Philippine Contracts Worth $2.2 Billion Awarded for Renewable Energy Projects

BANGALORE, INDIA–October 29, 2009–Researched by Industrial Info Resources (Sugar Land, Texas)–The Philippines Department of Energy has awarded 87 new contracts worth a combined $2.2 billion in the renewable energy sector to 18 companies. The contracts entail the development of biomass, geothermal, hydropower, ocean, solar and wind energy resources, with a total power generation potential of 4,042 megawatts. This development is being touted as the largest number of contracts awarded in a single day.

Of the 87 contracts signed, 65 pertain to the development of renewable energy projects. The remaining 22 are conversions of existing agreements and service contracts into renewable energy contracts: 17 for hydropower projects and five for geothermal projects.

The contracts were awarded pursuant to the Renewable Energy Act of 2008, also known as Republic Act 9513, which calls for investments of about $8.5 billion to be made in harnessing renewable sources of energy over a period of 10 years. The projects are expected to result in cost savings that will be passed on to consumers. According to earlier estimates, about 1,636 MW of renewable energy projects are expected to be commissioned in the next five years. This number is likely to increase, as new projects get under way.

The DoE aims to increase renewable energy generation capacity from 4,500 MW to 9,000 MW during 2003-13, targeting about 40% of the country’s primary energy requirements to be serviced by renewable sources. Targets set for this period include the addition of:

* 1,200 MW of geothermal energy generation capacity, to reach 1,931 MW

* 2,950 MW of hydropower generation capacity, to reach 5,468 MW

* 417 MW of wind power generation capacity

* 131 MW of biomass, ocean and solar power generation capacity.

The Philippines is considered to be the world’s second-largest producer of geothermal energy and Southeast Asia’s largest developer of wind energy.

In July this year, the DoE announced plans to establish a $2 billion renewable energy trust fund to help develop renewable energy sources and promote the use of renewable energy in the country. In September, the DoE awarded seven renewable energy contracts, with a combined value of about $1 billion, to six companies for the development of 379 MW of wind power generation capacity. At the time, the DoE indicated that about 70 renewable energy projects were in the pipeline, including 50 mini-hydropower and 20 wind power projects, and one ocean energy project.

The National Renewable Energy Board is expected to release soon an incentive package for investors in the Philippines‘ renewable energy sector. Under the Renewable Energy Act of 2008, investors and project developers are offered several fiscal incentives, including tax-free carbon credits; exemption from tariffs; exemption from import duty on machinery and equipment for the first 10 years of operations; income tax holidays for the first seven years of operations; and exemption from value-added tax on power generated from renewable sources of energy. Non-fiscal incentives include mandatory utilization and priority dispatch of power from renewable sources in the grid.

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