fluctuations in the international markets. To this end, the RE Act provides for the development of a strategic programme for the development of RE resources, and the promotion of the efficient and cost-effective commercial application of RE systems through fiscal and non-fiscal incentives for RE project proponents.

The primary regulators for RE activities in the Philippines are the DOE and the Energy Regulatory Commission (ERC).

The DOE is the agency tasked with the preparation, integration, co-ordination, supervision and control of all plans, programmes, projects and activities of the Philippine government relative to energy exploration, development, utilisation, distribution and conservation.

The ERC is an independent, quasi-judicial regulatory body whose function is to promote competition, encourage market development, ensure customer choice and penalise abuse of market power in the restructured Philippine power industry.

Broadly speaking, the Philippine power industry is divided into four areas: (a) generation; (b) transmission; (c) distribution; and (d) supply through Retail Competition and Open Access (RCOA). Of these, transmission and distribution are regulated.

Transmission refers to the transportation of electricity generated by power generation facilities through the high-voltage transmission system (the “grid”) from said generation facilities to the distributing entities, distribution utilities and electric co-operatives. Transmission is regulated as a common carrier electricity business and is subject to the rate-making powers of the ERC.

Pursuant to EPIRA, transmission assets may only be owned by the state, with the exception that a generation company may, subject to the prior authorisation of the ERC, develop, own and operate a dedicated point-to-point limited transmission facility provided that it is for the limited purpose of connecting to the grid and provided that it is to be used solely by the owner generation company. All other transmission and sub-transmission assets are owned by the National Transmission Corporation, also known as TransCo. Pursuant to EPIRA, TransCo has the authority and responsibility for the planning, construction, and centralised operation and maintenance of the grid, including grid interconnections and ancillary services. On the other hand, the operation of the grid requires a national franchise. The current franchise holder is the National Grid Corporation of the Philippines (NGCP). The NGCP must provide open and non-discriminatory access to the grid to all electricity users and comply with the provisions of the Philippine Grid Code. Ownership of the grid remains with TransCo.

The distribution of electricity to end users is regulated as a common carrier business requiring a national franchise. Distribution of electric power to all end-users may be undertaken by private distribution utilities, co-operatives, local government units (LGUs) presently undertaking this function, and other duly authorised entities (“Distribution Utilities”), subject to regulation by the ERC. Distribution Utilities must provide universal service within their franchise area. Distribution Utilities have the obligation to supply electricity in the least-expensive manner to their captive market, subject to the collection of a retail rate duly approved by the ERC. To this end, Distribution Utilities must undertake a competitive selection process or open bidding process, the procedure of which must comply with the guidelines set out by the DOE, before they may enter into any bilateral power supply agreements (PSAs) with generation companies.

Pursuant to Article XII, Section 11 of the Philippine Constitution, no franchise, certificate or any other form of authorisation for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organised under the laws of the Philippines, at least 60% of whose capital is owned by such citizens; nor shall such franchise, certificate or authorisation be exclusive in character or for a longer period than 50 years.

This is relevant as the transmission and distribution of electricity are regulated as public utilities in the Philippines.

Under RA No 7042 (the Foreign Investment Act of 1991), the term “Philippine national” shall mean “a citizen of the Philippines; or a domestic partnership or association wholly owned by citizens of the Philippines; or a corporation organised under the laws of the Philippines of which at least sixty per cent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines; or a corporation organised abroad and registered as doing business in the Philippines under the Corporation Code of which one hundred per cent (100%) of the capital stock outstanding and entitled to vote is wholly owned by Filipinos or a trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national and at least sixty per cent (60%) of the fund will accrue to the benefit of Philippine nationals: Provided, That where a corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered enterprise, at least sixty per cent (60%) of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens of the Philippines and at least sixty per cent (60%) of the members of the Board of Directors, in order that the corporation shall be considered a Philippine national”.

While the generation sector is not subject to foreign ownership limitations, the development, construction and operation of a generation facility may require permits that can only be issued to Philippine nationals or may be indirectly subject to nationality restrictions such as the ownership of private lands, which is reserved for Philippine citizens.

