Feed-in-Tariff (FiT) System

The Feed-in-Tariff (FiT) System is a price-support mechanism under the Renewable Energy Act (RA 9513) that provides RE generators with a guaranteed above-market tariff rate for a specified period, offering financial certainty and reducing investment risk. FiT is one of the early foundational mechanisms of the Philippines’ RE deployment strategy.

Statutory Mandate (Section 7, RA 9513)

The FiT system is mandatory under Section 7 of the RE Act. Key statutory parameters [RA 9513, Section 7, 2008]:

• Covers emerging RE only: wind, solar, ocean, run-of-river hydropower, and biomass. Large hydro and geothermal are excluded — they are classified as “established” RE and are not FiT-eligible.
• ERC, in consultation with NREB, must formulate FiT rules within one year of effectivity.
• Fixed tariff applies for a period of not less than twelve (12) years per technology.
• Priority grid connection and priority purchase and transmission are mandatory obligations on grid operators.
• FiT is applied to RE used for RPS compliance — linking the two mechanisms.

Enabling Issuances

[NREP 2020-2040, Table 2 footnotes, p.3, 2022]

How It Works

Under the FiT system, eligible RE generators are guaranteed a fixed tariff rate (set by the ERC ) for the electricity they produce over a specified contract period. A FiT-All (FiT Allowance) is collected from all on-grid electricity consumers at a uniform rate in PhP/kWh — representing the difference between the FiT price and the prevailing market price, plus other components. TRANSCO is the FIT-ALL Fund Administrator, responsible for establishing, managing, disbursing, and settling the FIT-All Fund [NREP 2020-2040, p.3, 2022].

FiT Installation Targets and Status

FiT installation targets were set by technology and expanded over time. The initial solar target of 50 MW was immediately increased to 500 MW — and was still oversubscribed by more than 300 MW. Wind was expanded from 200 MW to 400 MW due to strong private sector interest [NREP 2020-2040, p.2, 2022].

Table — Status of FiT Implementation, as of December 2021 [NREP 2020-2040, Table 2, p.3, 2022]:

As of December 2021, only ROR hydropower had remaining unsubscribed capacity. The DOE subsequently issued a certification in June 2022 further increasing the ROR hydro target from 250 MW to 350 MW [PEP 2023-2050 Vol. II, p.44, 2023].

As of December 2023:

• 174.63 MW of the ROR hydro FiT target remains unsubscribed
• Full subscription of the remaining target is expected by 2025 [PEP 2023-2050 Vol. II, p.45, 2023]

30% RE Share Policy and FiT Auction Mandate (DC2015-07-0014)

DC2015-07-0014 (June 26, 2015, Secretary Carlos Jericho Petilla) — “Guidelines for the Policy of Maintaining the Share of RE in the Country” — established the foundational 30% target and the FiT auction pathway [DC2015-07-0014, 2015-06-26]:

30% RE Installed Capacity Share (§2)

The DOE adopted a policy of maintaining at least 30% of the country’s total power generation installed capacity from RE resources, implemented through the FiT System and other RA 9513 mechanisms. The 2014 baseline at time of issuance: RE accounted for 32.87% of total installed capacity and 25.64% of total power generation [DC2015-07-0014, Whereas clauses, 2015-06-26].

The policy targets installed capacity share, not generation share — recognizing that intermittent RE generates less per installed MW than baseload capacity.

Replacement Power Responsibility (§3)

The RE Developer of FiT-eligible resources is responsible for the nomination and dispatch of generated power from its facilities. For deviations outside the prescribed range for each FiT-eligible technology, the RE Developer bears the cost of procuring replacement power [DC2015-07-0014, §3, 2015-06-26].

FiT Auction System (§4)

Upon full subscription of the existing FiT installation targets, succeeding rounds of installation targets for FiT-eligible resources shall be determined through an auction system to be adopted by the DOE. The auction shall account for grid security (interconnection, location, technical), cost, and other considerations [DC2015-07-0014, §4, 2015-06-26].

Conditionality: The auction for subsequent FiT installation targets may only be held upon issuance of the Must-Dispatch Implementing Rules and Regulations (DC2015-03-0001, issued March 2015, was the framework; full IRR was the outstanding condition) [DC2015-07-0014, §4 proviso, 2015-06-26].

This provision foreshadowed the eventual shift to competitive procurement. In practice, the FiT auction pathway evolved into the Green Energy Auction Program (GEAP) , launched under DC2021-11-0036 (Revised GEAP Guidelines), rather than a strictly FiT-based auction round.

RPS Compliance Equivalence (§5)

Upon issuance of the RPS Rules under RA 9513 §6, compliance with DC2015-07-0014 shall be deemed compliance with the RPS. This equivalence provision anticipated the on-grid RPS Rules by two years (DC2017-12-0015, issued December 2017) [DC2015-07-0014, §5, 2015-06-26].

Transition from FiT to GEAP

The FiT system was the primary RE procurement mechanism in the early deployment phase, particularly for technologies that needed cost discovery and demand stimulation. As solar and wind costs have fallen significantly, the DOE has shifted toward competitive procurement under the Green Energy Auction Program (GEAP) for non-FiT-eligible technologies. FiT remains relevant for run-of-river hydropower, which has a longer development lead time and higher capital risk.

The DOE ’s NREP roadmap explicitly provides for formulating policy for other market mechanisms for large/impounding and pumped storage hydropower projects, and ocean energy facilities — signaling a potential transition of these technologies out of FiT and into competitive procurement frameworks [PEP 2023-2050 Vol. II, Figure 10, 2023]. See Green Energy Auction Program (GEAP) .