The Department of Energy (DOE) is now at the process of fast-tracking efforts on the issuance of a Circular that will lift the nationality requirement for capital flow on renewable energy (RE) projects.
The department is currently seeking comments and inputs from all relevant stakeholders on the propounded tweak to the implementing rules and regulations (IRR) of Republic Act 9513 or the Renewable Energy Act so 100-percent foreign equity ownership can already be allowed in RE ventures.
The DOE has given all interested parties to submit their respective recommendations to the proposed policy modification by Friday (October 21).
The targeted adjustment in the RE Law’s IRR took its cue from a legal opinion issued by the Department of Justice (DOJ) last month, declaring that “the Constitutional foreign ownership restriction on the exploration, development and utilization of natural resources only covers things that are susceptible to appropriation, thus, excluding the sun, the wind and the ocean.”
It was further emphasized that “the compelling reason behind the Constitutional foreign ownership restriction finds no application to inexhaustible renewable energy sources.”
It is from that precept then that the DOE initiated steps to finally ‘cure’ the policy shackle that has been impeding massive capital flow into the country’s RE sector – and the remedy it proffered will be the issuance of a Circular that will amend the IRR of the law.
A draft Circular published by the department stipulated that it will be “removing the nationality requirement imposed on businesses engaged in the exploration, development and utilization of solar, wind, hydropower and ocean energy thereby allowing the entry of foreign capital into the country’s RE industry.”
The DOE underscored that such policy step “will address one of the significant challenges towards achieving the targeted 35-percent share of RE in the power generation mix by 2030 and 50-percent share by 2040” – and such will be in keeping with the targeted capacity-installations under the National Renewable Energy Plan.
It is the department’s belief that if the planned RE projects will be concretized, this will help lower energy costs in the country; and this will likewise pave the way for cleaner energy solutions becoming more accessible to the consuming public – including those in the off-grid areas that have physical constraints of connection to the major power grids.
Based on the estimates of the DOE, if the mandated share of RE in the energy mix will be realized, this could generate more than P270 billion worth of investments of clean energy sources added up into the country’s power supply base.
The policy anchor that could be depended on by RE investors is the Renewable Portfolio Standards (RPS), which is an edict that mandates distribution utilities to source the prescribed 2.52-percent of their supply from RE facilities.