Renewable Portfolio Standards (RPS)

A mandatory policy under the Renewable Energy Act (RA 9513) requiring power distribution utilities, generation companies with directly connected customers, and retail electricity suppliers to source a minimum percentage of their energy supply from eligible renewable energy facilities [PEP 2023-2050 Vol. I, p.38, 2023].

Statutory Mandate (Section 6, RA 9513)

Section 6 of the RE Act requires that all stakeholders in the electric power industry contribute to RE industry growth. The National Renewable Energy Board (NREB) shall set the minimum percentage of generation from eligible RE resources and determine to which sector RPS shall be imposed, on a per-grid basis within one year of effectivity [RA 9513, Section 6, 2008].

The NREB’s RPS-setting role under §6 operates alongside the DOE’s power to adjust RPS increments through department circulars (e.g. DC2022-09-0030 raising the annual increment to 2.52%).

The IRR (DC2009-05-0008, SEC. 4) specifies that the RPS Rules must include: (1) eligible RE resource types and generating facility certification; (2) yearly minimum RPS requirements; (3) annual minimum incremental percentage, which shall in no case be less than one percent (1%) of each MP’s annual energy demand over the next ten years; (4) assessment of grid technical feasibility; and (5) means of compliance (direct generation, PSA, REM trading). The 1% statutory floor was the baseline that DC2022-09-0030 subsequently raised to 2.52% [DC2009-05-0008, SEC. 4(c), 2009-05-25].

Mandated Participants

Under the on-grid RPS rules (DC2017-12-0015), Mandated Participants (MPs) include [NREP 2020-2040, p.5, 2022]:

1. All distribution utilities (DUs) — for their Captive Customers
2. Electricity suppliers — for the Contestable Market
3. Power generating companies — only to the extent of actual supply to Directly-Connected Customers (DCCs)
4. Other electric power industry participants as recommended by the NREB and approved by the DOE

RPS Compliance Mechanisms

MPs may demonstrate compliance through any combination of [NREP 2020-2040, p.5, 2022; DC2023-05-0015, §§5, 2023-05-23]:

1. Allocation from FiT -eligible RE facilities
2. Power Supply Agreement (PSA) with RPS-eligible facilities
3. Purchase or acquisition of RECs from the RE Market (REM)
4. Generation from net-metering installations
5. RE facility for own-use
6. Energy sales from the GEOP
7. GEAP and/or its Opt-In Mechanism, and Distributed RE Resources — added as a formal compliance mechanism by DC2023-05-0015 §15(f); subject to DOE determination upon RPSCT recommendation and stakeholder consultation [DC2023-05-0015, §5, 2023-05-23]

All MPs are required to use least-cost procurement (CSP ) when sourcing RE supply for RPS compliance [DC2023-05-0015, §4, 2023-05-23].

On-Grid RPS: Historical Baseline (DC2017-12-0015)

DC2017-12-0015 (“RPS Rules for On-Grid Areas”, December 22, 2017, Secretary Cusi) promulgated the original on-grid RPS rules after six years of consultations (2011–2017). It was superseded and amended by DC2023-05-0015 (May 2023). Key features of the original framework:

• Aspirational target: 35% RE share in the national Energy Mix (MWh) by 2030 [DC2017-12-0015, §7, 2017-12-22]
• Year 0: The year the RE Market becomes operational — not a fixed calendar year [DC2017-12-0015, §7(a), 2017-12-22]. DC2023-05-0015 later fixed Year 0 as 2018 and Compliance Year 1 as 2020, because the REM was not operationalized within the 1-year mandate.
• RE Market mandate: DOE required to establish the RE Market not later than one (1) year from the effectivity of the Circular (i.e., by late 2018); the Market Operator to establish the RE Registrar [DC2017-12-0015, §16, 2017-12-22]. In practice, the REM did not become operational until 2022.
• Transition period: 1 year from RE Market commencement or effectivity, whichever earlier [DC2017-12-0015, §26, 2017-12-22]
• Initial annual increment: 1% of each MP’s Net Electricity Sales of the prior year [DC2017-12-0015, §8, 2017-12-22]
• Carry-over of compliance: Up to 3 years (vs. 1 year in DC2023-05-0015); 60-day deemed approval; Composite Team recommends to DOE [DC2017-12-0015, §25, 2017-12-22]
• Composite Team: Chaired by DOE Assistant Secretary (vs. Undersecretary/RPSCT under DC2023-05-0015); members: REMB Director, EPIMB Director, NREB Chairman, RE Registrar representative [DC2017-12-0015, §19, 2017-12-22]
• REC validity: 3 years from issuance; price cap on RECs to be approved by ERC within 6 months [DC2017-12-0015, §17(j)(k), 2017-12-22]
• Penalties: PhP100,000–PhP500,000 administrative; 1–5 years or PhP100,000–PhP100,000,000 or 2× damages/costs avoided criminal. These penalty provisions were subsequently superseded by DC2023-12-0032 [DC2017-12-0015, §24, 2017-12-22]
• Annex A: 5 illustrative DU examples (DU Nos. 1–5) projecting RPS requirements from 2018–2040 at a 3% annual energy sales growth rate, demonstrating the compound effect of the 1% annual increment on a DU’s RE procurement obligation [DC2017-12-0015, Annex A, 2017-12-22]