Likewise, a change in ownership and control may have an effect on the existing permits and contracts that an RE developer may have in place. For example, under the DOE’s Department Circular No DC2024-06-0018 or the Revised Omnibus RE Guidelines, any sale or acquisition of shares of the RE developer amounting to a change of control shall be subject to the prior written approval of the DOE.

As mentioned in 1.2 Renewable Energy Technologies, the Department of Justice issued its Opinion No 21, series of 2022, effectively lifting nationality restrictions on the exploration, development and utilisation of certain types of RE resources such as solar, wind, biomass and ocean/tidal energy.

Please refer to 2.4 Ownership and Transfer of Control.

The production and generation of electricity from RE sources in the Philippines is principally governed by EPIRA and the RE Act. Under the EPIRA framework, generation is not considered a public utility, and therefore not subject to nationality restrictions, making it open to foreign and domestic investment. Developers, however, must secure RE service contracts from the DOE, which cover the exploration, development and commercial operation phases. As provided in EPIRA, generation companies are allowed to sell electricity to distribution utilities or retail electricity suppliers through either bilateral contracts or the Wholesale Electricity Spot Market (WESM).

No generation company is allowed to own more than 30% of the installed generating capacity of the Luzon, Visayas or Mindanao grids and/or 25% of the total nationwide installed generating capacity. Further, no generation company associated with a distribution utility may supply more than 50% of the distribution utility’s total demand under bilateral contracts, without prejudice to the bilateral contracts entered into prior to the enactment of EPIRA.

The DOE awards service contracts and administers programmes such as the Green Energy Auction Programme (GEAP) and the Green Energy Option Programme (GEOP). The Department of Environment and Natural Resources (DENR) oversees environmental compliance, while the National Commission on Indigenous Peoples and LGUs are involved when projects affect ancestral lands or require local permits.

The ERC regulates rates, approves PSAs and enforces the RPS. The NGCP is the sole transmission operator, tasked with maintaining and expanding the grid. The Independent Electricity Market Operator of the Philippines operates the WESM, while the National Renewable Energy Board advises on RE policy frameworks.

The National Renewable Energy Programme aims to increase the share of RE in the power generation mix to 35% by 2030 and further to 50% by 2040.

The production of gas from renewable sources in the Philippines, such as biogas, is principally governed by the RE Act. Under the RE Act, biomass includes gases and liquids recovered from the decomposition and/or extraction of non-fossilised and biodegradable organic materials, and is expressly recognised as an RE resource, making projects eligible for the fiscal and non-fiscal incentives provided therein.

The DOE awards service contracts and oversees the implementation of incentive schemes for biomass and biogas projects. In addition, DOE Department Circular No DC 2024-06-0018 established guidelines for endorsing waste-to-energy projects, further clarifying the regulatory framework for facilities converting agricultural, industrial or municipal waste into energy. The DENR supervises environmental compliance, while LGUs issue permits required for construction and operation.

Other applicable laws and regulations for the biogas industry include the DOE Renewable Energy Guidelines, ERC Regulations on biofuels, and relevant environmental laws such as RA No 8749 (the Philippine Clean Air Act of 1999) and RA No 9003 (the Ecological Solid Waste Management Act of 2000).

The Philippines is the third-largest producer of geothermal energy globally, with major facilities located in Leyte, Albay, Laguna, Negros and North Cotabato. The potential geothermal capacity in the Philippines is estimated to be around 4,064 MW. Currently, more than 1,900 MW of this potential has been developed and is operational. This accounts for about 14% of the country’s total electricity generation.

The production of heat from renewable sources in the Philippines, principally through geothermal energy, is governed by the RE Act and Presidential Decree No 1442 (the Geothermal Resources Exploration and Development Act). Under DOE Department Circular No DC 2024-06-0018, the exploration, development and utilisation of geothermal resources requires at least 60% Filipino ownership. For the large-scale exploration, development and utilisation of geothermal resources, defined under Section 4(s) of the RE Act as a mineral resource, the government, through the president, may enter into agreements with foreign-owned corporations involving technical or financial assistance pursuant to Article XII, Section 2 of the Philippine Constitution.

The DOE is the primary agency responsible for awarding service contracts and supervising geothermal projects. The DENR oversees environmental compliance, particularly in forest reserves and watershed areas where geothermal fields are commonly located, while LGUs issue local permits and clearances necessary for construction and operation.

