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Regulatory and policy framework for Renewable Energy development

Pricing and Contracting Mechanisms in the Philippines.

Description of project:

The 2005-2014 Philippine Energy Plan lays out a two prong agenda:

  • enhancing energy security/independence; and
  • implementing market sector reforms to enable a more efficient sector’s operation and ensure proper supply of a growing energy demand.

Furthermore, the Renewable Energy Law October 2008, lays out a framework to accelerate the development and utilization of renewable energy resources and, in parallel, establishes an institutional framework and mechanisms to carry out its mandates. To this end, the Electricity Regulatory Commission (ERC) has requested the World Bank support in developing a sound regulatory framework to encourage the sustainable development of renewable energy sources, by developing and using a more broader and multiyear programmatic approach. Under this framework, ÅF Spain was requested to advise the ERC on recommending pricing and contracting mechanisms for RE.

ÅF's services:

The scope of work for Mercados EMI covered the following Components:

Component 1: Regulatory Framework for scaling up Renewables: Inception Report

In this task the Consultant assessed and recommended a regulatory framework to promote the efficient achievement of the Governments renewable energy policy targets by

  • Reviewing the efficiency and effectiveness of the policy/regulatory instruments based on practical experience in the Philippines and other countries;
  • Advising on the choice of policy/regulatory instruments such as rules and regulations and their assignment of the instruments between agencies in the Philippines; and
  • Advising on the design and implementation by ERC of pricing and other regulatory arrangements to promote renewable energy consistent with the Renewable Energy Law.

Component 2:  Pricing and Contracting Mechanisms for Renewables: Main task

This task was comprised of the following activities:

  • Review of relevant international experience in determining prices for renewables and recovery through regulated tariffs of contracting / purchase costs with renewables.
  • Assessment and proposal of renewables pricing and generation pass-through to retail tariffs options (i) for Luzon, taking into consideration existing WESM; (ii) for Visayas taking into consideration possible future arrangements and network expansion; and (iii) for Mindanao, to develop industrial and economic growth and support rural electrification.  It is expected that recommended approaches may differ for each region, in particular that the approach may be different for WESM than in a non-market environment.

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