On-Grid RPS: Formula, Compliance Period, and Key Rules

Generation Mix Definition

DC2023-05-0015 inserted a definition of “Generation Mix” (§5(k)) as “the combination of the various fuels and technologies used to generate electric power to supply the electricity demand of a given geographic region” [DC2023-05-0015, §1, 2023-05-23]. This anchors the 35%/50% aspirational targets to the defined Generation Mix rather than a looser formulation, and provides the denominator reference for the RPS annual percentage computation.

RPS Requirement Formula

The minimum annual on-grid RPS requirement per Mandated Participant is calculated by the RPSCT in coordination with the NREB using the following formula [DC2023-05-0015, §3, 2023-05-23]:

RPS(n) = ES(n-1) × Σ(m=0 to n) Km

Where:

Exclusions from ES(n-1) [DC2023-05-0015, §3, 2023-05-23]:

• (a) Sales under a Multiple Suppliers Arrangement already counted in the Primary Supplier’s sales
• (b) MWh supplied to a Contestable Customer where the MP acts as Supplier of Last Resort (SOLR)

Year 0 = 2018; Compliance Year 1 = 2020; Transition Period = 2019.

DU RPS calculations must be included as an integral part of the Distribution Development Plan (DDP) [DC2023-05-0015, §3, 2023-05-23].

Compliance Period and REC Submission

The compliance period runs from 26 December of the current year to 25 December of the following year. Each MP must ensure submission of sufficient RECs to the RE Registrar (through its RPS Account) on or before 25 December of the following year for each compliance period [DC2023-05-0015, §7, 2023-05-23].

For Compliance Year 1 (2020): the submission window is 26 December 2020 to 25 December 2021.

CSP-RPS Linkage

All Mandated Participants, in meeting their RPS requirements, must comply with the least-cost sourcing principles embedded in DOE-ERC CSP policy. For DUs specifically, the ERC was directed to issue rules on least-cost RE procurement for the Captive Market within 60 calendar days of DC2023-05-0015’s effectivity [DC2023-05-0015, §4, 2023-05-23]. See Competitive Selection Process (CSP) .

ERC Regulatory Support (§30)

The ERC is directed to establish a Regulatory Framework within 60 calendar days of DC2023-05-0015’s effectivity, covering [DC2023-05-0015, §10, 2023-05-23]:

(a) Determination of potential impacts of a Mandated Participant’s compliance with its minimum annual RPS requirements;

(b) Calculation of attendant costs arising from RPS compliance; and

(c) Rationalization of cost recovery mechanisms, when applicable.

DOE Review Cycle

The DOE reviews RPS implementation during the first three years of the program (annually), and every other year thereafter, for possible revisions — based on rate of MP compliance, RE Market activity, and progress towards RPS goals [DC2023-05-0015, §7, 2023-05-23].

Carry-Over of Compliance (On-Grid)

The DOE may allow an on-grid MP to carry its RPS shortfall to the next succeeding year only. The request must be addressed to the RPSCT with the following supporting documents [DC2023-05-0015, §8, 2023-05-23]:

(a) Proof of over-contracting or force majeure:

• Over-contracting: Power Supply-Demand Outlook for the 10-year planning period, PSA filings before ERC, and other data establishing that compliance would result in over-contracting.
• Force majeure: RE Registrar certification that in the relevant Compliance Year: (1) RE supply was inadequate to meet the RPS requirement; (2) RECs were inadequate; and/or (3) RE generation could not be delivered due to unavailable transmission/distribution capacity.
• Other grounds: Proof of causal connection between the circumstance and the shortfall, with a narrative of the MP’s compliance efforts.

(b) RPS Compliance Plan for the one-year carry-over period (current-year requirement plus shortfall), duly adopted by Board Resolution (or equivalent) and certified by the Corporate Secretary or President.

Upon RPSCT recommendation, the DOE approves the request. Deemed approved after 60 days from complete submission; the 60-day clock pauses during any rectification period for incomplete documents.

