gem DEPARTMENT OF ENERGY DEPARTMENT CIRCULAR NO. DC2019-10- 0013 OMNIBUS GUIDELINES GOVERNING THE AWARD AND ADMINISTRATION OF RENEWABLE ENERGY CONTRACTS AND THE REGISTRATION OF RENEWABLE ENERGY DEVELOPERS WHEREAS, pursuant to Section 2, Article XII, of the 1987 Philippine Constitution, all forces of potential energy and other natural resources within the Philippine territory belong to the State and their exploration, development and utilization shall be under the full control of the State; WHEREAS, under Section 2 of Republic Act (RA) No. 7638, as amended, otherwise known as the “Department of Energy Act of 1992”, the Department of Energy (DOE) is mandated to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the Government relative to energy exploration, development, utilization, distribution and conservation, among others; WHEREAS, Section 5(b) of the same Act empowers the DOE to develop and update the existing Philippine energy program which shall provide for an integrated and comprehensive exploration, development, utilization, distribution and conservation of energy resources, with preferential bias for environment-friendly, indigenous, and low-cost sources of energy, and which program shall include a policy direction towards the privatization of government agencies related to energy, deregulation of the power and energy industry and reduction of dependency on oil-fired plants; WHEREAS, Section 2 of RA No. 9136, otherwise known as the “Electric Power Industry Reform Act of 2001" or “EPIRA”, declares that it is the policy of the State to, among others, (i) ensure and accelerate the total electrification of the country; (ii) enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors; (iii) assure socially and environmentally compatible energy sources and infrastructure; and (iv) promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy; WHEREAS, Joint Administrative Order (JAO) No. 2008-1, Series of 2008, otherwise known as the “Guidelines Governing the Biofuel Feedstocks Production, and Biofuels and Biofuel Blends Production, Distribution and Sale", provides for the accreditation of biofuel producers, among others, under RA No. 9367, otherwise known as the “Biofuels Act of 2006”, Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City, Philippines 1632 Tel. Nos. (Trunkline) (632)479-2900; ‘Website: httn-/wwrw doe.eov.oh: E-mail| [email protected]WHEREAS, Section 2 of RA No. 9513, otherwise known as the “Renewable Energy Act of 2008” or “RE Act’, directs the State to encourage and accelerate the exploration, development and utilization of renewable energy (RE) resources such as, but not limited to, biomass, solar, wind, hydropower, geothermal, and ocean energy sources, and including hybrid systems; WHEREAS, Section 19(c), Rule 6 of Department Circular No. DC2009-05-0008 which prescribes the Implementing Rules and Regulations (IRR) of the RE Act, requires the DOE to issue a regulatory framework containing the guidelines that shall govern the transparent and competitive system of awarding Renewable Energy Service/Operating Contracts from Pre-Development to Development onto Commercial Operations stage, or the awarding of direct operating contracts to specific RE technologies, among others; WHEREAS, under Section 2 of RA No. 11032, otherwise known as the “Ease of Doing Business and Efficient Goverment Service Delivery Act of 2018’, itis the duty of the State to, among others, promote integrity, accountability, proper management of public affairs and public property, aimed at efficient turnaround of the delivery of government services and the prevention of graft and corruption in government; WHEREAS, in Section 2 of RA No.11234, otherwise known as the “Energy Virtual One-Stop Shop Act” or “EVOSS", the State is likewise commanded to, among others, ensure transparency and accountability in the process of approving power generation, transmission, or distribution projects, and deliver efficient and effective service to the public; WHEREAS, in pursuing the efficient and transparent exploration, development and utilization of RE resources, the DOE promulgated various policies and guidelines in the awarding of RE Contracts and issuance of Certificates of Registration to RE Developers, with the view to increase the development and utilization of RE to contribute in the attainment of energy supply security in the country, to wit (a) DC2009-07-0011 dated 12 Jul 2009; b) DO2013-08-0011 dated 20 July 2013; (c) DO2013-10-0018 dated 09 October 2013; 'd) DO2013-12-0020 dated 02 December 2013; ‘e) DO2013-12-0023 dated 27 December 2013; (f) _DO2014-06-0010 dated 09 June 2014; 'g) DO2014-10-0018 dated 14 October 2014; h) DO2016-09-0011 dated 05 September 