The ERC regulates the rates and tariffs applicable to electricity generated from geothermal sources.

The production of hydrogen and other biofuels in the Philippines is principally governed by the RE Act and RA No 9367, otherwise known as the Biofuels Act of 2006 (“Biofuels Act”). Under the RE Act, biomass includes gases and liquids recovered from the decomposition and/or extraction of non-fossilised and biodegradable organic materials, and is recognised as an RE resource eligible for incentives.

The DOE awards and administers RE contracts for biomass and waste-to-energy projects under its revised omnibus guidelines. These provide for Biomass Energy Operating Contracts and Waste-to-Energy Operating Contracts. The DOE also issued Department Circular No DC2024-01-0001 providing the national policy, framework, roadmap and guidelines for hydrogen in the energy sector. The Circular covers all activities relating to hydrogen production, storage, transmission, distribution and utilisation, and recognises that the production of “green hydrogen” and its derivatives is preferred and considered an RE project.

For biofuels (bioethanol and biodiesel), agencies led by the DOE, together with the Department of Agriculture, the Department of Agrarian Reform, the DENR, the Department of Trade and Industry and others, issued Joint Administrative Order No 2008-1: Guidelines Governing the Biofuel Feedstocks Production, and Biofuels and Biofuel Blends Production, Distribution and Sale, pursuant to the Biofuels Act. The Order covers accreditation/registration of biofuel producers and distributors, compliance with Philippine National Standards, observance of mandated blends under the Act and its Implementing Rules and Regulations, and permitting requirements (including Environmental Compliance Certificates (ECCs) from the DENR and certifications from the National Commission on Indigenous Peoples, as applicable). The DOE also recently issued Department Circular No 2024-05-0014, which provides the Guidelines on Biofuel Blend Implementation.

The production or generation of RE for own or local use is principally governed by the RE Act. The RE Act establishes net metering for RE, under which distribution utilities, upon request and subject to technical considerations, enter into net-metering agreements with qualified end-users that install eligible RE systems (such as rooftop solar PV). The RE Act also provides that any Renewable Energy Certificate resulting from a net-metering arrangement accrues to the distribution utility for use in complying with the RPS.

Under DOE Department Circular No DC 2024-06-0018, an “RE Project for Own Use” is defined as a project located within or contiguous to an end-user’s premises and operated solely to supply part or all of that end-user’s requirements, whether installed by the end-user or via a third-party provider. Certain own-use projects do not require an operating contract but must comply with DOE registration requirements. This requires that the physical connection of such projects shall be as a self-generating facility whose generating unit has no connection to the distribution system.

The transportation of electricity from renewable sources is effected through transmission over the public grid pursuant to EPIRA and the Philippine Grid Code. Transmission assets are owned by the TransCo and operated by the NGCP under franchise and ERC oversight. The NGCP plans, operates, and expands the grid and provides open and non-discriminatory interconnection to generators, including renewable energy plants.

For batteries, the DOE has issued Department Circular DC2023-04-0008, entitled “Prescribing Policy for Energy Storage System in the Electric Power Industry,” provides the general framework for Energy Storage System (ESS) operations which includes Battery Energy Storage Systems (BESS) as well as various configurations such as “Stand-Alone Energy Storage System” (which charges from the grid) and “Integrated RE Plant and ESS” (which charges exclusively from an RE plant).

As system operator, the NGCP integrates renewable generation and storage resources into the network, procures and schedules ancillary services, and implements grid expansion under the Transmission Development Plan. TransCo retains ownership of the transmission assets, while distribution utilities handle distribution-level interconnections for storage sited on their networks in accordance with ERC-approved technical standards.

Grid congestion arising from RE sources is managed primarily through transmission planning and expansion led by the NGCP under the Transmission Development Plan, including the build-out of Competitive Renewable Energy Zones and inter-island links to move RE output to load centres.

At present there is no formal, grid-wide policy that codifies voluntary or forced curtailment of RE generators.

There is a Demand-Side Management programme designed by the DOE to be implemented by every distribution utility through Multi-Sectoral Programmes, Industrial Sector Programmes, Commercial Sector Programmes, Residential Sector Programmes and Public Sector Programmes.