Off-Grid RPS

History

DC2018-08-0024 (“RPS Off-Grid Rules”, August 2018, Secretary Cusi) first mandated RE sourcing in off-grid and missionary areas. Its implementation was suspended shortly after issuance due to unresolved issues: varying commercial arrangements in off-grid areas, identification of appropriate Mandated Participants, determination of compliance mechanisms, and the optimal power supply mix for each area [NREP 2020-2040, p.6, 2022]. The COVID-19 pandemic also prevented the DOE from conducting capacity-building activities. DC2018-08-0024 was formally repealed by DC2023-05-0014 [DC2023-05-0014, SEC. 26, 2023-05].

Key features of the original 2018 framework (preserved for historical reference):

• Baseline year: 2018; minimum annual increment: 1%; full implementation: from 2020 [DC2018-08-0024, §8(a), 2018-08-24]
• Mandated Participants: NPC-SPUG, NPPs, QTPs, and DUs with embedded generation [DC2018-08-0024, §11, 2018-08-24]
• Eligible RE technologies (10): Biomass, Waste-to-Energy, Wind, Solar, Run-of-River Hydro, Impounding Hydro, Ocean Energy, Hybrid systems (RE component), Geothermal, and other technologies later identified by DOE [DC2018-08-0024, §9, 2018-08-24]
• Priority dispatch: Based on least True Cost Generation Rate (TCGR), inclusive of cash incentives — RE facilities dispatch in TCGR merit order [DC2018-08-0024, §14, 2018-08-24]
• Composite Team (original): Chaired by a DOE Undersecretary or Assistant Secretary; members: REMB Director, EPIMB Director, NREB Chairman, RE Registrar representative; NEA and PSALM as observers [DC2018-08-0024, §17, 2018-08-24]
• Transition period: 2 years from commencement of RE Market operations or effectivity of the Rules, whichever is earlier — mandatory compliance begins after transition [DC2018-08-0024, §22, 2018-08-24]
• Carry-over of compliance: Up to 2 years (vs. 1 year in DC2023-05-0014); 60-day deemed approval if DOE does not act [DC2018-08-0024, §19, 2018-08-24]
• Penalties: Administrative — PhP100,000–PhP500,000; Criminal — 1–5 years imprisonment and/or PhP100,000–PhP100,000,000, or twice damages/costs avoided (whichever higher) [DC2018-08-0024, §21, 2018-08-24]

DC2023-05-0014 (May 2023, Secretary Lotilla) promulgated the Revised Rules and Guidelines Governing the Operationalization of the RPS Off-Grid Rules, operationalizing what was never implemented. Key changes from the 2018 version: incorporation of RA 11646 (Microgrid Systems Act) terminology renaming QTPs as MGSPs; introduction of the Optimal Supply Mix as the per-area planning criterion; and creation of the RPS Composite Team (RPSCT) as the oversight body.

Mandated Participants (Off-Grid)

Under DC2023-05-0014, the following are Mandated Participants required to comply with the Minimum Annual RE Generation/RPS Off-Grid Requirements [DC2023-05-0014, SEC. 12, 2023-05]:

(a) Generation Companies including NPC-SPUG, New Power Providers (NPPs), and Microgrid System Providers (MGSPs);

(b) Distribution utilities (DUs) and Local Government Units (LGUs) operating electric systems in off-grid areas; and

(c) Other entities which may later be identified by the DOE.

Minimum RE Requirement and Optimal Supply Mix

Unlike the on-grid RPS (which uses a fixed minimum annual percentage increment), the off-grid RPS requirement is area-specific and based on attaining the Optimal Supply Mix for each Missionary and Off-Grid Area — the generation mix that achieves adequacy and reliability at least cost while reducing the UC-ME subsidy [DC2023-05-0014, SEC. 4(g) and SEC. 7, 2023-05]. The minimum RE generation share is whatever is needed to reach that OSM.

In calculating the minimum RE share, Mandated Participants (and TransCo/DOE) must consider: (a) generation from all existing identified RPS-eligible RE resources in the area; and (b) adoption of hybrid or distributed RE generation systems [DC2023-05-0014, SEC. 6, 2023-05].

The DOE reviews the RPS Off-Grid Rules annually (on or before September 30) to align with the NREP and Philippine Energy Plan [DC2023-05-0014, SEC. 8, 2023-05].

