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Republic of the Philippines
DEPARTMENT OF ENERGY
(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. DC2022-/0-003/ va

DECLARING ALL RENEWABLE ENERGY RESOURCES AS PREFERENTIAL
DISPATCH GENERATING UNITS IN THE WHOLESALE ELECTRICITY SPOT
MARKET AMENDING FOR THIS PURPOSE DEPARTMENT CIRCULAR NO.
DC2015-03-0001

WHEREAS, Republic Act No. 7638, otherwise known as the “Department of Energy
(DOE) Act of 1992,” declares as a policy of the State to, among others, ensure the
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, Republic Act No. 9136 otherwise known as the “Electric Power Industry
Reform Act of 2001,” or “EPIRA,” declares as a policy of the State to, among others,
ensure the reliability, quality, and security of supply of electric power, and promote the
utilization of indigenous, new, and renewable energy (RE) resources in power
generation to reduce dependence on imported energy;

WHEREAS, Section 37, Chapter II] 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, Republic Act No. 9513, otherwise known as the “Renewable Energy Act
of 2008” or the “RE Act’, declares as a 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, Section 7 of the RE Act mandated the establishment of a Feed-in Tariff
(FIT) system for electricity produced from wind, solar, ocean, run-of-river hydropower,
and biomass to accelerate the development of emerging RE resources. Under the
FIT system, FIT-eligible power projects are given priority connections to the grid, and
priority purchase and transmission of, and payment for, electricity generated from
eligible RE resources;

WHEREAS, Section 20 of the RE Act declared that qualified and registered RE
generating units with intermittent RE resources shall be considered “must dispatch”
based on available energy and shall enjoy the benefit of priority dispatch. The phrase
“RE generating units with intermittent RE resources’ refers to RE generating units or
group of such units connected to a common connection point whose RE resource is
location-specific, naturally difficult to precisely predict the availability of RE resource
thereby making the energy generated variable, unpredictable and irregular and the
availability of the resource inherently uncontrollable, which include plants utilizing
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wind, solar, run-of-river hydro or ocean energy;

WHEREAS, the DOE issued Department Circular (DC) No. DC2015-03-0001, entitled
‘Promulgating the Framework for the Implementation of Must Dispatch and Priority
Dispatch of Renewable Energy Resources in the Wholesale Electricity Spot Market’,

a. “Must Dispatch” is facilitated in the WESM by -qualified and registered
intermittent RE-based plants, whether or not under FIT system, such as wind,
solar, run-of-river hydro, or ocean energy, according to the preference in the
dispatch schedule whenever generation is available. The enjoyment of Must
Dispatch by intermittent RE-based plants is based on the difficulty to precisely
predict the availability of RE resource thereby making the energy generated
variable and irregular and the availability of resource inherently uncontrollable
pursuant to Section 20 of the RE Act.

b. “Priority Dispatch” means giving preference to biomass plants, under the FIT
system, in the dispatch schedule pursuant to Section 7 of the RE Act:

WHEREAS, granting all generating units utilizing RE resources either Must Dispatch
or Priority Dispatch status (collectively referred to as “Preferential Dispatch” status)
will aid in accelerating the development and utilization of indigenous RE resources
and reduce dependence on imported conventional energy resources, thereby
minimizing the country’s exposure to price fluctuations in the global markets, and
making the supply and delivery of electric power more Stable and secured from
international incidents, such as the conflict between Russia and Ukraine, which
Caused delays and disruptions in the global supply value chain and price increase in
imported fuels’,

WHEREAS, the development and full utilization of RE will support the country's efforts
to achieve its Nationally Determined Contribution Targets that are primarily based on
RE policies and programs, among others;

WHEREAS, the grant of Preferential Dispatch status in the WESM to all generating

WHEREAS, the DOE conducted virtual public consultations regarding various RE-
related policies, which include this Circular, on 18 and 214 March 2022 for Luzon and
Visayas, and Mindanao, respectively.

ee
' Baclig, C. E. (2022, 02 March 2022). Putin's war on Ukraine and impact on PH prices. Philippine Daily
Inquirer. Retrieved from https://newsinfo.inquirer.net/1 562204/putins-war-on-ukraine-and-impact-on-
ph-prices#ixzz7Qn6x4rOL

? A project funded by the German Federal Ministry for the Environment, Nature Conservation, Nuclear
Safety and Consumer Protection (BMUV) and implemented by the Deutsche Gesellschaft for
Internationale Zusammenarbeit GmbH (GIZ) ana the Institute for Climate and Sustainable Cities.

Department Circular No. Preferential Dispatch of all Generating Units Utilizing RE Resources in the WESM

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NOW THEREFORE, in consideration of the above premises, the DOE hereby issues
and promulgates this Circular.

PART 1. GENERAL PROVISIONS

Section 1. Short Title. This Circular Shall be known as the “Preferential Dispatch of
all Generating Units Utilizing RE Resources in the WESM.”

Section 2. Coverage. The amended Preferential Dispatch classifications, as defined
in Section 3 hereof, shall cover all existing and new RE generating units.

