=== pdp-2023-2050-ch3-page-100.pdf === CHAPTER 3. POWER SECTOR ROADMAP 2023-2050 (Short-, Medium-, and Long-Term) POWER DEVELOPMENT PLAN 2023-2050 100 === pdp-2023-2050-ch3-page-101.pdf === CHAPTER III Power Sector Roadmap 2023-2050 In this chapter, the DOE will present the new power sector roadmaps for generation, transmission, distribution, supply, electricity market, off-grid development, and total electrification. The updated roadmap is divided into three-term goals, the short-term, medium-term, and long-term. These roadmaps are anchored on three main goals by 2050 namely: • • • Energy security, resiliency, affordability, and sustainability. Transparent and fair playing field in the power industry; and Electricity access for all. By presenting these goals, the power sector roadmap sets a clear and comprehensive trajectory towards a future characterized by energy security, fairness, and accessibility for all. The integration of smart grid technologies and improvements to the sector's database further align these roadmaps with the evolving needs and challenges of the energy landscape. Goal 1: Energy Security, Resiliency, Affordability and Sustainability 1. Generation Short Term 2023-2024 • • • • Smooth integration of new and emerging power generation technologies into the country’s energy mix Enhance policy on the performance and operation of generation facilities toward selfhealing grid system. Policy support to incentivize more investments in generation. Development of omnibus guidelines for the processing of generating unit/s requirements for commercial operation and other purposes Medium Term 2025-2028 • • Smooth integration of new and emerging power generation technologies into the country’s energy mix Policy on Virtual Power Plant / Consolidation of Distributed Energy Resources System Long Term 2029-2050 • • Enhance and utilize non-fossilbased energy in power generation in support of cleaner energy transition and decarbonization. Increase power generation flexibility 1. Smooth integration of new and emerging power generation technologies into the country’s energy mix Aligned with the nation’s commitment to transitioning to a cleaner and more sustainable energy resources, the DOE is proactively exploring strategies to diversify and integrate new and emerging power generation technologies in the energy mix, anchored to enhancing the power supply security and reliability of the country’s energy mix. POWER DEVELOPMENT PLAN 2023-2050 101 === pdp-2023-2050-ch3-page-102.pdf === In this PDP update, the DOE has taken proactive move by incorporating various new emerging technologies (e.g., offshore wind, nuclear, energy storage system, and liquefied natural gas) into the generation capacity expansion planning. The goal is to offer valuable guidance to potential investors and financing institutions, providing insights into productive investment opportunities within the country. On the policy and regulatory side, the DOE will identify potential barriers, propose incentives, and formulate supportive policies to promote the adoption and create a conducive environment for these new emerging technologies. The DOE will assess the reliability of these new technologies to ensure a consistent and stable power supply consistent with its mandate under the RA No. 9136, EPIRA Section 3737. Further, to develop backup systems and contingency plans to maintain energy security in case of unexpected failures or disruptions. 2. Enhance policy on the performance and operation of generation facilities toward self-healing grid system As the country endeavors to achieve the targets of 35% and 50% RE share by 2030 and 2040, respectively, the reliability of the power system is expected to face heightened vulnerability due to the intermittent nature of incoming renewable sources. Given these anticipated challenges, it is essential that generation facilities must be resilient, dependable, and adaptable to any abrupt changes in the power network. The incorporation of energy storage systems, smart-grid technologies, and distributed energy sources will play a crucial role in mitigating the impact of RE sources, as it will provide buffer for abrupt changes in the power supply and demand dynamics. Achieving interoperability is also one of the key focuses, as it will enhance the overall flexibility and adaptability of the power system. The DOE will formulate policies to foster adaptable and reliable power systems in the face of an evolving energy landscape, as well as ensure that the generation sector will seamlessly integrate with these advanced systems and components. 3. Policy support to incentivize more investments in the generation sector Given the existing policy framework primarily centered on fiscal and non-fiscal incentives, the DOE is committed to continually devise policies and programs that will further incentivize investments in the generation sector. Some of these measures are currently under discussion within the Department are: a) Collaboration between the government and financial institutions, facilitated by the DOE's IPO, will enable conversations aimed at improving financial access for potential investments in the energy sector. Following a recent roundtable discussion with lenders and financing institutions, the IPO is set to initiate a sequence of sessions and engagements aimed at supporting and conducting an information campaign about the upcoming developments in the Philippine energy sector. This will include exploring other approved equivalent requirements, such as auction programs and WESM options, as viable alternatives to the intricate longterm power supply agreement requirements. 