Guidelines on Awarding Renewable Energy Contracts

Guidelines cover award procedures for Renewable Energy Service/Operating Contracts (RE Contracts) that include both pre-development and development/commercial stages.
Applies to contracts for power and non-power applications and covers the transition of existing service contracts to RE Contracts.
Establishes process for DOE Certificate of Registration issuance to RE Developers.

Act: R.A. No. 9513, Renewable Energy Act of 2008.
Blocking System: subdivision of Philippine territory into 81-hectare geographic blocks used to define contract areas (applicable to ocean, solar, wind, geothermal resources).
Commercial Operation: phase post-commissioning ready for energy sale/use.
Declaration of Commerciality: confirmation by DOE Secretary that project is commercially feasible.
Financial Closing: proof of financial capacity to implement RE project.
Frontier Areas: RE resource areas lacking sufficient technical data, not ready for immediate development.
RE Applicant & Developer: entities applying for or engaged in exploration and utilization of RE resources, duly registered under Philippine laws.
Work Program: plans and budget commitments for contract obligations.
Working Capital: net liquid assets available.

RE Contracts are service agreements granting exclusive rights to explore, develop, or utilize specific RE areas.
Biomass resources governed by Operating Contracts, exempted from standard Service Contract rules.
FYI: Biofuel producers regulated separately under Biofuels Act.
Two stages: (1) Pre-Development (assessment, feasibility, financial closing), (2) Development/Commercial (facility construction and operation).
Conversion process for RE Contracts from pre-development to development stage requires Declaration of Commerciality and fulfillment of permits.
Existing service contracts may convert to RE Contracts with provisional registration during the transition.

Contract areas delineated by the DOE’s Blocking System for ocean, solar, wind, and geothermal only.

Applicants: Individuals or corporations, Filipino nationals or Filipino-owned (60% minimum ownership), except for geothermal which permits foreign entities under certain conditions.
Legal prerequisites: Certified birth certificates or corporate documents, board authorizations, SEC registration for corporations, authentication for foreign entities.
Technical capability assessed via prior experience, work programs, key personnel qualifications, and company equipment availability.
Financial capability indicated through audited statements, bank certifications, working capital, guaranteed support where applicable.

Application and processing fees mandatory; no acceptance without payment.
Payments due only after complete documentation submission and DOE payment order.

Two modes: Open and competitive selection or Direct Negotiation.
Competitive selection involves publication of available RE areas on DOE website and newspapers, and invitations for proposals.
Evaluation conducted by a Review Committee based on legal, technical, and financial criteria.
Timeline and notification requirements established.
Direct negotiation applies to frontier areas or scenarios where competitive process yields no qualified applicants.
Public posting of frontier area applications for transparency during negotiation period.

Review Committee recommends award within one week after evaluation.
RE Contracts must be signed following notification.
Technical or financial assistance agreements involving foreign firms require Presidential approval.
RE Contract takes effect on stipulated date.
Performance bond posting required annually, equal or above minimum expenditure commitment.
DOE issues Certificate of Registration upon contract effectivity; provisional registration granted during contract conversion.

General term capped at 25 years renewable once, total max 50 years.
Pre-development stage initially two years, extendable by one year (two years plus one for geothermal).

Immediate issuance of Certificate of Registration enables eligibility for RE Act incentives.
Contracts must include benefits provisions for host communities and LGUs funded from government shares.

DOE may suspend or terminate contracts upon non-compliance with work program, technical standards, environmental laws, reporting, financial obligations, or failure to post performance bond.
Termination is void if remedied before the effective date.
Financial/technical assistance agreements require Presidential action for suspension/termination.

DOE approval required for any assignment.
Assignments to affiliates permitted with written guarantees.
Subsidiaries may operate but primary developer remains liable.
Foreign financial or technical assistance agreements subject to Presidential approval and Congressional notification.

Geothermal projects by foreign developers handled as Financial or Technical Assistance Agreements (FTAAs).
Requirements include investment commitments, financing limitations, employment preferences, technology transfer, and Presidential notification to Congress.
Hydropower impounding and pumped-storage developers must comply with international standards; Blocking System not used.
Biomass developers exempt from pre-development contracts, only require Operating Contracts; no exclusivity on feedstock areas.

Own-use projects must register with DOE to qualify for incentives.
Micro-scale non-commercial projects processed under simplified evaluation and checklist system.
Registration required but exempt from government share payments for micro-scale projects.