For other areas, there are hybrid microgrid systems such as the Sabang Renewable Energy Microgrid project in Palawan and the Puerto Galera wind project.

The Philippines does not have an established national pipeline infrastructure for natural gas into which renewable gas could be introduced. Projects are therefore localised and on-site.

Key parties include project developers (agribusinesses, livestock operations and landfill/wastewater operators), end-users (industrial/commercial plants and communities) and government instrumentalities (DOE, DENR and ERC where electricity from biogas is supplied to the grid). In the absence of a public gas grid, assets consist mainly of digesters, gas holders/treatment systems and small-scale generators at or near the feedstock site. Because there is no national gas pipeline into which renewable gas can be injected, there are no specific grid-injection rules or gas-admixture obligations.

Laws and regulations applicable to the biogas industry include the RE Act, the Biofuels Act, the DOE Renewable Energy Guidelines, the ERC Regulations on biofuels, and relevant environmental laws such as RA No 8749 (the Philippine Clean Air Act of 1999) and RA No 9003 (the Ecological Solid Waste Management Act of 2000).

The transportation and storage of heat from renewable sources in the Philippines are regulated by the RE Act and, for geothermal, Presidential Decree No 1442 and the Revised Omnibus RE Guidelines (DOE DC 2024-06-0018) of the DOE. There is no public or regulated “heat grid” in the Philippines. Heat from renewable sources is produced and used within project or customer premises, not traded over public networks. As regards geothermal, direct-use heat applications exist but remain in a nascent stage. Most geothermal output is used for power generation. Key parties are the DOE (award/administration of service contracts), the DENR (environmental compliance) and LGUs (local permits), alongside private geothermal developers/operators.

Thermal energy storage (eg, hot-water or process-heat storage) is implemented at facility level as part of plant design and permitting; there is no separate statutory regime for heat storage. While there is no public heat grid, electricity produced from geothermal projects is transmitted over the public grid.

The transportation and storage of biofuels are governed by the Biofuels Act and its implementing department orders and related administrative rules. The DOE issued Department Circular No DC2024-01-0001 providing the national policy, framework, roadmap and guidelines for hydrogen in the energy sector. The Circular covers all activities relating to hydrogen production, storage, transmission, distribution and utilisation, and recognises that the production of “green hydrogen” and its derivatives is preferred and considered an RE project. The Circular classifies hydrogen storage facilities as Hydrogen Energy Storage Systems (HESS), treated as ESS and subject to DOE DC2023-04-0008 requirements.

For transportation and distribution, the Circular provides that hydrogen (or its derivatives such as ammonia and other carriers) may be moved via dedicated pipelines, chemical carriers, or rail or maritime distribution systems, with fuelling stations as part of the value chain. There is presently no dedicated public “hydrogen grid”.

Department Circular No 2024-05-0014 further provides the Guidelines on Biofuel Blend Implementation. In particular, downstream oil companies are required to maintain sufficient storage capacity, blending facilities, transport systems and dedicated storage tanks to meet the new blend schedule, with compliance enforced through DOE reporting and penalties.

The Philippine electric power industry operates under EPIRA. EPIRA unbundled the relevant sectors in the industry to promote competition in the generation, distribution and supply sectors while keeping the transmission sector regulated. The electricity derived from RE sources is integrated into the electric power framework through the RE Act.

Key parties of the renewable electricity segment of the industry include:

• RE generators (solar, wind, hydro, biomass and geothermal power plants);
• the regulating agencies, foremost of which are the DOE and ERC;
• the NGCP (as the private entity that operates, maintains and develops the Philippine power grid);
• distribution utilities;
• retail electricity suppliers (licensed entities supplying electricity to “contestable customers” (see 5.5 Renewable Energy Certificates and (Corporate) Power Purchase Agreements);
• the Philippine Electricity Market Corporation (the operator and governance arm of the WESM or spot market); and
• the Independent Electricity Market Operator of the Philippines (the market operator of the WESM).

