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Senate OKs Renewable Energy bill

by LYNDA JUMILLA, ABS-CBN News | 09/29/2008 7:03 PM

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Amid continued uncertainty over oil prices, the Senate approved on third and final reading a package of incentives to attract developers of renewable energy (RE) to invest in the country.

Renewable energy proponent Sen. Juan Miguel Zubiri defined renewable energy as "resources that do not have an upper limit on the total quantity to be used."

"Such resources are renewable on a regular basis, and whose renewal rate is relatively rapid to consider availability over an indefinite period of time," he said.

These include: biomass, solar, wind, geothermal, ocean energy, and hydropower conforming to internationally-accepted norms and standards on dams.

Zubiri, who authored one of the bills that were eventually consolidated as Senate Bill 2046, said the measure provides for a seven-year income tax holiday and a five percent gross income tax thereafter to renewable energy developers who invest in the Philippines.

Power and electricity from RE resources for the investor's/generator's own consumption or free distribution in off-grid areas will be exempt from universal charges under Section 34 of the Electric Power Industry Reform Act (EPIRA).

Zubiri said it was necessary to offer an attractive incentive package to RE investors because RE projects are more expensive than fossil-fuel based energy plants.

"Therefore, the Senate deemed it appropriate to provide investors this tax holiday as well as lower corporate tax rates in order for them to survive the first phase of costly constructions and operation, thereby making the projects economically viable," he added.

Zubiri noted that "the beauty of RE power plants" is that high investment costs occur only at the beginning of the project, particularly in the construction of infrastructure.

"Costs taper off during operations since power is generated from cost-free renewable resources like wind, solar, hydro, geothermal, and don't need imported fossil fuels such as coal and bunker fuel to operate," he said.

On the other hand, consumers who adopt RE technologies for their own use will also enjoy incentives.

SB 2046 provides for a government share equivalent to 1 percent of the gross income of RE developers on the sale of energy produced, as well as other incident income from generation, transmission, and sale of electricity.

Zubiri acknowledged the escalating price of oil in the world market effectively pressured legislators into tackling the RE bill with urgency.

Sen. Edgardo Angara, who co-authored and sponsored SB 2046, enumerated the savings renewable energy could bring:

• 3.6 billion dollars or almost 200 billion pesos in fuel purchases;
• 1 million barrels of oil for every 600 million kilowatt hour of RE generation;
• 100 million barrels of oil by developing 2,500 megawatts of RE-based power plants by the year 2014.

Angara said the country must wean itself from heavy dependence on oil especially since world oil prices are expected to remain high or even escalate further as global demand for energy increases.

"The future is in clean renewable energy, which is predicted to be one of the biggest industries in the next 5 years. The benefits of renewable energy use are considerable: it will foster sustainable growth, energy independence and economic security for the country, and unite us with the global effort to stop climate change," Angara said.

Some months back, the House of Representatives passed its version of the renewable energy measure. The Senate and the lower house are expected to convene a bicameral committee shortly to hammer out a common version of the Renewable Energy Bill.

as of 09/29/2008 7:03 PM