Foreign investors in the offshore wind industry are being perturbed with another round of policy uncertainty being thrown their way – this time, it is on the plan of the Department of Environment and Natural Resources (DENR) to enforce "seabed lease" for them to secure rights for ocean floor or under-the-sea land for the construction and eventual operation of their facilities.

According to a highly placed industry source, the proposal of the DENR on a "seabed lease" has already been raised with the Department of Energy (DOE), so the investors could be given clear direction on how that policy muddle could be resolved in the "whole of government approach" being instituted by the Marcos administration.

“For foreign investors – especially those which availed of 100-percent ownership in the service contracts awarded by the DOE, that is a major concern because under the ‘seabed lease’ being proposed, we will be compelled to tap local partners just for that leasing arrangement; and that will increase investment risks for us,” an executive of a foreign energy company noted.

The offshore wind developers, in particular, are arguing that what they are harnessing for energy production is wind; and not the water resource within these seabed sites, hence, a clear-cut policy has to be laid down by the Philippine government primarily on the ownership restriction.

The source added that “the initial argument we raised with the DOE is similar to the use of seabed in oil and gas exploration, wherein the foreign contractors were allowed to set up their installations on ocean floors on the strength of their awarded service contracts.”

As emphasized by the source, “that particular policy has to be clarified in the framework being crafted by the DOE, in line with the prescriptions of Executive Order No. 21 that was issued by President Marcos in April this year.”

EO 21 establishes the policy and administrative frameworks that the investors in the country’s offshore wind sector will have to adhere to – and the specific rules to guide investors shall be drawn up by the DOE in coordination with all the other relevant government agencies.

In other energy markets, seabed leasing is being advanced to ensure not just protection of environmentally-sensitive elements underneath these bodies of water, but to also allocate the marine spaces equitably to the project developers.

On seabed being earmarked for offshore wind facilities, it was noted that some energy markets offer them within specified period for the exploratory phase or pre-development activities on a project; and there is also a pre-determined duration that shall be set for the commercial operation of the facilities.

For these under-the-sea lease arrangement, several energy markets require the payment of upfront fee for the project sponsor-firms to secure the lease rights and there could also be annual charge to be settled as "rent" once the wind farm reaches commercial operation; while other countries opt for royalty payments akin to what’s being done in the upstream oil and gas sector.

There had been massive interest being shown by foreign investors in the nascent offshore wind industry of the Philippines, but as they advance on their planned implementation of projects, the snags have been tormenting them one by one.

If the offshore wind generation potential could be fully harnessed, it is highly anticipated that this will help the country elevate its energy security goals because these are the type of developments that could yield gigawatt-scale of capacities.