There are several standard contracts involved in the supply of electricity from RE sources. A PSA is a contract executed by and between RE generators and a distribution utility or retail electricity supplier and must be approved by the ERC. A retail supply contract is an agreement executed by and between a retail electricity supplier and a contestable customer under the RCOA regime. A renewable energy supply agreement is a contract similar to a PSA but is specific to RE and may incorporate incentives under the RE Act. A WESM participation agreement is a contract that outlines the terms and conditions for entities participating in the WESM. A GEOP contract is an agreement between a qualified end-user and an RE supplier under the GEOP, a mechanism under the RE Act which empowers eligible end-users to choose a purely RE resource to meet their requirements.

Aside from EPIRA and the RE Act, the RE industry is regulated by applicable rules and regulations such as the WESM Rules and Market Manuals, the ERC Rules on RCOA, DOE Circulars on GEOP, and the RPS.

The Philippine market for the trade and supply of biogas and green gas is still in its early stages. Most projects are small and supply biogas or green gas directly to nearby end-users. This sector of the energy industry is fragmented and is typically associated with localised and on-site utilisation. There is no established national pipeline infrastructure for natural gas into which gas from RE sources could be introduced.

Key parties of the biogas and green gas sector include project developers, end-users, distribution utilities and electric co-operatives, and government instrumentalities. Project developers may be agribusinesses, livestock farms, landfill operators and wastewater treatment facilities. End-users may include industrial plants, commercial establishments and local communities that use the biogas as fuel for cooking, heating or captive power. Relevant government instrumentalities include the DOE, the ERC and the DENR, which regulates environmental permitting.

Laws and regulations applicable to the biogas industry include the RE Act, the Biofuels Act, the DOE Renewable Energy Guidelines, the ERC Regulations on biofuels, and relevant environmental laws such as RA No 8749 (the Philippine Clean Air Act of 1999) and RA No 9003 (the Ecological Solid Waste Management Act of 2000).

Renewable sources of heat in the Philippines include geothermal, solar, biomass and biogas. The market for the trade and supply of heat from renewable sources is integrated into the electricity industry.

The Philippines is one of the top producers of geothermal power due to its location within the Pacific Ring of Fire characterised by active volcanic activity. Energy harnessed from geothermal sources is used to generate electricity, which is then sold to form part of the electricity generation mix of the country. The DOE awards geothermal service contracts to qualified RE developers.

Solar power is one of the fastest-growing RE sources in the Philippines due to the country’s location in the tropics. The country is actively developing large-scale solar farms, in accordance with the call to reduce the country’s reliance on fossil fuel. Electricity generated from solar farms is sold to distribution utilities through PSAs, while smaller projects participate in the Net Metering Program, a programme under the RE Act, which allows end-users to sell excess generated electricity to the grid.

Electricity generated from biomass and biogas projects in the Philippines is often used for on-site consumption to power the facilities that produce the organic materials used to produce the heat.

The market for the trade and supply of hydrogen as an RE resource in the Philippines is still in its early stages and is not yet fully developed.

The biofuels industry is more developed and is governed by Biofuels Act. The Biofuels Act mandates blending of locally sourced biofuels into all liquid fuels for motors and engines. The law also provides incentive schemes to encourage investments in the production, distribution and use of locally produced biofuels at the minimum mandated blends.

Key parties in the RE sector include:

• the DOE;
• the National Renewable Energy Board, which recommends policy frameworks;
• the ERC, which regulates supply and contracts;
• generation companies;
• distribution utilities; and
• biofuel producers.

Standard contracts include PSAs between generators and distribution utilities, RE service contracts issued by the DOE to developers, and trading contracts for spot market transactions in the WESM.

Applicable laws and regulations include the Biofuels Act, the RE Act, EPIRA, the DOE Circulars and ERC-issued rules.

Renewable Energy Certificates

Renewable energy certificates (“RE Certificates”) are traded in the Philippine Renewable Energy Market (REM), the facility intended for mandated participants allowing them to comply with their RPS, a market-based policy that mandates electricity suppliers to source portion of their energy supply from eligible RE sources. The REM was established under the RE Act. Guarantees of Origin are not yet standardised in the Philippines.

Key parties involved in the market for the trade of RE Certificates include:

• the DOE and ERC for policy and regulatory oversight;
• the Independent Electricity Market Operator of the Philippines, which facilitates the trading of RE Certificates;
• distribution utilities and electric co-operatives, which are mandated to comply with their RPS requirements by purchasing RE Certificates;
• RE developers and generators; and
• end-users.

