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Lr Republic of the Philipp C
ee) DEPARTMENT OF ENERGY
(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. DC 2020-10 - 0022 ,,

PRESCRIBING THE POLICIES TO ENHANCE THE NET-METERING
PROGRAM FOR RENEWABLE ENERGY SYSTEMS

WHEREAS, Republic Act (RA) No. 7638, otherwise known as the “Department of
Energy (DOE) Act of 1992,” declares as a policy of the State to, among others,
ensure a continuous, adequate and economic supply of energy through the
integrated and intensive exploration, production, management and development of
the country’s indigenous energy resources;

WHEREAS, RA No. 9136, otherwise known as the “Electric Power Industry Reform
Act of 2001” or “EPIRA,” declares the policy of the State to, among others: (a)
assure socially and environmentally compatible energy sources and infrastructure;
and (b) promote the utilization of indigenous and new and renewable energy (RE)
resources in power generation in order to reduce dependence on imported energy;

WHEREAS, Section 37 of the EPIRA mandates the DOE to encourage private

sector investments in the electricity sector and promote the development of
indigenous and RE resources;

WHEREAS, RA No. 9513, otherwise known as the “Renewable Energy Act of
2008” or the “RE Act,” declares the policy of the State to accelerate the exploration
and development of RE resources including hybrid systems, to achieve self-
reliance, strategies to reduce the country’s dependence on fossil fuels and thereby
minimize the country’s exposure to price fluctuations in the international markets,
the effects of which spiral down to almost all sectors of the economy;

WHEREAS, the RE Act further declares the policy of the State to increase the
utilization of RE by institutionalizing the development of national and local
capabilities in the use of RE Systems, and promoting their efficient and cost-
effective commercial application by providing fiscal and non-fiscal incentives;

WHEREAS, on 27 May 2013, the Energy Regulatory Commission (ERC) issued
Resolution No. 9, Series of 2013 entitled “A Resolution Adopting the Rules Enabling
the Net-Metering Program for Renewable Energy” or the “Net-Metering Rules”
pursuant to Section 10 of the RE Act and Section 7 of its Implementing Rules and
Regulations:

WHEREAS, from 01 July 2013 to 31 December 2019, the Net-Metering Program
recorded a cumulative total of 25 MW of Net-Metering facilities (from 3,132
Qualified End-Users) have been installed in the Philippines, wherein 62.6% of it are

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located within the franchised area of one Distribution Utility (DU), equivalent to only
0.16% of the 2019 total non-coincident peak demand of 15,581 MW;

WHEREAS, despite the high potential of RE resources in the country, numerous
economic and non-economic barriers under the current design of the Net-Metering

Program have contributed to low level of participation from the electricity End-
Users;

WHEREAS, on 22 December 2017, the DOE issued the Department Circular No.
DC2017-12-0015 entitled, “Promulgating the Rules and Guidelines Governing the
Establishment of the Renewable Portfolio Standards for On-Grid Areas,” or the
“RPS On-Grid Rules” where energy produced or generated by Eligible RE Facilities
under the Net-Metering Program are eligible to earn RE Certificates, which shall be
credited as one of the mechanisms that the DUs may apply as part of their

compliance with their obligations as Mandated Participants under the RPS On-Grid
Rules;

WHEREAS, the DOE, in partnership with the United States Agency for International
Development through the Clean Power Asia Program with expertise from the
National Renewable Energy Laboratory, Lawrence Berkeley National Laboratory
and Chulalongkorn University, conducted a study on the Net-Metering Program,
composed of data-driven analysis on three key impacts, namely: customer
economics; utility revenue and retail rate; and technical impact on the distribution
grid:

WHEREAS, after the conduct of focus group discussions with various stakeholders,
the study resulted in the publication of the “Distributed Photovoltaic Economic and

Technical Impact Analysis in Philippines,” covering potential policy and regulatory
revisions;

WHEREAS, on 16 August 2019, the ERC issued Resolution No. 06, Series of 2019
entitled “Adopting the Amendments to the Rules Enabling the Net-Metering
Program for Renewable Energy” or the “Amended Net-Metering Rules” to address
the issues on the applicability of the lifeline rates to Qualified End-Users and
whether the mechanism of accumulating the credits of net exports on the customer
bill is reasonable:

