RE Contract Framework

The RE Contract is the service agreement between the Philippine Government (through the DOE) and an RE Developer, granting the exclusive right to explore, develop, or utilize an RE Resource within a defined area [DC2024-06-0018, §3.25, 2024-06-04]. All RE Contracts are awarded and administered under DC2024-06-0018 (Revised Omnibus RE Guidelines), which supersedes DC2019-10-0013.

Historical Basis

The RE Contract framework was first enacted in Section 29 of RA 9513 (2008) and operationalized by DC2009-05-0008, SEC. 19 (2009 base IRR). SEC. 19 established the foundational constitutional principle that all forces of potential energy — kinetic energy from water, marine current, and wind; thermal energy from solar, ocean, geothermal, and biomass — are State-owned and inalienable. The DOE was directed to formulate the full regulatory framework within one (1) month of the IRR’s effectivity [DC2009-05-0008, SEC. 19(C), 2009-05-25]. The 2009 IRR also made explicit that biomass, biogas, methane capture, and WtE technologies — which develop non-naturally occurring resources — must be covered by RE Operating Contracts rather than service contracts, a distinction carried forward into DC2024-06-0018. See also Government Share (RE Projects) for the Government Share applicable to RE Contracts.

Contract Categories

RE Contracts fall into two categories depending on whether the resource requires an exploration stage [DC2024-06-0018, §3.27/§3.32, 2024-06-04]:

Contract Types by Resource

[DC2024-06-0018, §3, 2024-06-04]

Contract Lifecycle

For RE Service Contracts, the lifecycle runs through three stages [DC2024-06-0018, §3, 2024-06-04]:

Pre-Development Stage
    → Declaration of Commerciality (DOC)
    → Certificate of Confirmation of Commerciality (COCOC)
Development Stage  ← COCOC issuance date = commencement date
    → Financial Closing (written funding commitment from financiers)
Commercial Stage
    → Commercial Operations (confirmed by ERC)

For RE Operating Contracts (biomass, solar, WtE), there is no Pre-Development Stage — developers proceed directly to the Development Stage upon contract award.

Key Certificates and Milestones

[DC2024-06-0018, §§3.3, 3.4, 3.5, 3.10, 3.12, 2024-06-04]

Award Modes

RE Contracts are awarded through two modes [DC2024-06-0018, §3.11/§3.20, 2024-06-04]:

Open and Competitive Selection Process (OCSP): DOE identifies Pre-Determined Areas (PDAs) with sufficient technical data (assessed by REMB, approved by DOE Secretary) and conducts a competitive bid for the contract. The DOE has conducted multiple OCSP rounds: DC2020-11-0024 (OCSP3, October 2020) launched the third round specifically for geothermal and hydropower PDAs, with REMB as implementing lead and LGU/DU endorsements encouraged [DC2020-11-0024, §§1–3, 2020-10-20].

OCSP4 (DC2023-06-0019, June 2023): The 4th round covered 20 PDAs — 3 geothermal, 14 hydropower, and 3 onshore wind. This was the first OCSP round to include wind resources. Wind PDAs (San Jose, Pantabangan, Bagac) had TBD capacity; geothermal PDAs totaled 160 MW (Buguias-Tinoc 100 MW, Mabini 40 MW, Mt. Sembrano 20 MW) [DC2023-06-0019, §4.2, 2023-06-08].

OCSP4 evaluation criteria: Work Program 40%, Technical Qualification 20%, Financial Qualification 40%; Legal qualification is Pass/Fail [DC2023-06-0019, §6.5, 2023-06-08].

OCSP failure trigger (§7): A PDA that attracts only one applicant which fails either technical or financial criteria triggers a “Failure of OCSP” — unlike normal competitive bids, there is no automatic award for uncontested applications that fail quality checks. A failed PDA reverts to Direct Application mode [DC2023-06-0019, §7, 2023-06-08].

GSC/FTAA dual track: For OCSP4 geothermal PDAs, a foreign-owned applicant must apply as a Financial or Technical Assistance Agreement (FTAA) — executed by the President — for projects with initial investment ≥USD 50 million (pre-development through drilling phase). The 60% Filipino requirement applies to standard GSCs; the FTAA route is available to foreign-majority applicants [DC2023-06-0019, §1.1, 2023-06-08].

Application window: 60 calendar days from first publication. Data access through EDCP (Energy Data Center of the Philippines) upon payment of application fee and submission of signed Data Use Agreement [DC2023-06-0019, §§3.1, 3.1.5, 2023-06-08].

Direct Application: The RE Applicant identifies a specific Contract Area it wishes to develop. The DOE must first certify that the area is free and open for exploration or development.