2016; i) DO2016-06-0010 dated 24 June 2016; (j) _0O2017-04-0005 dated 07 April 2017; (k) DO2018-03-0003 dated 16 March 2018: (l)_ DO2019-01-0003 dated 11 January 2019; and (m) DO2019-07-0018 dated 30 July 2019; ( ( ( ( ( ( ( ( (i Page 2 of 33WHEREAS, recent developments necessitate the harmonization and enhancement of the existing guidelines and procedures governing the transparent and competitive system of awarding RE Contracts and the registration of RE Projects; NOW, THEREFORE, in consideration of the foregoing premises, the DOE hereby issues the following revised guidelines and procedures governing the awarding of RE Contracts, and the registration and management of RE Projects: CHAPTER | GENERAL PROVISIONS Section 1. Title. This Circular shall be known as the “Omnibus Guidelines Goveming the Award and Administration of Renewable Energy Contracts and the Registration of Renewable Energy Developers.” Section 2. Coverage. This Circular shall prescribe the guidelines and procedures on: 2.4. The pre-application, application, and award of RE Contracts; 2.2. The conversion of existing service contracts to RE Contracts for the exploration, development or utilization of RE resources with the DOE, subject to Section 39, Rule 13, of the IRR of the RE Act; 2.3. The issuance by the DOE of Certificates of Registration (COR) for RE Developers of projects with or without RE Contracts; and 2.4. The administration of RE Contracts. Section 3. Definition of Terms. As used in this Circular and in other issuance of the DOE, the following terms shall be understood to mean, as follows: 3.1. ‘Biomass Energy Operating Contract” or “BEOC" shall refer to the RE Contract issued for the development and operation of RE Projects utilizing biomass as RE Resource, 3.2. “Blocking System" shall refer to the subdivision of the Philippines, for purposes of RE Applications for wind, geothermal and ocean resources, into RE meridional blocks (RE blocks) of 30 seconds of latitude and 30 seconds of longitude using Philippine Reference System of 1992 (PRS'92) as the standard reference system. One (1) RE block shall have approximate area of eighty-one (81) hectares. Each block shall have a unique number designated by the DOE. Page 3 of 333.3. 3.4. 3.5, 3.6. 37s 3.8, 3.9, 3.10. 3.11. 3.12. “Certificate of Confirmation of Commerciality” or “COCOC” shall refer to the Certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE Developer and shall serve as a notice to proceed for the construction of the RE Project or the installation of the RE Facilities, The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project. “Commercial Operations” shall refer to the phase commencing at the operation of the RE Project, following its successful testing and commissioning, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DOE and other relevant regulatory bodies. “Commercial Quantities” shall mean quantities of energy to be produced from the RE Resources using commercially available technology to develop the RE Systems which have a reasonable chance of being sufficient and technically compliant to support the Commercial Operations of the project. ‘Contract Area” shall refer to the total area, which is the subject of the RE Contract as detailed and outlined in the map with its technical description, and where the RE Developer has the exclusive right to explore, develop and utilize the RE Resources. “Declaration of Commerciality” or ‘DOC’ shall refer to a written declaration made by the RE Developer to the DOE, stating that the RE Resource is of Commercial Quantities. “Direct Application” shall refer to the mode of RE Application whereby the RE Applicant identifies a Contract Area it wishes to explore or develop. The identified Contract Area must first be certified by the DOE to be free and open for exploration or development. “Energy Application Management System” or “EAMS” shall refer to an intranet-based system utilizing radio frequency identification (RFID) technology to uniquely identify an application and monitor its real-time location “Financial Closing” shall refer to such milestone in the Pre-Development or Development Stage of the RE Project when the RE Developer has secured a written commitment from the financier/s to provide its full funding requirements through equity and/or commercial borrowings, or other financing schemes. “Financial Qualifications” shall refer to the criteria and procedures set out by the DOE to establish the financial capability of the RE Developer to implement the RE Project “Geothermal Service Contract” or “GSC” shall refer to the RE Contract issued for the exploration, development and/or utilization of geothermal resources as RE Resource for the operation of RE Projects. Page 4 of 333.13. 