Renewable Energy Market (REM)

The Renewable Energy Market (REM) is the Philippine market mechanism for trading Renewable Energy Certificates (RECs), enabling Mandated Participants to meet their Renewable Portfolio Standards (RPS) obligations by purchasing RECs from eligible RE generators. RECs represent a unit of electricity generated from RE sources and are tracked by the Philippine Renewable Energy Market System (PREMS).

Legal Basis

The REM is established under Section 8 of the Renewable Energy Act (RA 9513) to facilitate compliance with the RPS. The IRR (DC2009-05-0008, SEC. 10) characterized the REM as a sub-market of the WESM where RE Certificates may be traded. The IRR directed: (1) DOE to establish the REM framework within six months of IRR effectivity; (2) PEMC to implement WESM rule changes to incorporate REM-specific rules within one year of the Act [DC2009-05-0008, SEC. 10, 2009-05-25]. The foundational circular is DC2019-12-0016 (“Promulgating the Renewable Energy Market Rules”), issued on 4 December 2019 [NREP 2020-2040, p.9, 2022].

RE Registrar (SEC. 11): The IRR directed PEMC to establish and operate the RE Registrar within one year of the Act’s effectivity. For this function, PEMC may impose a transaction fee equal to half of what it charges regular WESM players [DC2009-05-0008, SEC. 11, 2009-05-25].

The Philippine Renewable Energy Market System (PREMS) — the online platform for REC account management and trading — was launched on 17 December 2019. Its development was supported by the DREAMS Project (funded by the Global Environment Facility and UNDP) [NREP 2020-2040, p.9, 2022].

Founding Circular (DC2019-12-0016)

DC2019-12-0016 (“Promulgating the Renewable Energy Market Rules”) was issued on 1 December 2019 by Secretary Cusi. It formally promulgated the REM Rules (attached as Annex A) and established the governance structure for the REM [DC2019-12-0016, §§1–17, 2019-12-01].

Scope of Application (§2)

The REM Rules apply to all electric power industry participants in Luzon, Visayas, and Mindanao, organized in four participant categories:

PEMC as Initial RE Registrar (§§1–3)

PEMC was designated to perform RE Registrar (RER) functions and develop the PREMS. Within one (1) year from the start of commercial operations of the REM, the RER functions, assets, and liabilities of PEMC shall be transferred to the entity performing market operations [DC2019-12-0016, §2, 2019-12-01]. (This transfer occurred when IEMOP assumed market operator functions from PEMC, effective December 2018 for WESM and extended to REM functions.)

REM Governance Committee (RGC): Created by DC2019-12-0016 §3, placed under the supervision of the Philippine Electricity Market (PEM) Board. The RGC oversees and monitors RE Registrar activities to ensure REM participant and Mandated Participant compliance with REM Rules, and regularly reports to the PEM Board.

Transitory Provisions (§5)

PEMC was directed to submit to the DOE:

Once the DOE validated and verified the Certification, the REM was authorized to start commercial operations. Before the REM launch:

• The FIT-All Fund Administrator was directed to provide the DOE and PEMC all data necessary to facilitate REC allocation from FIT-eligible RE plants to Mandated Participants [DC2019-12-0016, §5(b), 2019-12-01].
• The RE Registrar was required to have appropriate procedures, tools, and systems in place [DC2019-12-0016, §5(c), 2019-12-01].
• Corresponding WESM Rules changes were required to be implemented by PEMC [DC2019-12-0016, §5(d), 2019-12-01].

Mindanao and Off-Grid Provision (§6)

All Mandated Participants in Mindanao (in the absence of commercial WESM operations) and in missionary areas served by NPC or its successors, NPPs, and QTPs, were directed to submit relevant data to the RE Registrar to enable it to perform its mandate [DC2019-12-0016, §6, 2019-12-01].

Annual Reporting (§10)

PEMC was mandated to submit to the DOE its annual report on the status and performance of the REM — including gaps and policy needs — every end of June for the year being reviewed [DC2019-12-0016, §10, 2019-12-01].

REC Price Cap (§8)

PEMC was directed to develop the REC Price Cap, which shall be approved by the ERC [DC2019-12-0016, §8, 2019-12-01].

Status

Interim Commercial Operations of the REM were declared on 10 June 2022 through DC2022-06-0019. Rules were subsequently amended in the same month through DC2022-06-0026 [PEP 2023-2050 Vol. II, p.43, 2023].

During interim operations, the RE Registrar performs the following functions [PEP 2023-2050 Vol. II, p.43, 2023]:

• Registration of participants
• Conducting REM awareness activities
• Performing RPS computations
• Submitting and validating RE Certificate (REC) data
• Issuing and validating RECs
• Submitting REC reports
• Operating the Philippine Renewable Energy Market System (PREMS)
• Providing technical and administrative support to the REM Governance Committee (RGC)

Note: During the interim period, RE Registrar functions that involve financial transactions are suspended.

Full Commercial Operations of the REM remain pending as of the PEP 2023-2050 reporting date. The DOE’s near-term roadmap includes declaring full commercial operations as a priority action [PEP 2023-2050 Vol. II, Figure 10, 2023].

REM I-COP Detail (DC2022-06-0019)

DC2022-06-0019 (June 10, 2022, Secretary Cusi) declares the commencement of the I-COP based on the RPSCT’s Resolution No. RPSCT2021-10-05-001. Three regulatory items were outstanding that prevented full commercial operations [DC2022-06-0019, §2, 2022]:

1. REC Price Cap and Methodology
2. Rules on the Recovery Mechanism for RPS compliance costs by regulated entities
3. Structure and Level of Market Transaction Fees

The ERC was directed to resolve all three within 120 working days of the I-COP declaration [DC2022-06-0019, §5, 2022].