Blocking System

For wind, geothermal, and ocean resource applications, the Philippines is subdivided into RE blocks under the Blocking System [DC2024-06-0018, §3.2, 2024-06-04]:

• Grid: 30 seconds of latitude × 30 seconds of longitude (PRS'92 reference system)
• Each block: approximately 81 hectares
• Each block has a unique DOE-assigned number
• Applicants apply for specific block numbers; the DOE tracks availability

Solar and biomass/WtE are not subject to the Blocking System — their Contract Area is the project site.

RE Developer Eligibility

An RE Developer must be an individual or juridical entity created, registered, and/or authorized to operate in the Philippines under existing Philippine law [DC2024-06-0018, §3.26, 2024-06-04]. Following DC2022-11-0034 (incorporated into this Circular), 100% foreign ownership is permitted for solar, wind, hydropower, and ocean energy developers. Geothermal development retains the constitutional 60% Filipino requirement. See RE Sector Nationality Restrictions .

Resource-Specific Contract Terms

Key terms vary by resource type [DC2024-06-0018, §§12–14, 22–24, 2024-06-04]:

COR trigger by resource:

• Biomass/WtE: upon Financial Closing (or earlier at developer’s option upon contract award)
• Geothermal: upon COCOC issuance (confirms Declaration of Commerciality) — or earlier at developer’s option upon GSC award
• Solar: upon Financial Closing (or earlier at developer’s option upon SEOC award)
• Hydropower/Ocean: upon COCOC issuance — or earlier at developer’s option upon HSC/OESC award
• Onshore Wind: upon COCOC issuance — or earlier at developer’s option upon OnWESC award
• Offshore Wind: upon COCOC issuance — or earlier at developer’s option upon OsWESC award

Solar SEOC Notes

Project types: SEOC distinguishes land-based (ground-mounted, roof-mounted) and floating solar, each with separate contract templates (Annex D / Annex E) and different COA and development stage durations [DC2024-06-0018, §§28.1, 30.1, 2024-06-04].

Multi-project SEOC: A single SEOC may cover multiple solar power projects where each does not exceed 5 MW and all are within the same province (or same city within Metro Manila). The COA must be availed for all projects under such a consolidated SEOC [DC2024-06-0018, §29.2.3, 2024-06-04].

SIS-contingent COA extension: Even if the standard COA validity lapses, the DOE must extend it until the System Impact Study (SIS) is issued, provided the developer submitted the complete SIS application within 6 months of the COA issuance date [DC2024-06-0018, §28.6, 2024-06-04].

Own-use solar: A solar project for own-use is exempt from SEOC only if the generating unit has no connection to the distribution system or grid. Grid-tied own-use solar installations must obtain a SEOC [DC2024-06-0018, §26.2, 2024-06-04].

Legacy SESC: Solar Energy Service Contracts issued under DO2013-08-0011 (pre-2024) had a Pre-Development Stage (preliminary assessment → Financial Closing → DOC). Current SEOC regime omits Pre-Development Stage — solar is now treated as an Operating Contract. Existing SESCs continue under their original terms until converted under §68 (Pass 8) [DC2024-06-0018, §31.2, 2024-06-04].

Hydropower Notes

Project types: Hydropower projects fall into three types [DC2024-06-0018, §40, 2024-06-04]:

• Run-of-River (ROR): Weir + canal/penstock; no large dam/reservoir; Pre-Development Stage = 3+2yr
• Impoundment: Large dam and reservoir; base load capable; Pre-Development Stage = 5+2yr
• Pumped Storage: Two reservoirs at different elevations for energy storage and generation; Pre-Development Stage = 5+2yr

Water appropriation nationality note: §33.2 preserves the 60% Filipino-capital requirement for direct water appropriation from a natural source (PD 1067 Water Code) — distinct from owning the power generation company (which may be 100% foreign). A hydropower developer may therefore need separate Filipino-majority entities for the water rights holder vs the generation entity [DC2024-06-0018, §33.2, 2024-06-04].

AOI configuration: HSC uses coordinate-based area definition (weir/powerhouse location with elevation); OESC uses Blocking System (polygonal or blocks) — same as geothermal/wind [DC2024-06-0018, §37.5, 2024-06-04].

Geothermal Nationality Restriction and FTAA Exception

Unlike all other RE resources, geothermal requires ≥60% Filipino capital (Art. XII §2 of the Constitution, retained through DC2024-06-0018 §15.1). However, for large-scale geothermal exploration, development and utilization (defined as initial investment ≥US$50,000,000 inclusive of Pre-Development Stage through production well drilling), the President may enter into Financial or Technical Assistance Agreements (FTAAs) with foreign-owned corporations pursuant to Art. XII §2 [DC2024-06-0018, §15.2, 2024-06-04].

