ERC proposes renewable priority rules for off-grid power

The Energy Regulatory Commission has drafted rules to accelerate renewable energy deployment in off-grid areas, reduce reliance on imported diesel fuel, stabilize electricity prices, and ease the Universal Charge for Missionary Electrification paid by consumers nationwide.

The proposed Off-Grid Renewable Energy Distributed Energy Resources Rules would prioritize electricity generated from renewable sources, such as solar and wind, over diesel-fired power through operational and financial mechanisms.

The ERC said the framework seeks to expand clean energy use in missionary areas, where communities outside the main transmission grids often depend on costly 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 UC-ME charge,” ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said.

Under the draft rules, renewable energy sources would be dispatched ahead of diesel plants through a priority dispatch mechanism.

Diesel generators, including those covered by existing contracts, may be placed on standby whenever distributed renewable energy output is sufficient.

The generators may continue recovering fixed costs while avoiding additional fuel expenses during periods when renewable energy can meet demand.

Juan said the approach is intended to ensure renewable energy is not merely encouraged but used first in the actual operation of off-grid power systems.

“These mechanisms are intended to ensure that renewable energy deployment is not only encouraged but also prioritized in actual system operations in the off-grid areas, displacing costly diesel generation whenever available,” Juan said.

The proposed framework also introduces an 80/20 export payment scheme.

Under the arrangement, distributed energy resource owners would receive 80 percent of the subsidized and approved generation rate, or SAGR.

Distribution utilities would retain the remaining 20 percent to help finance grid upgrades needed to accommodate distributed energy resources.

Qualified renewable energy developers may also receive a cash incentive equivalent to 50 percent of the UC-ME rate for every kilowatt-hour generated.

Renewable Energy Certificates would be earned and attributed to mandated participants in the off-grid area for compliance with national renewable energy targets.

The incentives are intended to improve the commercial viability of renewable energy projects while reducing the amount of diesel generation supported through electricity subsidies.

The UC-ME is collected from electricity consumers to finance missionary electrification in remote and off-grid areas where the full cost of generating power is generally higher than the rates charged to local customers.

The Department of Energy’s 2024–2028 Missionary Electrification Development Plan identifies renewable energy deployment, modernization, private-sector participation, and grid interconnection as key strategies for expanding sustainable electricity access in off-grid and underserved communities.

The ERC published the draft rules on July 10, 2026.

The commission will accept public comments until July 23 and conduct a public consultation through Microsoft Teams on July 30, 2026.

The proposal builds on the ERC’s existing regulatory framework for distributed energy resources, which was adopted in 2022.

It also forms part of broader regulatory reforms aimed at strengthening renewable energy integration, improving long-term cost efficiency, and making electricity service in off-grid areas more sustainable.