REC Validity and Compliance Guidance

RECs are issued corresponding to metered generation (MWh) from eligible RE facilities starting from 2018 onwards. A REC is valid for three (3) years from the date of issuance, regardless of when the underlying energy was generated [DC2022-06-0019, §4(a)(ii), 2022].

RPS Compliance Year 1 = 2020. Compliance periods run from December 26 of the current year to December 25 of the following year. All Mandated Participants were deemed compliant for Compliance Years 1–3 (2020–2022) based on DOE REMB simulations [DC2022-06-0019, §4(a)(i), 2022].

Compliance shortfall carry-over (up to 3 years) is available under five conditions upon RPSCT recommendation [DC2022-06-0019, §4(a)(iii), 2022]:

• Inadequate RE supply to meet minimum RPS requirements
• Inadequate REC supply
• Transmission/distribution network congestion preventing delivery from eligible RE facilities
• Force majeure affecting compliance
• Other extraordinary circumstances outside the Mandated Participant’s control (as determined by RPSCT)

Off-grid RPS (Compliance Year 1) is suspended until further notice [DC2022-06-0019, §4(b), 2022].

REC Issuance Rules (DC2023-05-0015 §17 Amendments)

DC2023-05-0015 made targeted amendments to the REC issuance principles, clarifying attribution for complex supply arrangements [DC2023-05-0015, §§6–7, 2023-05-23]:

Non-FIT eligible RE facilities (§17(f)(i)): RECs are issued to the Mandated Participant holding the PSA up to the contracted energy. If a facility is dispatched beyond its PSA, the excess RECs go to the facility owner, not the MP. Only facilities that commenced commercial operations after the effectivity of the RE Act (2008) are eligible for REC attribution.

Multiple Suppliers Arrangement (§17(f)(v)): Where an end-user is served by multiple suppliers simultaneously, RECs are allocated to each individual Supplier based on its actual/metered energy quantity. The total gross energy consumption equals the sum of all individual Supplier contributions — preventing double-counting in complex contestable market arrangements.

Compliance period (§17(m)): The annual RPS compliance period runs from 26 December of the current year to 25 December of the following year. MPs must submit sufficient RECs to the RE Registrar via their RPS Accounts on or before 25 December of the following year.

DOE review cycle (§17(n)): The DOE reviews RPS implementation annually for the first three years of the program, then every other year thereafter — based on MP compliance rates, REM activity, and progress toward RPS goals.

REM Rules Amendments (DC2022-06-0026)

DC2022-06-0026 (June 20, 2022, Secretary Cusi) adopted seven targeted amendments to DC2019-12-0016, effective the same month as the I-COP declaration [DC2022-06-0026, Section 1, 2022-06].

1. RGC Composition — Expanded to 7 Members

The REM Governance Committee was expanded from 5 to 7 members [DC2022-06-0026, §1.1, 2022-06]:

Clause 1.3.2.4 (which had previously addressed the combined representation of smaller generators and RES) was deleted as redundant [DC2022-06-0026, §1.1, 2022-06].

2. RGC Liability Standard

The PEM Board, RGC, or their respective members are not liable for any damage or loss suffered by any REM Member unless due to bad faith, manifest partiality, or gross negligence [DC2022-06-0026, §1.2, 2022-06].

3. Retail Electricity Suppliers as REM Members

The standard of care for REM Members’ duties and obligations was updated to explicitly include “Retail Electricity Supplier” alongside the existing categories of generator, End-User, and public utility [DC2022-06-0026, §1.3, 2022-06].

4. GEOP REC Attribution — RECs Go to the Host DU

Where a REM Generator is registered under the Green Energy Option Program (GEOP) , the Registrar issues any RECs created to the host Distribution Utility that registered the REM Generator, not to the GEOP end-user. The corresponding energy is added to the host DU’s net electricity sales for the calculation of its RPS requirements [DC2022-06-0026, §1.4, 2022-06].

This means GEOP end-users do not hold RECs directly — the DU retains the RPS compliance credit for energy it enables its customers to source through GEOP.

5. FIT Allocation Timelines Extended

Two deadlines in the FIT generation allocation process were extended [DC2022-06-0026, §1.5, 2022-06]:

6. Excess RECs Credited Back for Trading

If a Mandated Participant surrenders RECs in excess of its Annual RPS Obligation in respect of an RPS Compliance Period, the Registrar credits the excess RECs back to the MP for trading in the REM — rather than retiring them [DC2022-06-0026, §1.6, 2022-06].

7. REC Term Tolled During Disputes

If a REC is put on hold pending resolution of a dispute, its 3-year validity term is tolled (suspended) from the time the dispute is lodged with the Registrar. The remaining term re-commences after the dispute is finally resolved [DC2022-06-0026, §1.7, 2022-06].

Relationship to RPS and GEAP

REM RECs provide the compliance instrument for the RPS — Mandated Participants (distribution utilities, generation companies with directly connected customers, retail electricity suppliers) purchase RECs to demonstrate that they have sourced or procured the required minimum RE percentage. RE capacity awarded through GEAP auctions is eligible to generate RECs. See Renewable Portfolio Standards (RPS) and Green Energy Auction Program (GEAP) .