Applicable laws and regulations in the trade of RE Certificates include the RE Act, DOE Department Circulars on RPS and REM, and other ERC issuances.

Long-Term (Corporate) Power Purchase Agreements

Long-term power purchase agreements (PPAs) in the Philippines are common, particularly with large energy consumers or “contestable customers”. Under the RCOA regime established by EPIRA, contestable customers are allowed to contract directly with retail electricity suppliers. This development has opened the market for corporate PPAs, especially in the renewable energy sector, as companies seek long-term price stability and to meet sustainability commitments. Long-term PPAs typically last for a term of ten years.

The Philippines has a relatively mature onshore RE sector in terms of geothermal, hydropower and biomass, while the solar and wind power sectors are currently enjoying a period of rapid development.

In terms of size, the capacities of geothermal projects may range up to 400 MW, hydropower plants up to 30 MW, and biomass power projects up to 70 MW. Solar power farms may have capacities of up to 1,600 MW, and wind power projects may reach up to 700 MW.

The development process can be divided into the construction and operational phases. The construction phase of onshore projects includes activities such as land acquisition, permitting, financing, grid connection, procurement, and Engineering, Procurement and Construction (EPC) contract execution. The operational phase of RE projects may exceed the typical 25-year period, with one geothermal power plant having reached its 40th anniversary in 2023 and still in operation.

Key parties in RE projects include:

• the project developers;
• relevant government agencies such as the DOE, DENR, ERC, National Electrification Administration and NGCP;
• offtakers such as distribution utilities, electric co-operatives and large corporate buyers;
• local communities; and
• indigenous peoples for projects located in or near ancestral domains.

The legal framework for onshore RE projects is anchored on the RE Act, which provides for fiscal and non-fiscal incentives. EPIRA governs the trade and supply of electricity generated from RE projects. In projects where indigenous cultural communities may be affected, RA No 8371 (the Indigenous Peoples’ Rights Act) must also be considered, specifically in the Free, Prior and Informed Consent (FPIC) process. Onshore RE projects must secure the pertinent service contract with the DOE, approval of PSAs from the ERC, and the ECC from the DENR, among other permits.

Land acquisition involving private lands is achieved through purchase or lease agreements. For public lands, RE project developers secure special use agreements with the government.

Contracting standards typically follow international practice, whereby EPC contracts are typically turnkey, fixed-price and date-certain. Operation and Maintenance (O&M) contracts cover several years, typically ranging from two to five years, and the services provided thereunder may be provided by the EPC contractor or a third-party contractor.

The government typically provides incentives to encourage the development of RE projects. These include both fiscal incentives, which may be in the form of income tax holidays, duty-free importation of equipment or value-added tax exemptions, or non-fiscal incentives, which may be in the form of priority dispatch in the grid.

Community participation is a critical component of RE project development. Public consultations are required during environmental impact assessment, and project developers must secure clearances from LGUs. In cases where RE projects may affect indigenous cultural communities, FPIC must be obtained.

The offshore RE market in the Philippines is in its early stages, with no commercial-scale offshore projects, specifically wind farms, in operation. Nonetheless, the country is considered highly promising due to strong offshore wind potential. The DOE has already awarded over 80 offshore wind service contracts, many supported by international developers in partnership with local firms. Offshore wind projects are expected to begin construction and generation by 2028.

The development of offshore projects consists of a construction phase and an operational phase. The construction phase includes activities such as seabed surveys, securing grid connection, and detailed engineering and planning considering typhoon and seismic risks unique to the Philippines. Balance-of-plant works include subsea cables, foundations and offshore substations, all of which require significant foreign expertise. The operational phase may include activities that are more complex than that for onshore projects due to access constraints, weather conditions and the need for specialised vessels.

Similarly to onshore projects, key parties involved in offshore RE projects include:

• the project developer, which may be a joint venture between international firms and local companies;
• the DOE for the approval and issuance of service contracts;
• the DENR for environmental permitting and marine resource protection;
• the ERC for the approval of PSAs;
• the NGC for transmission and grid connection;
• the Philippine Ports Authority and the Maritime Industry Authority (MARINA) for port use and vessel regulation; and
• the National Commission on Indigenous Peoples and relevant LGUs for community or indigenous peoples’ consent.