WHEREAS, while the Amended Net-Metering Rules addressed most of the
economic and technical barriers of the current Net-Metering Program, the DOE
deems it necessary to further enhance the current Net-Metering policies and

commercial arrangements in order to increase the utilization of RE thru the Net-
Metering Program;

WHEREAS, as part of securing the views, comments, and suggestions from the
stakeholders on the draft Department Circular, entitled as “Policies to Enhance the
Net-Metering Program for Renewable Energy Systems and Other Mechanisms to
Ensure Energy Security,” the DOE conducted a series of public consultations on
08 October 2019 in Taguig City, Metro Manila, 10 October 2019 in Cebu City, and

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24 October 2019 in Davao City, a dialogue with the ERC on 02 March 2020, and
recently through the National Renewable Energy Board (NREB);

NOW, THEREFORE, after due consideration of the above, the DOE hereby adopts
the following rules and regulations:

Section 1. Title. This Department Circular shall be known as “Prescribing the
Policies to Enhance the Net-Metering Program for Renewable Energy Systems.”

Section 2. Purpose. This Circular aims to encourage and further promote
electricity End-Users’ participation in the Net-Metering Program by enhancing the
current policies and commercial arrangements, while ensuring the economic and
technical viability of the DU.

Section 3. Scope. This Circular prescribes the following policies and guidelines to
provide complementary enhancements to the Net-Metering Program in support of
ERC Resolution No. 06, Series of 2019:

(a) Implementation of the period of one (1) year for the banking of Net-Metering
credits for existing and new applications;

(b) Application to Off-Grid or Island Grid Systems;

(c) Publication of the DUs Net-Metering Program including their respective
hosting capacities of Distribution Systems for Net-Metering purposes; and

(d) Development of a Net-Metering Guidebook that aims to prescribe the
guidelines and procedures for Net-Metering arrangements from offer to
after-sales services by the Net-Metering installers and practitioners as well
as prescribing the minimum standards for all Net-Metering installations, in
collaboration with all concerned government agencies.

Section 4. Definition of Terms. This Circular hereby adopts, by reference, the
terms defined in the EPIRA, RE Act, their respective implementing rules and

regulations, the RPS On-Grid Rules, as well as the relevant DOE Department
Circulars.

(a) “Banking Period” refers to a period of time that a Qualified End-User may
store the excess Net-Metering Credits it has accumulated over a certain
period of time:

(b) “Net-Metering Credit” refers to an amount of energy exported into the
Distribution System by a Qualified End-User in excess, subject to the
prescribed valuation of the exported energy;

(c) “Qualified End-User’ refers to electricity End-Users that produce electric

power generated from an eligible on-site RE generating facility, such as, but
not limited to, house or office building with a photovoltaic system that can be

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connected to the Distribution System, for the purposes of entering into a Net-
Metering agreement, as defined in Section 7 of the RE Act-IRR; and

(d) “Renewable Energy Certificate” or “RE Certificate” refers to a certificate
issued by the RE Registrar to Mandated Participants of the RPS showing
the energy sourced, produced, and sold or used from the Eligible RE
Systems. The definition of RE Certificate as defined under Section 3(tt) of
the RE Act-IRR is hereby amended accordingly.

Section 5. Threshold Capacity for Net-Metering Installations. Any Qualified
End-User under the Net-Metering arrangement, under normal circumstances, shall
not be a net generator or producer at the end of each calendar year. This is to
avoid oversizing of the Net-Metering facility, where the annual electricity generation
of the facility has exceeded the Qualified End-User’s annual energy consumption.

Section 6. Banking of Net-Metering Credits. Upon effectivity of this Circular, all
Net-Metering Credits shall be banked for a maximum of one (1) calendar year. Any
excess or balance Net-Metering Credits at the end of each calendar year shall be
forfeited. As to the Net-Metering Credits generated prior to the effectivity of this
Circular, the ERC, in consultation with the DUs, shall issue the necessary rules on
the disbursements of all outstanding peso credits to their respective Qualified End-
Users within ninety (90) days from the effectivity of this Circular.

