Philippine Energy Policy Wiki

DC2023-04-0008 (ESS Policy)

Status
operative
Confidence
high
Effective date
2023-05

Document: Department Circular No. DC2023-04-0008 Title: Prescribing the Policy for Energy Storage System in the Electric Power Industry Issued: April 2023 Issuing authority: DOE Secretary Raphael P.M. Lotilla Pages: 14 (image-based PDF; OCR via tesseract) Repeals: DC2019-08-0012

What This Document Does

Establishes the comprehensive regulatory framework for Energy Storage System (ESS) deployment in the Philippine electric power industry, replacing the earlier 2019 framework. Covers technology classifications, eight permitted purposes, permitting/licensing, WESM registration thresholds, sector duties, and incentives for integrated RE+ESS configurations.

Key Provisions

Section 2 — ESS Technology Types. BESS (electrochemical), CAES (compressed air), FES (flywheel), PSH (pumped-storage hydropower).

Section 4 — Eight ESS Purposes. Ancillary services; WESM trading/bilateral contracts; VRE variability management; auxiliary load management; T&D facility upgrades deferment; T&D power quality management; end-user demand management; DU demand management.

Section 5 — Sector Duties.

  • GenCos: bi-directional metering required for Generating Plant+ESS; WESM registration required for all GenCo ESS except integrated configurations
  • DUs: conduct DIS before connecting ESS; notify TNP for ESS ≥10 MW (Luzon) / ≥5 MW (Vis/Min)
  • SO/SGSO: may dispatch owned BESS/FES only after determining no contracted AS is available; must develop ESS testing standards and AS accreditation process (submit to ERC within 90 days of effectivity)
  • MO: propose WESM rule changes within 1 month of effectivity; register ESS with standardized Pmax/Ramp Rate parameters

Section 6 — COC Framework.

  • Stand-Alone ESS → COC-ESS from ERC (separate from generation)
  • Integrated RE Plant and ESS → single COC (ESS charged only by RE plant)
  • Integrated Non-RE Plant and ESS → single COC (ESS Pmax limited to plant capacity)
  • Generating Plant and ESS → separate COC + separate COC-ESS (ESS can charge from plant or grid)

Section 7 — Connection Requirements. Grid-connected ESS: PGC + WESM Rules; distribution-connected: PDC; microgrid: ERC applicable guidelines; off-grid: DC2019-01-0001.

Section 8 — WESM Registration Thresholds. Mandatory for: ESS connected to transmission system; ESS connected to distribution system with capacity ≥10 MW (Luzon) / ≥5 MW (Visayas) / ≥5 MW (Mindanao). Below threshold: voluntary.

Section 9 — Integrated RE Plant and ESS Incentives. Energy discharged from Integrated RE+ESS is classified as RE for incentive purposes: income tax holiday, duty-free importation, zero-rated VAT (RE Act incentives). Also entitled to preferential dispatch (or can opt for scheduled generating unit status).

Section 10–11 — ERC/TPSP roles. ERC to issue COC-ESS framework, testing standards, and cost recovery mechanisms. Third Party Service Providers (TPSPs) for T&C and AS accreditation defined.

Sections 12–13 — Safety and disposal. DOE to develop occupational safety and health standards; ESS proponents mandated to recycle and dispose per DENR AO 2013-22.

Policy Significance

The SO dispatch priority rule (§5.6.1–5.6.2) is operationally significant: it prevents the SO from using government-owned BESS/FES to displace privately contracted AS capacity, protecting investment returns of AS providers and reinforcing the merit-order principle in ancillary service dispatch. The incentive parity for Integrated RE+ESS (§9) also makes co-located storage economically attractive.

Pages Expanded

Full text: Cleaned copy