The legal framework for offshore RE is anchored on the RE Act, which provides for fiscal and non-fiscal incentives. EPIRA governs the trade and supply of electricity generated from RE projects. In projects where indigenous cultural communities may be affected, the Indigenous Peoples’ Rights Act must also be considered, specifically in the FPIC process. Relevant environmental and sea ecosystem protection laws may also be of relevance, and in this context, offshore projects must co-ordinate with the DENR for coastal and marine impact assessment and with MARINA and the Philippine Ports Authority for maritime safety and port facilities. Offshore RE projects must secure the pertinent service contract from the DOE, such as an Offshore Wind Energy Service Contract. Other requirements include the ECC from the DENR and maritime clearances.

Currently, location allocation is secured through direct application to the DOE for an Offshore Wind Energy Service Contract, although a future competitive tender process may be introduced, aligned with the GEAP.

The Philippine government actively promotes RE projects, offering fiscal incentives; however, regulatory clarity on seabed leasing, safety zones and revenue-sharing schemes is still evolving.

Community consultation is mandatory during environmental impact assessment. Offshore projects may also be required to negotiate agreements with fishing communities, LGUs and indigenous peoples if traditional fishing grounds or ancestral waters will be affected.

Project financing of RE projects in the Philippines broadly follows the same framework as other project-financed infrastructure projects but also presents specific legal considerations and risks that lenders and financiers must address. In general, RE projects are financed on a limited non-recourse basis, with repayment sourced from the project’s cash flow obtained from PSAs or from sales in the WESM. As in other project-financed assets, lenders require a robust security package and the presence of offtake agreements.

The common legal considerations for financing RE projects are the regulatory approvals, revenue certainty and land rights. Developers must obtain the pertinent service contract from the DOE, which grants exclusive rights to explore and develop a resource and is a precondition for financing. The ERC must approve PSAs or offtake agreements with distribution utilities and electric co-operatives, which is a crucial consideration of project bankability. In addition, project developers must secure a Certificate of Compliance from the ERC to operate and an ECC from the DENR to address possible environmental impacts. Local government permits and, where applicable, compliance with the FPIC process with indigenous communities are also essential.

Compared with other project-financed assets, RE projects benefit from specific incentives under the RE Act, including a seven-year income tax holiday, duty-free importation of machinery and equipment, value-added tax exemptions, accelerated depreciation and priority dispatch in the grid. These incentives improve project economics and enhance bankability.

However, RE projects also face distinct risks. Land acquisition is often a complex process due to fragmented ownership, agricultural land conversion restrictions and potential ancestral domain claims. Regulatory uncertainty may also pose legal risk, as changes in relevant rules, such as competitive selection process rules, RPS compliance or feed-in tariff rules, can undermine revenue security.

Foreign ownership restrictions also play an important consideration in financing. Under the Philippine Constitution, foreign entities cannot own land, so project developers must secure long-term leases or partner with local developers. In natural resources projects such as geothermal projects, a minimum 60:40 Filipino to foreign ownership rule applies unless structured through a financial or technical assistance agreement. These rules affect project structuring and require due diligence by lenders.

The Philippines has a comprehensive subsidy and incentive framework for RE established under the RE Act. At the national level, the law grants both fiscal and non-fiscal incentives aimed at lowering the cost of investment and ensuring priority access to the electricity market for qualified RE projects.

Among the key fiscal incentives are a seven-year income tax holiday from the start of commercial operations, after which qualified RE projects enjoy a preferential corporate tax rate of 10% on their net taxable income. In addition, RE project developers may avail themselves of duty-free importation of RE machinery and equipment for the first ten years of operation, zero-rated value-added tax on local purchases of goods and services needed for project development, and the ability to carry over net operating losses incurred in the first three years for the next seven years. If the income tax holiday is not claimed, RE project developers may instead apply accelerated depreciation on their assets.