NPC-SPUG Obligations

NPC-SPUG must prepare a multi-year RPS Compliance Plan as part of its Missionary Electrification Plan (MEP), approved by the NPC Board, for integration into the Missionary Electrification Development Plan (MEDP). The plan must include [DC2023-05-0014, SEC. 5(a), 2023-05]:

(i) Hybridization Program — hybridize existing diesel plants with RE to achieve the most optimal configuration;

(ii) Private Sector Participation (PSP) Program — open all NPC-SPUG areas to private New Power Providers (NPPs) through competitive procurement; DU, NPP, and NPC-SPUG agree on a Take Over Program (TOP) defining the transition; and

(iii) RE Project Development — NPC-SPUG may develop its own RE facilities (including rehabilitation of inefficient/non-operational RE projects) upon securing an RE Contract from DOE.

Framework for RPS Compliance: Three Cases

All Mandated Participants must prepare and implement an RPS Requirements and Compliance Plan. The framework differs by area configuration [DC2023-05-0014, SEC. 13, 2023-05]:

Case 1 applies equally to NPC-SPUG and MGSPs for their respective service areas.

Off-Grid Compliance Mechanisms

Mandated Participants may use RECs generated from any of the following [DC2023-05-0014, SEC. 14, 2023-05]:

(a) RE generation by NPC-SPUG from its own or contracted RPS-eligible RE facilities;

(b) RE generation supplied by MGSP or NPP from its own or contracted eligible RE facilities;

(c) Generation from embedded RE generation facilities of the DUs;

(d) Purchase or acquisition of RECs from the RE Market; and

(e) Other mechanisms (including distributed RE resources) as determined by the DOE upon RPSCT recommendation.

Eligible RE Technologies (Off-Grid)

The eligible technologies are the same as the on-grid RPS, encompassing: biomass, WTE, wind, solar, run-of-river hydropower, impounding hydropower, ocean energy, geothermal, hybrid systems (RE component only), and other technologies identified by the DOE after NREB endorsement [DC2023-05-0014, SEC. 9, 2023-05]. All facilities must have commenced commercial operations on or after the effectivity of the RE Act.

Eligible generation includes: new RE installations; incremental capacity from expansion or upgrading; non-RE to RE technology conversions; and mothballed RE facilities restored into operation — subject to the RE Act COD requirement [DC2023-05-0014, SEC. 10, 2023-05].

Priority Dispatch (Off-Grid)

RE generation facilities receive priority dispatch from the Small Grid System Operator (SGSO) to the extent of local demand. Where multiple RE facilities compete, priority goes to the facility with the lowest True Cost of Generation Rate (TCGR), inclusive of the 50% UC-ME cash generation-based incentive if availed [DC2023-05-0014, SEC. 11, 2023-05]. This directly links the RE fiscal incentive under RA 9513 §17(D) to dispatch priority.

MGSPs are exempt from SGSO dispatch instructions; all other RE Developers must comply with SGSO requirements.

Reportorial Requirements and Sanctions

Mandated Participants must submit compliance reports to the DOE by 15 March of each year, including: 10-year power supply-demand situation; OSM simulations; RPS Requirements and Compliance Plan; PSA details; and other DOE-required data [DC2023-05-0014, SEC. 20, 2023-05].

Administrative penalties: PhP100,000–PhP500,000 fine, or recommendation for license/franchise/authority revocation [DC2023-05-0014, SEC. 21(a), 2023-05].

Criminal penalties: 1–5 years imprisonment, or PhP100,000–PhP100,000,000 fine, or twice the damages/costs avoided — whichever is higher. No fine or penalty may be charged to customers or treated as a substitute for compliance [DC2023-05-0014, SEC. 21(b), 2023-05].

Carry-Over of Compliance

The DOE may allow a Mandated Participant to carry over an RPS shortfall to the next succeeding year only (no multi-year carry-over). Allowable grounds: (1) over-contracting, supported by the 10-year power supply-demand outlook and PSA status before ERC; or (2) force majeure, where eligible RE supply or RECs were inadequate, or grid capacity was unavailable. The request must be addressed to the RPSCT; deemed approved 60 days after complete documents are submitted [DC2023-05-0014, SEC. 19, 2023-05].

Oversight: RPS Composite Team (RPSCT)

See Rule 5 of DC2023-05-0014 — the RPSCT evaluates and validates compliance plans, monitors Mandated Participants, and submits compliance reports to the DOE Secretary, ERC, and NREB. NEA and TransCo serve as resource persons/observers. The REMB Technical Services Management Division (TSMD) provides secretariat support. See Renewable Energy Management Bureau (REMB) .

Administrative Enforcement

Detailed enforcement procedures are governed by DC2023-12-0032 (December 7, 2023), which superseded the penalty provisions of DC2017-12-0015 §24 and DC2023-05-0014 §21 [DC2023-12-0032, Section 6 (Repealing Clause), 2023-12-07].