37 EPIRA Section 37 entitled, “Role of the Department of Energy” POWER DEVELOPMENT PLAN 2023-2050 102 === pdp-2023-2050-ch3-page-103.pdf === b) RE Projects Grid Connection – The DOE, in collaboration with the National Transmission Corporation (TransCo) and a group of technical consultants38 initiated the formulation of a Smart and Green Grid Plan (SGGP) that seeks to establish a comprehensive roadmap for transforming the country’s existing electric grid into a smart, green, and sustainable transmission system in support of the Philippine Energy Transition Program (PETP). The SGGP aims to intricately design the Philippines' Transmission Network, encompassing existing infrastructure and expansion plans to accommodate incoming generation projects as outlined in the Clean Energy Scenario goals of the country. The SGGP aims to seamlessly integrate additional RE power projects that are expected to become operational from 2024 to 2050. 4. Development of omnibus guidelines for the processing of generating unit/s requirements for commercial operation and other purposes The DOE is set to formulate an omnibus guideline, which will serve as a unified framework consolidating all existing policies, application processes within the EVOSS, and other pertinent permitting procedures. This consolidated guideline is intended to streamline and harmonize the elements involved in obtaining approvals and permits, ensuring a more efficient and coherent process for projects leading up to their commercial operation. 5. Policy on Virtual Power Plant / Consolidation of Distributed Energy Resources System Advancements in technology are enhancing energy efficiency, cutting costs, and promoting environmental sustainability. As the power industry evolves, there is a growing focus on incorporating innovative concepts like Virtual Power Plants (VPPs) and Distributed Energy Resources (DERs). DERs, as defined in ERC Resolution No. 17, Series of 202339, refers to power sources connected to the Distribution System or electrical system of the End-Users, that could be aggregated to meet a demand. These are decentralized networks of small-scale energy equipment (solar, wind, or hydro), energy storage systems, intelligent grid management technologies, and demand response mechanisms of end-users, among others, are connected within a system network. VPP40, is defined as an aggregator that bundles and optimizes the use of DERs. The purpose of VPP is to operate various DERs, such as renewables and storage systems among others, as a unified and optimized entity which allows them to collectively meet size requirements for participating in wholesale energy markets. 38 Funded by the United States Agency for International Development (USAID) under the Energy Secure Philippines (ESP) Project. 39 Entitled, “A Resolution Adopting the 2023 Revised Rules for the Issuance of Certificates of Compliance for Generation Facilities” issued on 13 September 2023 40 Aggregators, Innovation Landscape Brief, International Renewable Energy Agency (IRENA) Retrieved through: https://www.energy.gov/sites/default/files/2022-11/DOE-LPO-Poster-Series-05-VPP.pdf POWER DEVELOPMENT PLAN 2023-2050 103 === pdp-2023-2050-ch3-page-104.pdf === The DOE is currently looking into possible avenues to encourage the deployment and adoption of these technologies through the creation of a policy framework and introduction of incentive programs (e.g. market participation, interoperability mechanisms, and grid-readiness to accept such technologies among others). 6. Enhance and utilize new technologies in power generation in support of cleaner energy transition and decarbonization The DOE is actively advancing cleaner energy transition and decarbonization by embracing new technologies in power generation. This strategic initiative involves introducing conducive policies, incentives, and development goals to purposefully transform the country's power generation mix. In the RE sector, the DOE has already introduced significant policies to boost the entry of RE sources, including the Renewable Portfolio Standard (RPS), Renewable Energy Market (REM), the Green Energy Option Program (GEOP), and conduct of Green Energy Auction (GEA). A significant development in the RE industry is the legal opinion issued by the Department of Justice (DOJ) on 29 September 2022, regarding the maximum (100.0%) foreign equity participation in exploring, developing, and utilizing solar, wind, hydro, and ocean or tidal energy resources. This opinion is expected to be a game-changer, thereby reducing costs associated with RE projects in the country. Furthermore, the DOE considers nuclear technology as a viable, stable, and emission-free energy option for the Philippines, given that it has been globally recognized to provide diverse applications in the energy sector. In adherence to the commitment to explore alternative energy resources to ensure supply security as mandated by the EPIRA, the government actively engages in studying and advancing the development of nuclear energy by implementing policies and programs to