3.14. 3.15. 3.16, 3.17, 3.18. 3.19. 3.20. 3.21 3.22. “Hydropower Service Contract” or “HSC” shall refer to the RE Contract for the exploration, development and/or utilization of hydropower resources as RE Resource for the operation of RE Projects. “Letter of intent” or “LOI” shall refer to the written notice or document submitted by a Person to the DOE, indicating interest in the exploration, development, utilization and commercialization of RE Resource. “Ocean Energy Service Contract" or “OESC" shall refer to the RE Contract for the exploration, development and/or utilization of ocean resources for the operation of RE Projects. “Pre-Determined Area” or “PDA” shall refer to area/s with RE Resource potential through sufficient available technical data as may be determined by the REMB, and approved by the DOE Secretary for its inclusion in the Open and Competitive Selection Process (OCSP). “Person’ shall refer to a natural or juridical person, as the case may be. “Production Area” shall refer to that portion of the Contract Area identified in metes and bounds by the RE Developer and approved by the DOE, where RE Resources are utilized to produce electricity in Commercial Quantities. “RE Applicant’ shall refer to any Person, subject to the limitations provided in Section 4.2 hereof, who applies for the assessment, exploration, harnessing, development, utilization or commercialization of RE Resources. “RE Application” shall refer to the set of documents submitted by RE Applicants pertaining to their legal, technical and financial qualifications to enter into an RE Contract with the government, by either OCSP or Direct Application, in accordance with the requirements under this Circular. For this purpose, the RE Application shall be comprised of one (1) electronic copy and four (4) printed copies, where one (1) set of the printed copy shall be in the original. “RE Contract" or “Financial and Technical Assistance Agreement (FTAA)’ refers to the service agreement between the Government, through the DOE or the President, respectively, and an RE Developer over an appropriate period as determined by the DOE which grants to the RE Developer the exclusive right to explore, develop, or utilize the RE Resource within a particular area, “RE Developer” shall refer to an individual or juridical entity created, registered and/or authorized to operate in the Philippines in accordance with existing Philippine laws, and engaged in the exploration, development and/or utilization of RE Resources, and actual operation of RE Project. It shall include existing entities engaged in the exploration, development and/or utilization of RE Resources, or the generation of electricity from RE Resources, or both. Page of 33,3.23. 3.24. 3.25, 3.26, 3.27, 3.28, 3.29, 3.30, ‘RE Operating Contract” shall refer to the service agreement between the DOE and RE Developer for the development and/or utilization of biomass, solar and other RE Resources which, due to their inherent technical characteristics, need not go through Pre-Development Stage. “RE Project” shall refer to the power generation and related facilities utilizing RE Resources under a particular RE Contract or Certificate of Registration issued by the DOE pursuant to the RE Act. “RE Project for Non-Commercial Operations” shall refer to an RE Project which is intended for demonstration purposes of any new or modified RE technologies, and those that are covered by Official Development Assistance (ODA) grants, and all other programs and projects which are not designed and operated for profit. ‘RE Project for Own-Use" shall refer to an RE Project located within the premises of or in an area contiguous to an End-User's premises, and operated solely for the supply of a portion or all of the electricity requirements of such End-User. For this purpose, an ‘End-User’ shalll refer to any person or entity requiring the supply and delivery of electricity generated by the RE Project dedicated for its own consumption, which facility is installed either by the End-User or through a third-party provider. “RE Resource” shall refer to energy 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. These include, but are not limited to, biomass, solar, wind, geothermal, ocean energy, and hydropower, conforming with internationally accepted norms and standards on dams, and other emerging RE technologies. “RE Service Contract’ shall refer to a service agreement between the Philippine Government, through the President or the DOE Secretary, and RE Developer, covering an appropriate period as stated therein, in which the RE Developer shall have the exclusive right to explore, develop and utilize geothermal, hydropower, wind, ocean and other RE Resources within a particular area. “Renewable Energy Management Bureau” or “REMB” refers to the unit of the DOE created under Section 32 of the RE Act, with the primary function includes, among others, implementing policies, plans, and programs related to the accelerated development, transformation, utilization, and commercialization of RE Resources and technologies “Solar Energy Operating Contract” or “SEOC” shall refer to the RE Contract issued for the development and operation of RE Projects utilizing solar energy as RE Resource. Page 6 of 333.31. 