Outlook brightens in the Philippines -- Passage of renewables law

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Prospects in the Philippines for boosting installed wind power capacity from the current 33 MW to beyond a soft 2014 target of 120 MW have improved after the passage in December of a Renewable Energy Act, nearly two decades after a bill was first submitted. The new law promises tax incentives and a mandated power purchase price for wind energy production.


An 86 MW wind project in Burgos, Ilocos Norte, by Philippine energy company Energy Development Corp (EDC), stalled for almost a decade, is now ready to proceed, in large part because the law makes it economically viable, says EDC's Noel Nicolasora. Commissioning could occur as early as year-end 2010. Six technology suppliers are in the frame for the project: Acciona, Vestas, Suzlon, GE, Siemens and Korea's Unison. EDC is waiting for clearance from the energy department to proceed and is considering another 40 MW project in Pagudpud, near its first site at the northern tip of the Luzon main island.

Wind power potential in the Philippines has been mapped at more than 70 GW, but without a clear market framework, little has happened to develop it. But the government is now looking at 300 MW of wind power by 2014 and hopes to raise installed capacity to at least 415 MW by 2018 as part of a minimum goal of 20% of primary energy from renewable sources by that year, according to the energy department. There is no wind target for 2009.

The new renewables law offers a seven-year tax holiday on wind power revenues, after which wind and other renewables pay a 10% corporate tax rate throughout the life of the project, compared to typical 32-35% rates, says the energy department's Ronnie Sargento. The law requires that new wind and solar power plant be connected to the grid without delay. If implementation of the law goes according to plan, within a year electricity suppliers will be required to procure power from renewable energy resources at prices determined by the government. A board tasked with deciding the price for wind was to convene last month.

Only one wind power plant now operates commercially in the Philippines: Northwind Power Development Corp's station in Bangui, also located at the north-west tip of Luzon. In January, the government issued technical certification for the latest 8.25 MW Phase II of the project to sell output, bringing total operating capacity at the site to 33 MW.

Three companies have applied for permission to develop approximately 100 MW of wind plant over the next two to three years, says Sargento. Energy Logics Philippines and UPC Asia from the US have come farthest in the process, he adds without identifying the third company. The biggest challenge to reaching the target, he says, is procuring turbines, "especially from Europe." No suppliers have been decided for these projects.

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