support and promote the exploration of nuclear power development as a significant component of the country's energy mix. EO No. 116, Series of 202041, issued on 24 July 2020, mandates a study for adopting a National Position on the Nuclear Energy Program (NEP) in accordance with pertinent International Atomic Energy Agency (IAEA) guidelines, relevant laws, rules, and regulations. Moreover, it establishes the Nuclear Energy Program InterAgency Committee (NEPIAC) which is tasked to formulate the national position on NEP and come up with a national strategy and roadmap including measures to address the challenges under the Milestones Approach of the International Atomic Energy Agency (IAEA), consisting of 19 Nuclear Infrastructure Issues. NEPIAC summarizes these infrastructure issues into four areas tagged as “The Four Cornerstones Approach” comprising of National Policy, Legislative Framework, Alignment with International Standards, and Public Awareness. Further advancing the NEP, former President Rodrigo R. Duterte through EO No. 164, Series of 202242 approved the Philippines’ Nuclear Power Program on 28 February 2022. This directive aims to utilize nuclear power to address the anticipated decline of coal41 Entitled, “Directing a Study for the Adoption of a National Position on Nuclear Energy Program, Constituting a Nuclear Energy Program Inter-Agency Committee, and for Other Purposes.” 42 Entitled, “Adopting a National Position on a Nuclear Energy Program and for Other Purposes.” POWER DEVELOPMENT PLAN 2023-2050 104 === pdp-2023-2050-ch3-page-105.pdf === fired power plants with the existing coal moratorium advisory along with coal repurposing based on the directive on Energy Transition towards cleaner energy in the future. The government, under this order, is empowered to adopt and implement a national position for the NEP, ensure peaceful nuclear technology use, assess, and develop NEPs, engage with stakeholders, and make recommendations on the viability of nuclear power installations in the country. Lastly, considering the Philippines’ abundant ocean and water resources, the DOE is continuously exploring and conducting further research on the ocean thermal conversion potentials. Concurrently, the DOE is delving into the study of hydrogenbased technologies, exploring avenues such as co-firing and mechanisms linked to renewable energy. 7. Increase power generation flexibility The DOE had already identified the need to import Liquefied Natural Gas (LNG) in the future due to the depleting supply of indigenous natural gas in the country from the existing Malampaya gas facility. Natural gas has less carbon dioxide emission compared to coal and fuel oil. Increasing flexibility in power generation enables the system to synchronously adapt and adjust to dynamic conditions at any given time, resulting in optimized electricity demand and supply flow. Power generation from natural gas is greatly pushed to provide the baseload, intermediate, or mid-merit supply requirement of the country, as well as replacement to coal and fuel oil in the future. Mid-merit gas power plants are load-following plants that can easily adjust their power production with the fluctuations in electricity demand. As of 31 December 2022, a total of 3,500 MW committed installed capacity from natural gas is expected to be operational from 2022 to 2025. The DOE closely monitors the development of these projects, along with the 9,090 MW indicative natural gas capacity, which is still under the pre-development stage. These natural gas power plants, along with the existing ones should be fueled by the seven (7) proposed LNG terminal facilities that are expected to be completed from 2023 to 2026, to wit: Table 53. List of LNG Terminal Facilities in the Philippines Proponent Project FGEN LNG Corporation Interim Floating Storage and Regasification Unit (FSRU) Linseed Field Corporation Floating Storage Unit (FSU) and Onshore Regasification and 60,000 LNG Storage Capacity43 Location 5.26 MTPA Batangas City, Batangas 3 MTPA Batangas City, Batangas Estimated COD Anchor Market September 2023 (LNG Terminal) Existing gas-fired power plants August-Sept 2023 (LNG Delivery) Proposed Fgen facilities extension April 2023 (FSU and onshore regasification 1,200 MW Ilijan Power Plant Batangas Combined Cycle Power Project 43 1 metric tonnes per annum (MTPA) is roughly equivalent to 1000 MW as per Oil Industry Management Bureau POWER DEVELOPMENT PLAN 2023-2050 105 === pdp-2023-2050-ch3-page-106.pdf === Proponent Project LNG Storage Location Capacity43 cbm buffer LNG storage tank Energy World Gas Operations Philippines Inc. LNG Storage and Regasification Terminal Estimated COD Anchor Market April 2023 (LNG delivery)44 3 MTPA Luzon LNG Terminal Inc. FSRU LNG Terminal 4.4 MTPA Vires Energy Corporation FSRU Terminal 3 MTPA Pagbilao, Quezon Batangas bay within the municipal waters of Mabini and San Pascual, and city water of Batangas Batangas City, Batangas December 2023 (Unit 1 GT)45 Self-owned Gas-fired power plant (under construction) EGCO Group46 December 2025 3rd party access mode47 April 2026 Proposed 500 MW Floating Power Plant AC Energy proposed gas-fired power projects in Mariveles and Subic Shell Energy Philippines, Inc. Samat LNG Corporation FSRU Terminal Small-scale LNG terminal 3 MTPA 14,400 m3 Batangas City, Batangas Mariveles, Bataan