3.32. “Wind Energy Service Contract’ or “WESC” shall refer to the RE Contract issued for the exploration, development and/or utilization of wind energy as RE Resource for the operation of RE Projects. “Work Program” refers to the plans and programs and other related activities formulated for the performance of the work obligations under the RE Contract by the RE Developer, along with the corresponding budgetary estimate, submitted to the DOE for approval. CHAPTER II RE SERVICE AND OPERATING CONTRACTS Section 4. RE Contract - Modes of Award and Qualifications. 44. Modes of Awarding RE Contract. - RE Contracts shall be awarded through (a) an Open and Competitive Selection Process or (b) Direct Application 4.1.1. The Open and Competitive Selection Process (OCSP) shall be adopted for the selection and award of RE Service Contracts for Pre- Determined Areas (PDAs) covering any type of resource for commercial purposes. This shall be governed by Chapter IV below. 4.1.2. Direct Application shall be available for the selection and award of: (a) RE Operating Contracts; (b) RE Service Contracts covering PDAs, following a failed OCSP pursuant to Section 13.7 and the procedures in Chapter V below; and (©) RE Service Contract in an area identified by a RE Applicant and verified with or confirmed by the DOE-Information Technology and Management Services (ITMS) as available for exploration, development and/or utilization of the proposed RE Resoutce. 4.1.3. RE Projects for Own-Use and/or RE Projects for Non-Commercial Purposes shall not require the issuance of RE Contracts but shall comply with the registration requirements provided under Chapter IX of this Circular. Page 7 of 3342. 43. 4.4. 45. Who May Apply. — Any Person, local or foreign, may apply for RE Contracts, subject to the limits provided in this Circular. 4.24 4.2.2, 4.23, The RE Applicant must be a Filipino or, if a corporation, must be a Filipino corporation duly registered with the Securities and Exchange Commission (SEC), with at least sixty percent (60%) of its capitalization duly owned and controlled by Filipinos, unless the application is for biomass development and/or uses waste-to-energy technology, in which case, the 60% Filipino capitalization requirement shall not apply. This provision shall retroact to all RE Applications for biomass resource development and utilization that are being evaluated prior to the effectivity of this Circular. For the large-scale exploration, development and utilization of geothermal resources, defined under Section 4(s) of the RE Act as a mineral resource, the Government through the President may enter into agreements with foreign-owned corporations involving technical or financial assistance pursuant to Article XII, Section 2 of the Philippine Constitution. In case the RE Applicant is a joint venture or a consortium, the partners of the joint venture or members of the consortium shall organize themselves as a corporation registered under the Corporation Code of the Philippines and shall comply with the nationality requirements as provided for in the preceding paragraph. Stages of an RE Operating Contract. — An RE Operating Contract shall cover only the Development/Commercial Stage, which involves the development, construction and installation and commercial operation of the RE Project, including the achievement of Financial Closing. Stages of an RE Service Contract. - An RE Service Contract shall cover two (2) stages of the RE Project, namely: 444 442 Pre-Development Stage. Involves the conduct of preliminary assessment and feasibility study up to Financial Closing and Declaration of Commerciality (DOC) of the RE Project, including the identification of the proposed Production Area; and Development/Commercial Stage. Involves__the development, construction and commercial operation of the RE Project, production and utilization of RE Resources. Transition from Pre-Development Stage to Development/Commercial Stage. — The RE Service Contract shall transition from the Pre-Development Stage to Development/Commercial Stage only after issuance by the DOE of a Certificate of Confirmation of Commerciality (COCOC). The process of the issuance of a COCOC is provided in Section 29 hereof. Page 8 of 33Section 5. RE Contract Area. Upon transition from the Pre-Development to Development Stage of the RE Service Contract, the Contract Area shall be amended to cover the Production Area only. In the case of RE Operating Contracts, the Contract Area is equivalent to the Production Area Section 6. Conversion of Existing Service Contract. For existing RE Projects that have been operating prior to the effectivity of the RE Act pursuant to contracts issued under the relevant preceding laws and those that have been issued RE Contracts after the RE Act but prior to this Circular, the contract holder may elect to convert its service contract or agreement by applying for an RE Contract under this Circular. However, the period of the RE Contract to be issued in relation thereto shall be the balance of the contract term remaining under the existing and valid service/operating contract or agreement. The requirements and procedures for conversion to RE Contract templates in Annexes A to F is provided in Section 30 hereof. CHAPTER III TYPES OF RE CONTRACT PER RESOURCE Section 7. Biomass Energy Resource. The development of biomass resources shall be covered by a Biomass Energy Operating Contract (BEOC) following the prescribed template (Annex A). The RE Developer shall be given a period of five (5) years from the date of effectivity of the BEOC to achieve Commercial Operations of the RE Project. The BEOC shall have a term of twenty-five (25) years from the date of its effectivity and may be renewed for the same period, subject to terms and conditions provided therein In the case of biofuel producers, their accreditation shall be governed by the procedures under JAO No. 2008-1, Series of 2008 pursuant to RA No. 9367. At their option, the accredited biofuel producers may register with the DOE as RE Developers to avail of incentives under the RE Act. Section 8. Geothermal Energy Resource. The development of geothermal resources shall be covered by a Geothermal Service Contract (GSC) following the prescribed template (Annex B). 8.1. The RE Developer shall be given a period of seven (7) years from the date of effectivity of the GSC to determine the existence of geothermal resources in Commercial Quantities. 8.2. The GSC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC by the DOE prior to the expiration of the Pre-Development Stage, and shall continue for the remainder of the twenty-five (25)-year period of the GSC term in accordance with the timeline set in the approved Work Program. The GSC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein Page 9 of 33Section 9. Solar Energy Resource. The development of solar energy resources shall be covered by a Solar Energy Operating Contract (SEOC) following the prescribed template (Annex C) 94 9.2. The Work Program depends on the type of development, whether the RE Project is mounted, roof-top, or floating The RE Developer shall be given a period of five (5) years from the date of effectivity of the SEOC to achieve Commercial Operations of the RE Project. The SEOC shall have a term of twenty-five (25) years from the date of its effectivity and may be renewed for the same period, subject to terms and conditions provided therein. Section 10. Hydropower Resource. The development of hydropower resources shall be covered by a Hydropower Service Contract (HSC) following the prescribe template (Annex D) 10.1 10.2 The RE Developer shall be given a period of five (5) years from the date of effectivity of the HSC to determine the existence of hydropower resource in Commercial Quantities The HSC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC prior to the expiration of the Pre-Development Stage, and shall continue for the remainder of the twenty-five (25)-year period of the HSC term in accordance with the timeline set in the approved Work Program. The HSC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein. Section 11. Ocean Energy Resource. The development of ocean energy resources shall be covered by Ocean Energy Service Contract (OESC) following the prescribe template (Annex E) W4 11.2. 11.3. The Work Program depends on the type of development, whether the RE Project is tidal stream/tidal current, tidal range, wave, ocean thermal or salinity gradient. The RE Developer shall be given a period of seven (7) years from the date of effectivity of the OESC to determine the existence of ocean energy resource in Commercial Quantities. The OESC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC prior to the expiration of the Pre-Development Stage, and shall subsist for the remainder of the twenty-five (25)-year period of the OESC term in accordance with the timeline set in the approved Work Program. The OESC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein. Page 10 of 33,Section 12. Wind Energy Resource. The development of wind energy resources shall be covered by Wind Energy Service Contract (WESC) following the prescribe template (Annex F). 