Retail choice expansion, GEOP improvements key to corporates’ renewable energy targets

In a public consultation conducted by the Clean Energy Investment Accelerator (CEIA) yesterday, officials from the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) provided insights on the CEIA’s latest white paper. The paper, titled Expanded Retail Choice for Renewable Energy Procurement in the Philippines, was launched publicly during the event.

According to DOE Assistant Secretary Mylene Capongcol, “we understand that most of the multinational companies (MNCs) operating in the Philippines are just renting their facilities so maybe we can introduce mechanisms such as Green Lease to allow these corporates to directly procure renewable energy (RE).”

Additionally, the DOE said that it will look into the possible amendment on the procurement of customers to cover lower threshold requirements. ”Both the Electric Power Industry Reform Act of. 2001 (EPIRA) and the RE Act of 2008 have a target of empowering consumers which is aligned with what the white paper aims to achieve,” Capongcol adds.

ERC Director Sharon Montañer also shared that “The ERC will continue to assess the market regarding the expansion of retail choice since expanded retail choice does not only mean lowering the threshold for RCOA, but offering additional programs as well to enhance and empower customer choice.”

“In order to preserve business and to allow growth of local companies, government representatives like the DOE and ERC must enable RE procurement options for Philippine service providers, manufacturers, or supply chain partners of global brands that have strong decarbonization commitments and are very serious with 100% RE,” says CEIA Philippines Co-Lead Marlon Apañada.

Companies from the commercial and industrial (C&I) sectors continue to demonstrate strong demand for renewable energy (RE) by setting science-based emissions reduction targets. Since 2016, there has been a continuous rise in global businesses committing to pursue 100% RE procurement or setting net-zero emissions goals.

In their recent 2022 Annual Disclosure Report, RE100 reveals that almost two-thirds of its new members come from Asia. However, Asian markets remain the most challenging countries for implementation of 100% RE commitments. The same report shows that there are 73 RE100 member companies operating in the Philippines as of 2022.

The Philippines is no stranger to the barriers and challenges faced by businesses seeking corporate RE procurement and pursuing strong sustainability targets and RE goals. However, the country’s existing retail choice framework, including the Retail Competition and Open Access (RCOA) mechanism and the Green Energy Option Program (GEOP), currently limits companies’ options to directly procure RE due to energy demand threshold limitations and facility ownership issues.

The White Paper prepared by the (CEIA), an international public-private initiative, underscores the importance of addressing design and implementation gaps in the existing retail choice policies to enable widespread participation in both RCOA (which is currently only available to electricity end-users with an average peak demand over 500 kilowatts) and the GEOP (which is only available to electricity end-users with an average peak demand over 100 kilowatts). Additionally, expanded retail choice would also provide new procurement pathways for corporates who are leasing their facilities and enable them to directly contract with renewable energy suppliers (RES) for the first time.

In a related effort, a new study commissioned by the Global Wind Energy Council (GWEC) and authored by The Lantau Group was also released wherein it provided recommendations on how to improve the regulatory environment for corporate RE procurement in the Philippines. Lantau Group Manager Mr. Kittithat “Kit” Promthaveepong joined the event to discuss their findings.

According to Kit, “Clean energy procurement is now a critical issue globally and spans beyond MNCs. Greater requirements are now being placed on supply chains and small and medium enterprises so positive reforms to mechanisms such as the GEOP are key to allowing more corporate end-users access to RE.”

GWEC Chair for Southeast Asia Mark Hutchinson also added “Corporate procurement is going to be a key driver for the future growth of wind and other renewables in the Philippines. Streamlining the process that allows corporate buyers to access RE through both expanded retail choice and an improved GEOP is critical”.

 

The CEIA-led White Paper showcases demand for enhanced RE procurement that has been echoed by local market stakeholders and details the benefits that would stem from expanding retail choice, including cost savings and bringing additional RE capacity into the country’s energy mix.

The paper also underscores the potential concerns that need to be addressed to enable full implementation, including the availability of RE in the energy mix, potential impacts to incumbent distribution utilities with customers potentially shifting towards retail options, and how the retail choice programs are governed.

Well-rounded implementation of any retail choice expansion program is necessary and required to ensure that expanded opportunities for electricity procurement result in positive outcomes for all stakeholders, not just the customers and RES.

Atty. Jose Layug, Jr., President of the Developers of Renewable Energy for AdvanceMent, Inc. (DREAM), shared that “We have so many things to fill up in terms of the gaps in retail choice and we’re hoping that platforms like the CEIA can continue collaborating and working alongside the DOE and ERC as well as the private sector to add more supply of RE into the market that could ultimately help bring down electricity prices for end-users.”