September 2025 May 2025 JG Summit for 81 MW existing power plant and 30-40 MW expansion BCE 1,100 MW Proposed Power Plant Ingrid Power Holding’s 40 MW conversion from diesel to natural gas Manufacture industries within 300-km radius of the terminal Pursuing greater flexibility also allows the integration of variable RE (VRE) like solar and wind technologies. Flexible power plants like natural gas can reduce their electricity generation output (quicker than baseload power plants with longer ramp-up and down periods) when solar and wind production are at their highest. This flexibility of power generation facilities allows the reduction of VRE curtailment and maximizes its operating capacity during its economic life. 44 Update as of July 2023 45 Update from DOE site inspection in November 2022 46 Small-scale LNG break bulk 47 Transparent and non-discriminatory open access model POWER DEVELOPMENT PLAN 2023-2050 106 === pdp-2023-2050-ch3-page-107.pdf === Goal 1: Energy Security, Resiliency, Affordability and Sustainability 2. Transmission and System Operation Short Term 2023-2024 • • • • • • Assess the performance of the transmission system operator. Review and develop policy on the reliability requirements of the grid, including system protection. Enhance the Transmission Development Planning Establish a coordination system to ensure the timely completion of transmission projects. Develop supplementary policies for Ancillary Services Interconnect the Luzon, Visayas, and Mindanao grids. Medium Term 2025-2028 • Policy development on Smart Grid and Green Plan • Interconnections of BatangasMindoro; Quezon-Marinduque; Catanduanes-Camarines Sur; Palawan-Mindoro. Long Term 2029-2050 • • • Interconnect off-grid islands to the main grid. Encourage looping of Luzon Grid and Visayas Sub-grids Assessment of the Renewal of the Concessionaire Agreement 1. Assess the performance of the transmission system operator The DOE promulgated Department Order No. DO2023-06-001848, that will establish a comprehensive and sustainable mechanism to confirm and validate the level of compliance of the Transmission Network Provider and SO. It provided policies, rules, and guidelines on how to conduct the assessment. 2. Enhance policy on the performance and operation of transmission system toward self-healing grid system The self-healing grid is a smarter network that employs sensor, control, and communication technologies to enable real-time troubleshooting of unanticipated situations. With the said premises, the DOE issued the national policy framework for the smart grid and roadmap for distribution utilities through Department Circular No. DC2020-02-000349. Under this Circular, the DOE adopted several criteria for transitioning the entire generation, transmission and distribution power system into a smart grid by 2040. 3. Review and develop policy on the reliability requirements of the grid, including system protection 48 Entitled, “Creating the Performance Assessment and Audit Team for the Operations of the Transmission Network Provider and System Operator (PAAT-TNPSO) and Providing for Its Responsibilities” 49 Entitled, "Providing a National Smart Grid Policy Framework for the Philippine Electric Power Industry and Roadmap for Distribution Utilities" POWER DEVELOPMENT PLAN 2023-2050 107 === pdp-2023-2050-ch3-page-108.pdf === This pertains to projects that will ensure the reliability and protection of the Grid as prescribed in the Philippine Grid Code (PGC). In support of these projects, the DOE is continuously assessing ways and possible policy issuances in resolving the pending cases and permit applications involving these transmission projects, as these are critical in ensuring power reliability and protection. 4. Enhance the Transmission Development Planning (TDP) In compliance with the EPIRA and its IRR, public consultations with electric power industry participants, namely generation companies, DUs, and end-users, were conducted to create and implement an enhanced and responsive 2022-2040 TDP. Though, TransCo was not involved in the TDP formulation, review, and evaluation as the grid owner in accordance with DOE Department Order No. DO2017-04000450, TransCo commented that generally the projects in the TDP will aid the development of the grid and will help address the requirements for interconnections, generation entry, load growth, system reliability, operation and maintenance, and system operation. 5. Establish a coordination system to ensure the timely completion of transmission projects Utilizing new transmission lines, increasing substation capacity, and upgrading transmission facilities are critical to effectively transfer electricity from new and existing plants to end customers. To ensure that transmission projects are completed on schedule, the DOE will continue to monitor the NGCP's monthly submission of the Transmission Projects Status Report. To reduce delays, the DOE continues to provide support to the NGCP through its endorsement to intervene and cooperate with other government agencies, as needed, to address concerns with right-of-way and permits, which create delays in transmission project completion. 