Section 3. Must Dispatch and Priority Dispatch, Defined. The definitions of Must
Dispatch and Priority Dispatch, are hereby amended as follows:

a. “Must Dispatch” is facilitated in the WESM for qualified and registered
intermittent or variable RE-based plants, which include wind, solar, run-of-river
hydro, and ocean energy power plants, according to the preference in the
dispatch schedule whenever generation is available, pursuant to Section 20 of
the RE Act.

b. “Priority Dispatch" means giving the option or preference to all qualified and
registered RE plants that are not Must Dispatch such as biomass, geothermal,
and impounding hydro plants to enjoy preferential dispatch in the WES\M, taking
into consideration their contractual obligations with their respective customers.

Section 4. Priority Dispatch of Impounding Hydro Plants. The grant of Priority
Dispatch status to impounding hydro plants, currently categorized as scheduled plants

Section 5. Emerging RE Technologies. The DOE may grant Preferential Dispatch

status to any future emerging RE technologies that may be approved by the DOE upon

promoting energy transition towards energy security, energy self-sufficiency, and
sustainability for the country. In such case, the provisions laid down in this Circular
and the WESM Rules and Manuals, as updated pursuant hereto, shall be followed.

PART 2. STAKEHOLDER RESPONSIBILITIES
Section 6. To ensure the efficient and effective scheduling and dispatching of
Preferential Dispatch generating units, the Market Operator (MO), WESM Governance
Arm, System Operator (SO), and Distribution Utilities (DUs) shall have the following
general mandates in the implementation of this DC:

Section 6.1. Responsibilities of the MO

a. Propose necessary amendments in the WESM Rules and Manuals to
implement the dispatch of all Preferential Dispatch generating units utilizing RE

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resources in the WESM;

b. Formulate the procedures for the qualification and registration of Preferential
Dispatch generating units in the WESM;

c. Conduct information campaigns on the implementation of Preferential Dispatch
of all RE plants in the WESM;

d. Report the annual compliance of RE generating companies’ facilities on the
forecast accuracy standards to the DOE;

e. Jointly with the SO, implement technical mitigation measures and
improvements in the system to ensure security and reliability of the electricity
transmission system; and

f. Regularly review, assess, and update WESM Rules and Manuals to ensure that
the provisions of the RE Act and existing rules and regulations are
implemented.

Section 6.2. Responsibility of the WESM Governance Arm

a. Monitor compliance of variable RE generation companies on the submission of
projected output for each of its generating units, pursuant to WESM Rules and
the approved forecast accuracy standards consistent with the Philippine Grid
Code (PGC).

Section 6.3. Responsibilities of the SO

a. With due consideration to grid security, ensure the maximum penetration of
variable RE-based power plants or Must Dispatch generating units in the grid;

c. Jointly with the MO, implement technical mitigation measures and
improvements in the system to ensure security and reliability of the electricity
transmission system;

d. Require and witness the conduct of technical tests to ensure generators’
compliance with the performance Standards as prescribed in the PGC;

€. Produce and submit to the MO the RE aggregated generation forecast for each
interconnected system it operates within the period prescribed in the WESM
Rules;

f. Endeavor to operate the Must Dispatch generating units in free active power
production control mode. However, if the SO considers it necessary for

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redispatch to maintain the security and reliability of the grid, the SO may instruct
intermittent RE-based generators to change the active power or immediate
disconnection of their generators as prescribed in the PGC;

g. Submit to the MO an operational report including all instructions issued to the
generators which resulted in a change in the active power production;

h. Always consider technical parameters and limitations of the transmission
facilities giving priority to the security and reliability of the grid during its dispatch
schedule and implementation: and

i, Determine and incorporate in the Transmission Development Plan the
necessary upgrading and/or expansion of its transmission facilities to ensure
non-discriminatory access of all grid-connected Preferential Dispatch
generating units.

Section 6.4, Responsibilities of DUs

a. Determine and incorporate in the Distribution Development Plan the necessary
upgrading and/or expansion of its distribution facilities to ensure efficient and
non-discriminatory access of all embedded Preferential Dispatch generating
units; and

b. Ensure that embedded Preferentia| Dispatch generating units shall be given
priority to inject to the distribution network.

Section 6.5 Compliance with the WESM Rules. All Preferential Dispatch
generating units and their respective owners, officers, and operators shall Strictly
comply with the WESM Rules.

PART 3. FINAL PROVISIONS

Section 7. Prohibited Act. Pursuant to Section 35(e) of the RE Act, non-compliance
or violation of this Circular shall be subject to applicable penalties provided under the
RE Act and its Implementing Rules and Regulations (IRR).

Section 8. Information, Education and Communication. Pursuant to Section 31(i)
of the IRR of the RE Act, the DOE, through the Renewable Energy Management
Bureau, shall develop and implement information, education, and communication
programs to increase awareness and appreciation of all RE stakeholders of this
Circular.

Section 9. Separability Clause. if any provision of this Circular is declared invalid or
unconstitutional, the other provisions that are not affected shall remain valid and
subsisting.

Section 10. Repealing Clause. Any prior issuances, orders, or circulars inconsistent
with this Circular are hereby repealed, amended, or modified accordingly.

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Section 11. Effectivity. This Circular shall take effect fifteen (15) days after its
publication in two (2) newspapers of general circulation. Copies of this DC shall be
filed with the University of the Philippines Law Center - Office of the National
Administrative Register.

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

RAPHAEL P.M. LOTILLA
Secretary

ocTO5 2022

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