The Energy Regulatory Commission (ERC) is drafting rules that would require renewable energy to be dispatched ahead of diesel-fired power plants in off-grid areas, as the regulator seeks to lower electricity costs and reduce dependence on imported fuel.
ERC Chairperson and Chief Executive Officer Francis Saturnino Juan said the proposed rules on off-grid Distributed Energy Resources (DER) would establish an operational and financial framework that gives renewable energy sources priority in dispatch over diesel generation.
“At the heart of these reforms is a simple objective: to deliver more affordable, reliable, and sustainable power to our off-grid communities while easing the burden on all electricity consumers who bear the Universal Charge for Missionary Electrification (UC-ME),” Juan said during a media briefing on Thursday.
Under the draft rules, DER owners would receive 80% of the Subsidized Approved Generation Rate (SAGR), while distribution utilities would receive the remaining 20% to support grid maintenance and upgrades.
Renewable energy developers would also be eligible for incentives, including a cash incentive equivalent to 50% of the UC-ME rate for every kilowatt-hour generated, while earning Renewable Energy Certificates that can be used to meet renewable energy compliance requirements.
The proposed compensation mechanism and incentives are expected to improve the commercial viability of renewable energy projects in off-grid areas, where diesel-fired generation has traditionally dominated electricity supply because of limited or no connection to the main transmission grid.
Many of the Philippines’ off-grid communities rely on diesel generation operated by the National Power Corporation and private power providers, with operating costs subsidized through the UC-ME, a levy collected from electricity consumers nationwide.
The proposal builds on a series of government initiatives aimed at accelerating renewable energy deployment in remote communities.
Earlier this month, the Department of Energy (DOE) said it was developing a pipeline of projects to reduce diesel consumption in off-grid areas, including support for microgrids and other clean energy solutions.
The ERC’s proposed rules also complement recent efforts to strengthen the country’s renewable energy framework.
The commission recently adopted rules on off-grid transmission wheeling, while the DOE has been pushing policies covering zero-export solar systems, battery energy storage deployment and renewable energy auctions to expand clean energy capacity and improve grid reliability.
The government has also been accelerating the completion of new power projects through Task Force 200, which the DOE said has delivered about 1.5 gigawatts of additional capacity this year, including battery energy storage systems that can help integrate more renewable energy into the grid.
The ERC said it will publish the draft rules on July 10, accept public comments until July 23, and hold a virtual public consultation on July 30.
The proposed framework is expected to encourage greater private sector investment in distributed renewable energy systems while helping reduce fuel costs and improve energy security in island and remote communities.
