Renewables law fails in the Senate -- Stalled Philippines

A long hoped for renewable energy law in the Philippines is back at the starting blocks. Although the House of Representatives passed a law at the end of last year, the Senate failed to follow suit in February. Greenpeace's Jasper Inventor says the law would have had several mechanisms, chief among them a green power mandate backed by renewable energy certificate trading, a green electricity option and several tax breaks. For 2007, the lobbying for incentives must begin anew with newly elected lawmakers.

The tax measures in the failed 2006 law built upon minor wind market incentives already in existence. Currently, the government extends a tax holiday to renewable energy projects for the first six months of operation, with bonus years if certain requirements are met. Anna Candelaira, with the Philippines National Oil Company's (PNOC) energy development corporation, says the law would have allowed qualification for the tax holiday to be made automatic. As it is, a company must apply for approval. In addition, import duties would have been waived for equipment.

Candelaira still holds out cautious hope that lawmakers will eventually bring the measures to the table again, but is doubtful about that happening. "The government is on a fiscal housekeeping binge. They don't want to give tax breaks so what we get is what we'll get for a while."

A 30 MW project

Even without incentives, Candelaira says the PNOC is moving ahead on a 30 MW wind project that could get the go-ahead this month. It was originally planned as a 45 MW project, but constraints on turbine availability forced a reduction in size. The plant could eventually be expanded in future phases to a total of 120 MW. The initial 30 MW phase will be located in North Luzon, not far from the nation's only existing wind project, a 24.75 MW facility of Vestas turbines commissioned in 2005 by Northwind Power Development Corp. That project is supported by an interest-free loan from the Danish government.

Two more

In addition to the PNOC project and a possible expansion of the existing Northwind plant, Greenpeace's Inventor says at least two other projects have finished the wind assessment period and are either working on getting contracts or working on their financing. These include a 15 MW proposal from Wind Electric Company and a 30 MW proposal from Smithbell Corporation, both to be located in the province Negros Occidental. A partnership called Amihan energy is also exploring its options in the Philippines, but is largely held up due to financial backing.

There are a number of expected projects in the future, says Inventor, but without any market mechanism, be it a mandate for green power or fixed power purchase prices, "These projects will have a hard time getting contracts with local utilities. Already, several projects are stalled because of the failure to get purchase contracts with local utilities," says Inventor. No wind turbines went up in the Philippines in 2006.

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