Non-fiscal incentives further strengthen the bankability of RE projects. The law mandates priority dispatch for electricity from RE sources in the grid, ensuring that their output is purchased ahead of fossil-fuel-based generators. The DOE has implemented the RPS, which obligates distribution utilities to procure a minimum of their supply from RE sources, creating a steady demand. Complementing this is the GEOP, which allows consumers with average peak demand of at least 100 kW for the past 12 months to source power directly from RE generators, and the Net Metering Program, which enables distributed generators with a capacity of up to 100 kW to sell excess energy to the grid. More recently, the DOE has launched the GEAP, a competitive procurement scheme that awards long-term supply contracts to RE project developers, providing certainty and guaranteed offtake.

In addition to these, LGUs may provide further support through reduced local business taxes or streamlined permitting process; however, these may vary across different provinces and municipalities.

Likewise, RE projects located in special economic zones regulated by the Philippine Economic Zone Authority may qualify for additional tax benefits such as extended income tax holidays, zero-rated value-added tax on local purchases, and simplified customs procedures for imported equipment.

Finally, the Strategic Investment Priority Plan maintained by the Board of Investments (BOI) lists RE as a priority investment area. This allows RE project developers to register with the BOI and avail themselves of enhanced tax incentives. The BOI registration framework is particularly relevant for foreign investors looking to maximise fiscal support.

In the Philippines, the regulation of cessation of activities and the decommissioning and disposal of RE installations is not yet governed by a single, comprehensive law specific to RE. Instead, obligations are addressed through a combination of the RE Act, its implementing rules and regulations, the terms and conditions of RE service contracts issued by the DOE, and existing environmental and land-use laws.

Under DOE guidelines, RE project developers are granted service contracts that typically run for a period of 25 years and are renewable for another 25 years. These contracts expressly provide that, upon expiration, termination or relinquishment, the RE project developer must undertake rehabilitation and decommissioning activities to restore the site to a safe and environmentally sound condition.

From an environmental law perspective, the DENR, through the Environmental Management Bureau, requires project developers to secure an ECC prior to construction and operation. The Environmental Impact Statement system obliges project proponents to include a decommissioning or abandonment plan in their environmental assessment. This plan must describe how facilities will be dismantled, how wastes will be disposed of, and how the site will be rehabilitated at the end of the project’s life. Compliance with the conditions of the ECC is mandatory throughout the period of the RE service contract, including the termination stage, and failure to implement proper decommissioning measures can result in penalties or liability for environmental damage.

Targets and Ambitions

Under the country’s Philippine Energy Plan (2023–2050), the Philippines aims to increase RE’s share in the generation mix to 35% by 2030, 50% by 2040, and more than 50% by 2050. Offshore wind development is prioritised, with potential deployment reaching twin targets of 19 and 50 GW by 2050, based on identified resource potential. The 19 GW target represents the minimum capacity and 50 GW represents the upper end of the capacity the government hopes to develop. These targets align with the country’s Nationally Determined Contribution under the Paris Agreement, ensuring reduction and a low-carbon transition.

Beyond renewables, the Philippine government is also exploring low-carbon alternatives, which involves the commissioning of at least 4,800 MW of potential capacity by 2050.

Key Policy Mechanisms and Initiatives

The Philippines continues its implementation of the GEAP, which provides long-term contracts for RE developers, ensuring cost-efficient and large-scale rollouts.

The DOE is also spearheading efforts for the enactment of a waste-to-energy bill and the promotion and development of waste-to-energy facilities.

Acknowledging that a conducive investment climate is key to sustainable growth in the RE industry, the DOE is also looking at amending the Omnibus Guidelines on the Award and Administration of RE Contracts and Registration of RE Developers, to further streamline the application process for RE projects.

On operational safety and resilience, the DOE is also taking efforts to establish Dam Safety Guidelines for the Philippines, to ensure the safety and safe operations of dams and reservoirs.

Recently, the DOE announced that it is developing a carbon credit policy for the energy sector aimed at creating new opportunities for stakeholders, cutting emissions and drawing more investments into clean energy initiatives.

In addition, the DOE has issued a draft Department Circular outlining the framework for incorporating nuclear energy into the Philippines’ power generation mix. The DOE has clarified that the pursuit of nuclear energy is not intended to replace RE but rather to complement it, aligning with the Philippine Energy Plan, which envisions a diversified and sustainable energy mix that harnesses both RE sources and other emerging technologies.