Section 7. Application to Off-Grids or Isolated Grid Systems. Subject to
technical considerations in accordance with the Philippine Electrical Code, the
Philippine Distribution Code, Distribution Services Open Access Rules, the
Philippine Small Grid Guidelines, and the Amended Net-Metering Rules and its
Interconnection Standards, the Net-Metering Program for End-User shall be
allowed even in areas not connected to the three major national electrical
transmission grids, namely: Luzon, Visayas and Mindanao.

The ERC, in consultation with the DOE, DUs, National Electrification
Administration, and National Power Corporation, may issue the necessary
amendments to the Net-Metering Interconnection Standards to facilitate the
efficient and effective implementation of the Net-Metering Program to Off-Grid
areas.

Section 8. Publication of Hosting Capacities for Net-Metering. The DUs shall
publish in their website (or on any official social media platform), their respective
Net-Metering programs, processes, and procedures, including hosting capacities
on a per feeder or sector basis.

Section 9. Responsibility of the Local Government Units (LGUs). All LGUs are
enjoined to strictly comply with the provisions of RA No. 11234 or the “Energy
Virtual One Stop Shop Act” and RA No. 11032 or the “Ease of Doing Business and
Efficient Government Service Delivery Act of 2018” in processing permits and
licenses related to applications for Net-Metering arrangements such as, but not
limited to Building Permit applications, Certification of Final Electrical Inspections,
among others.

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Section 10. Responsibilities of the National Electrification Administration
(NEA). The NEA shall provide the necessary assistance in promoting the Net-
Metering Program to all electric cooperatives (EC) nationwide, as well as other
capacity building program such as technical assistance on Distribution Impact and
Asset Studies and determination of the hosting capacity. Toward this end, the NEA
and ECs shall include in their orientation/briefing for new applicant member-
consumers the Net-Metering Program as well as other RE policies and programs
under the RE Act.

Section 11. Development of Net-Metering Guidebook. To help electricity end-
users in considering Net-Metering for RE, as well as ensuring safety and protection
on any potential market abuses, a guidebook on procedures and standards (i.e.
service offers, product standards, proper sizing, installation manual, after-sales
requirements, etc.) shall be developed by the DOE which will be used by all
stakeholders including suppliers, customers, Local Government Units, and
financing institutions. Towards this end, the Renewable Energy Management
Bureau shall prepare the Net Metering Guidebook, within six (6) months from the
affectivity of this Circular.

Section 12. Prohibited Act. Pursuant to Section 35(b) of the RE Act, the willful
refusal of a DU to undertake Net-Metering arrangements with Qualified End-Users

without justifiable cause shall be subject to the administrative penalties therein
provided.

Section 13. Other Provisions. Pursuant to Section 10 of the RE Act, the DOE,
among others, is mandated to provide the mechanisms for the physical connection
and commercial arrangements necessary to ensure the success of the Net-
Metering program.

(a) The ERC may adopt the Classical Net-Metering as described under Section
7 of the Implementing Rules and Regulations of the RE Act, whereby the
electric power generated by a Qualified End-User from an eligible on-site RE
generating facility and delivered to the local distribution grid may be used to
offset the electricity consumed by the End-User during the applicable period.

(b) All cost incurred by the host DU including metering, supply, and storage, shall
be charged only to Qualified End-Users as Net-Metering charge, which
amount shall be subject to determination and approval of the ERC;

(c) The DOE and ERC shall review and evaluate the implementation of the
Enhanced Net-Metering Program every two (2) years or as the need arises,
from the effectivity of this Circular, to ensure that the Net-Metering Program
redounds to the greater benefit of all electricity End-Users and the objectives
of the RE Act are met.

Section 14. Separability Clause. If any provision of this Circular is declared
invalid or unconstitutional, the other provisions not affected thereby shall remain
valid and subsisting.

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Section 15. Repealing Clause. Any prior issuances, orders or circulars
inconsistent with this Circular are hereby repealed, amended or modified
accordingly.

Section 16. Effectivity. This Circular shall take effect fifteen (15) days after its
publication in at least two (2) newspapers of general circulation. Copies of this
Circular shall be filed with the University of the Philippines Law Center — Office of
the National Administrative Register.

Al ercua)

Setretary

Issued on at the Department of Energy,
Fort Bonifacio, Taguig City, Metro Manila.

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