ERC proposes off-grid RE rules to cut power costs

MANILA, Philippines – The Energy Regulatory Commission (ERC) plans to prioritize the use of renewable energy plant over diesel power plants in remote areas to lower power costs.

In a statement on Thursday, the ERC said the proposed Off-Grid Renewable Energy (RE) Distributed Energy Resources (DER) Rules will speed up clean energy deployment by prioritizing renewables over diesel in missionary areas.

READ: DMCI Power budgets P 2.4B for off-grid expansion

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The regulator said the proposed framework will reduce dependence on imported diesel, stabilize electricity prices, and ease the Universal Charge for Missionary Electrification (UC-ME) burden on consumers across the country.

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ERC Chair and CEO Francis Saturnino C. Juan said the initiative aims to improve affordability and sustainability in underserved communities.

“At the heart of these reforms is a simple objective: to deliver more affordable, reliable, and sustainable power to our remote communities while easing the burden on all electricity consumers who bear the UC-ME charge,” Juan said.

The draft rules prioritize renewable energy sources, including solar and wind, over diesel plants.

Operators may place diesel generators, including those under existing contracts, on standby when renewable energy supply is sufficient, allowing them to recover fixed costs without additional fuel expenses.

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The proposed framework also introduces an 80/20 export payment scheme, under which DER owners will receive 80 percent of the subsidized and approved generation rate, while distribution utilities will retain 20 percent to support grid upgrades.

Qualified developers may also access incentives, including a cash incentive equivalent to 50 percent of the UC-ME rate per kilowatt-hour generated. They will also earn renewable energy certificates to help fulfill the country’s renewable energy targets.

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Juan said these mechanisms encourage and prioritize renewable energy in remote operations, replacing costly diesel generation whenever renewable supply is available.

The ERC said it will post the draft rules on July 10, accept public comments until July 23, and hold a public consultation on July 30 via Microsoft Teams.

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According to the commission, the proposed rules targets to strengthen the role of renewable energy in remote systems while promoting long-term cost efficiency and sustainability in the power sector. /pai INQ