Foreign investors in the renewable energy (RE) sector, especially those who applied for 100-percent foreign ownership n offshore wind (OSW) service contracts, are facing snag due to the foreshore land lease policy of the Department of Environment and Natural Resources (DENR).

This investment dilemma was affirmed by Energy Secretary Raphael P.M. Lotilla, as he noted that “we continue to sit down and discuss with all government agencies, including DENR,” with him qualifying that “they are also very proactive on their part and we have been exchanging notes.”

The energy chief noted that the DENR will be issuing soon its guidelines on securing environmental compliance certificates (ECCs), primarily those for offshore wind projects.

“Their ECC guidelines will be out very soon. Definitely, that’s the thing (foreshore land lease policy) that will be addressed down the line,” Lotilla stressed, as he emphasized that “we still have ample time to address those.”

The existing rules prescribe that the salvage zone for foreshore land extends 20 meters from the interior limit of the shoreline which is determined between the highest and lowest tide – and that could be typically covered with 25-year foreshore lease agreement with the DENR.

However, the current position of the environment department is that “for foreshore leases, this must only be granted to companies with 60 percent Filipino ownership.”

As gathered, some top officials at the DENR opined that given the "Constitutional brinksmanship" of such policy enforcement, opportunities must only be bestowed on those with or who can get land tenurial instruments.

Under Department Circular No. DC2023-06-0020 of the DOE, which sets the framework for OSW investments in the country, it was stipulated that the department “shall coordinate with the DENR and TransCo (National Transmission Corporation) for its formulation and issuance of foreshore lease regulation for transmission system of OSW projects and wind turbines and its components,” to include those on foundations, monopoles and transmission.

The foreshore lease regulation is targeted for issuance within 90 days from the effectivity of the DOE Circular which was enforced since June this year.

Denmark Ambassador to the Philippines Franz-Michael Mellbin sounded off that the Danish investors who signed up for 100-percent equity on offshore wind projects are confronted with “challenges on bringing the generated capacity on land; and that regulation will need to be thought through - and probably some room for adaptation.”

He averred “if the government wants private companies to be part of upgrading the smart grid and taking some of the best on government hands, then the current regulation doesn’t allow for flexibility, including foreign operators to come in with their generating capacity.”

The ambassador conveyed “there are some things that the government should probably consider to allow more flexibility when having the private sector as partner.”

As things stand today, it was reckoned that the DENR policy on lease arrangement for foreshore land is a bit tough for foreign investors to navigate, hence, project sponsor-firms have been seeking help from the DOE to have this pressing concern resolved at the soonest possible time.

Mellbin highlighted “if you look at bringing cables from the offshore wind on to land, right now, DENR regulations do not allow foreigners to do that – it has to be Filipino entity, so you need to consider how do you manage that if you want private partners to come in.”

He cited such importance, especially in accelerating large scale RE where developers would need  security to ensure enough capacity "so that you’ll not be stuck with stranded generating capacity which simply doesn’t have an offtake into the system, simply because the system can’t manage it.”