This FTAA pathway is executive (Presidential approval required) rather than DOE-level, and represents the only constitutional mechanism for majority-foreign participation in geothermal development. See RE Sector Nationality Restrictions .

Offshore Wind Notes

Pre-Development Stage is extendible (contrast with onshore wind): §62.1 gives OsWESC developers 5yr + 2yr extension — identical to geothermal and ocean energy. OnWESC developers have 5yr non-extendible (§51.1). The extension reflects the additional complexity of offshore installations (seabed surveys, floating platform mooring, marine consenting) [DC2024-06-0018, §62.1–§62.2, 2024-06-04].

Platform types (§61):

• Fixed-Bottom: Piles or gravity bases attached to seabed; deployed in shallow waters
• Floating: Anchored by mooring lines or cables; deployed in deeper waters (enables development in areas where Philippine EEZ is too deep for fixed foundations)

Renewal window same as onshore: 2yr–1yr before expiry [§62.5] — both wind types use this earlier window vs 6m–3m for most other resources.

Contract Administration — Key Rules

Performance Bond (§65): Required for all RE Contracts; exempted for projects ≤5 MW installed capacity. Acceptable forms: cash, manager’s check, standby L/C, bank guarantee, or surety bond. Bond is released after:

• Biomass/WtE/Solar: after DOE validates the EPC contract (90-day validation window)
• Geothermal/Hydro/Ocean/Wind: after EPC validation and COCOC issuance (whichever is later)

If ≥1yr of unreasonable construction delay is discovered in the 2-year post-EPC audit, the DOE may cancel the contract unless the developer posts a new performance bond = 30% of the financial commitment for the Contract Year [DC2024-06-0018, §65, 2024-06-04].

DOC Deadline and Consequences (§67): The Declaration of Commerciality application must be filed before the Pre-Development Stage expires. If the DOE issues a rejection notice within the Pre-Dev period, the developer has the remaining period to cure; if rejection comes after expiry, one 30-day opportunity is given. Failure to file or cure = contract termination [DC2024-06-0018, §§67.2–67.3, 2024-06-04].

Contract Assignment to Non-Affiliates (§70.1.3):

• RE Service Contracts (Pre-Dev): assignable once, after 2yr from effectivity — unless minimum permits were already procured before the proposed assignment date
• RE Service Contracts (Dev): assignable any number of times
• RE Operating Contracts (Dev): assignable once, after 2yr from effectivity
• RE Operating Contracts (Commercial): assignable any number of times
• Assignment to affiliates: any time, any number of times

Incentive Retroactivity on Assignment (§70.2): If an RE Contract is assigned within 10yr of award, and the assignor never used duty-free importation for that project, the assignee may avail duty-free importation for 10yr from the date its own COR is issued. This provision applies retroactively [DC2024-06-0018, §70.2, 2024-06-04].

Change in Control (§71): DOE prior written approval required for any share transaction resulting in a change of control over the RE Developer. Approval is granted if the developer remains legally, technically, and financially qualified.

Abandonment Plan (§72): An Abandonment and Termination Plan (ATP) must be prepared by the developer and approved by both DENR and DOE before a COCOC can be issued (or before transition to Commercial Stage, as applicable) [DC2024-06-0018, §72, 2024-06-04].

New/Emerging Technologies (Ch. IX): Technologies not enumerated in Chapters III–VIII are governed by the procedures of the most analogous resource type, pending REMB’s development of a dedicated regulatory framework [DC2024-06-0018, Ch. IX, 2024-06-04].

Contract Template Conversion (§68): Existing RE Contracts may be converted to the new templates in DC2024-06-0018 within 1 year of its effectivity (2024-06-04). Exception: OsWESCs have a 5-year conversion window, reflecting longer offshore project development timelines [DC2024-06-0018, §68, 2024-06-04].

Incentive Regime Election

At the time of COR issuance, each RE Developer must elect either the RE Act incentive regime (RA 9513) or the CREATE Act incentive regime (RA 11534). The election is irrevocable: failure to signify creates an irrebuttable presumption of RE Act election. CREATE may offer a more favorable income tax treatment for some project types, while RE Act provides FIT eligibility and specific renewable energy incentives [DC2024-06-0018, §87, 2024-06-04].

Own-Use and Non-Commercial Projects

RE Projects for own-use (RE facility within or contiguous to an end-user’s premises, operated solely for that end-user’s consumption) and non-commercial operations (demonstration projects, ODA-funded projects, non-profit projects) do not require an RE Contract but must obtain a COR from the DOE [DC2024-06-0018, §§3.29, 3.30, 2024-06-04]. These are governed by Chapter XI (§§80–86).