Commencement of Administrative Actions

Cases may be commenced by complaint or by the RPSCT’s own initiative [DC2023-12-0032, Rule 2 §1, 2023-12-07]:

• Complaint by aggrieved party: within four (4) years from the last day of the applicable Compliance Period
• RPSCT motu proprio: within one (1) year from the last day of the applicable Compliance Period (upon REMB findings duly validated by a technical subcommittee)
• Filing fee: PhP2,500–PhP20,000 (based on potential fine amount); must be paid within 10 working days or complaint is dismissed
• Email filing: rpsct_complaint@doe.gov.ph (PDF format, signed per Rules on Electronic Evidence)

Procedural Timeline

Decisions and Final Resolutions become final and executory 15 calendar days after receipt if unchallenged. Appeals to the Office of the President follow the procedure in Administrative Order No. 22, s.2011 [DC2023-12-0032, Rules 6–7, 2023-12-07].

Administrative Penalties

After formal investigation, the Department may impose one or more of [DC2023-12-0032, Rule 8 §1, 2023-12-07]:

a. Monetary fines: No less than PhP100,000 to PhP500,000, or the total amount of damages caused or costs avoided for noncompliance — whichever is higher.

The cost avoided formula is:

Cost Avoided for Noncompliance = (RR₁ − RR₂) × NES × 365

Where RR₁ = retail rate if respondent was RPS-compliant; RR₂ = actual retail rate charged to customers; NES = Net Electricity Sales in kWh for the year of noncompliance.

b. Cancellation or suspension of permit/license (suspension maximum one (1) year)

c. Withholding of new permits or licenses from the Department

Fines are imposed against the officers and/or directors of the respondent entity and may not be passed on to the Captive Market [DC2023-12-0032, Rule 8 §1, 2023-12-07].

Escalating Sanctions

Escalation acts only after finality of the Decision or Final Resolution [DC2023-12-0032, Rule 8 §1, 2023-12-07].

Criminal Penalties

Upon 3rd violation referral, the DOE refers the matter for criminal investigation. Conviction carries [DC2023-12-0032, Rule 10 §1, 2023-12-07]:

• Imprisonment of 1–5 years; or
• Fine of PhP100,000–PhP100,000,000, or twice the amount of damages or costs avoided for noncompliance — whichever is higher; or
• Both, at the court’s discretion

Corporate liability falls on the partner, president, COO, CEO, directors, or officers responsible for the violation. Aiders and abettors are liable as principals [DC2023-12-0032, Rule 10 §2, 2023-12-07].

RPS Demand Trajectory and Compliance Outlook

The NREP modeled RPS compliance under 2.52% Km from 2023 using DU consumption data. Key finding: MPs accumulated a 2-3 year REC buffer from FiT-eligible RE facilities starting 2018, but shortfalls begin at scale by 2023 [NREP 2020-2040, Table 7, p.27, 2022]:

REC compliance source mix (2020–2029) by grid:

• Luzon DUs: FiT-eligible plants 66%, PSA 24%, net-metering 9%, own-use 1%
• Visayas DUs: FiT-eligible plants 95%, net-metering 4%, PSA 1%
• Mindanao DUs: FiT-eligible plants 73%, PSA 27%

Shortfall grows rapidly because FiT REC volume is fixed and new PSA/GEAP capacity takes years to come online. GEAP and REM operationalization are the primary supply-side responses to the projected shortfall.

Eligible RE Technologies

Biomass, solar, run-of-river hydroelectric systems, impounding hydroelectric systems, ocean energy, and wind, among others [PEP 2023-2050 Vol. I, p.38, 2023].

Key Department Circulars

[PEP 2023-2050 Vol. I, p.38, 2023; PEP 2023-2050 Vol. II, pp.43–44, 2023]

RE Certificate Compliance

Mandated Participants use Renewable Energy Certificates (RECs) — issued through the Renewable Energy Market (REM) — to demonstrate RPS compliance. RE capacity awarded under the Green Energy Auction Program (GEAP) generates RECs eligible for RPS compliance. See Renewable Energy Market (REM) and Green Energy Auction Program (GEAP) .

Purpose

The RPS “effectively mobilizes the entire energy sector towards the country’s elusive attainment for energy independence” [PEP 2023-2050 Vol. I, p.38, 2023]. It is the supply-obligation complement to GEOP, which enables direct consumer choice.

BARMM Application

RPS implementation and enforcement within BARMM falls under the mandate of the REDU-TWG of the Intergovernmental Energy Board , alongside GEAP and GEOP [PEP 2023-2050 Vol. I, p.43, 2023].