12.1. The RE Developer shall be given a period of five (5) years from the date of effectivity of the WESC to determine the existence of wind energy resource in Commercial Quantities. 12.2. The WESC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall subsist for the remainder of the twenty- five (25)-year period of the WESC term in accordance with the timeline set in the approved Work Program. The WESC may be renewed for another twenty- five (25) years, subject to terms and conditions provided therein CHAPTER IV PROCEDURE FOR RE CONTRACTS UNDER OPEN AND COMPETITIVE SELECTION PROCESS Section 13. Open and Competitive Selection Process (OCSP). Interested parties may apply for RE Contracts for PDAs offered by the DOE during a prescribed period (Annex G) 13.1. Selection of PDAs. — Within six (6) calendar months following the effectivity of this Circular and every year thereafter, the REMB shall identify and submit a list of PDAs for RE Application, with the respective location maps and technical descriptions thereof, to the DOE Secretary, through its Supervising Assistant Secretary and Undersecretary, for approval. 13.2. Launch and Publication. - PDAs approved by the DOE Secretary shall be scheduled for launch and shall be publicly announced by the DOE for submission of RE Applications. PDAs for offer shall be published for at least ‘once (1) a week for two (2) consecutive weeks in at least two (2) newspapers of general circulation and shall likewise be posted at the DOE website 13.3. Data Packages and Promotional Activities. - The REMB shall arrange for the availability of data packages for the approved PDAs that can be purchased by interested parties in support of their applications. The REMB shall conduct promotional activities to promote the OCSP and the corresponding data packages so as to ensure maximum participation and awareness of prospective investors and stakeholders. 13.4. RE Contract Application. - Applications may be submitted a day after the publication date until the last day of submission which shall be sixty (60) calendar days from the date of first publication in accordance with the following requirements: Page 14 of 3313.4.1. The RE Applicant shall submit to the DOE a Letter of Intent (LO!) following the prescribed format (Annex H) together with the RE Application in accordance with prescribed Checklist of Requirements (Annex I); Each RE Application shall cover only one PDA as published. 13.4.2. The RE Application must be in both paper and electronic (flash drive in Portable Data Format) copies, which shall use Times New Roman in 12-point font size, and employ single line spacing. Figures and maps shall be printed and submitted in a document that is not smaller than A3 size. For legibility, figures and maps shall be submitted at a larger scale (1:10,000) as appendices; 13.4.3. An application fee shall be paid by each RE Applicant, along with the submission of RE Application. All payments may be made in cash, manager/company cheque, payable to “Department of Energy” or by wire/bank transfer. All wire/bank transfers should be net of all applicable bank and financial charges. 13.5. Opening and Evaluation of RE Applications. - The DOE shall open the applications at exactly 1300H, on the last day of the submission of RE Applications 13.6. Evaluation, Selection and Award. - The evaluation and selection of RE Applications and award of RE Contract shall be conducted following the criteria and procedures set hereunder: 13.6.1. Applications with incomplete documents based on the Checklist of Requirements shall be automatically disqualified during the opening of RE Applications. No additional documents shall be accepted after the deadiine for submission of RE Applications 13.6.2. RE Applicants shall be duly informed by the REMB Supervising Assistant Secretary whether their application passed the completeness check and shall be subjected to further legal, technical and financial evaluations. Applicants who were disqualified for submitting incomplete documents shalll likewise be informed by the REMB Supervising Assistant Secretary of the fact of their disqualification and the reasons therefor. 13.6.3. RE Applications which passed the completeness check shall be evaluated based on the following criteria Legal Qualification Pass/Fail | ‘Work Program 40% Technical Qualification 20% Financial Qualification 40% Page 12 of 33 ye py