6. Develop supplementary policies for Ancillary Services On 4 October 2021, the DOE issued the Department Circular No. DC2021-10-0031, the AS Competitive Selection Process (AS-CSP) Policy, which mandates the NGCP to procure the required AS level through CSP. This policy was promulgated by the DOE to ensure transparency, competitiveness, and wide dissemination of bid opportunities to ensure the participation of all eligible generation companies to meet required levels of AS through Ancillary Services Procurement Agreements (ASPA). For an update, out of the thirty-eight (38) bidders issued with Notice of Award as a result of the 1st AS-CSP, only the Ancillary Services Procurement Agreements (ASPA) for the thirty-six (36) bidders were executed and filed due to non-acceptance of the award of two winning bidder. 50 Entitled “Designating TransCo as Grid Owner to Participate in the Preparation, Review, and Evaluation of the Transmission Development Plan (TDP)” POWER DEVELOPMENT PLAN 2023-2050 108 === pdp-2023-2050-ch3-page-109.pdf === 7. Interconnect the Luzon, Visayas, and Mindanao grids Having an interconnected grid system is one of the visions for the Philippines’ electric power industry. Currently, Luzon and Visayas are already interconnected, while the integration of Mindanao is ongoing through the Mindanao-Visayas Interconnection Project, which is targeted to be completed by January 2024. To enable greater power supply import and export between the Luzon and Visayas grid, the Luzon–Visayas High Voltage Direct Current Bipolar Operation project is also proposed. Through an interconnected power network, the country can optimize its indigenous energy resources, such as natural gas in Luzon, geothermal in Visayas, and hydro in Mindanao. 8. Policy development on Smart Green and Grid Plan (SGGP) The DOE is currently formulating the Smart and Green Grid Plan (SGGP) that aims to address major challenges confronting the electric power industry, like grid congestions, as it aspires to move its power system to be smart and capable of incorporating an increasing amount of variable renewable energy in the generating mix. The SGGP's goal is to provide a set of projects for grid upgrades, as well as high-priority modernization projects that will ensure that the energy transmission plan of the DOE will be achieved. 9. Interconnections of Batangas-Mindoro; Quezon-Marinduque; CatanduanesCamarines Sur; Palawan-Mindoro For the Batangas-Mindoro interconnection project, the linking of the Mindoro with the main Luzon Grid was envisioned to provide the island access to bulk generation sources in the main grid while at the same time providing the means to export possible excess power once the generation potentials, including RE-based plants, within the island have been developed. With the envisioned interconnection of Mindoro Island to the Luzon Grid, the province of Palawan will be the next big island to be interconnected in terms of land area and energy demand. By connecting the existing Palawan grid to the Luzon grid via Mindoro Island, the province's present energy mix, which is primarily oil-based, is expected to depart from traditional sources in the coming years. This is owing to the anticipated introduction of renewable energy power plants, for which Palawan has a strong potential. On the other hand, the proposed Quezon-Marinduque Interconnection Project involves interconnecting the island of Marinduque to the Luzon Grid through a submarine cable from General Luna, Quezon to Sta. Cruz, Marinduque. It aims to address the expected long-term development in the island province of Marinduque. Lastly, the Camarines Sur–Catanduanes Interconnection Project aims to link the Catanduanes Island to the Luzon Grid and provide Catanduanes access to more reliable and competitive generation sources. POWER DEVELOPMENT PLAN 2023-2050 109 === pdp-2023-2050-ch3-page-110.pdf === 10. Interconnect off-grid islands to the main grid A significant number of islands and far-flung areas in the country remain isolated from the main grid. These are classified as off-grid areas, which are the majority being operated and managed by the NPC-SPUG. In line to build one Philippine grid system, the DOE promulgated Department Circular No. DC2019-01-00151. This policy includes the assessment of economic feasibility and timeline for the eventual interconnection of off-grid areas into the main grid. It also requires the NGCP to prepare a report or an annual program for the interconnection of off-grid areas into the main grid to be integrated into the TDP. 11. Encourage looping of Luzon Grid and Visayas Sub-grids The DOE envisioned the power system to have an extension and looping configuration in the three main island Grid of the country, providing an alternate transmission corridor to far-flung and radially connected areas for much more reliable power supply. 12. Assessment of the Renewal of the Concessionaire Agreement Part of the objective of the DO2023-06-0018 is to have the other state-run firms like TransCo to have their respective participation in the audit undertaking which shall be centered on the performance of the transmission network provider and system operator in keeping with the provisions of its 25-year concession agreement with the government when it comes to the operation of the country’s transmission facilities. Goal 1: Energy Security, Resiliency, Affordability and Sustainability 3. Distribution Short Term 2023-2024 • • • • • Enhance digitalization of Distribution Development Plans Ensure timely completion of Distribution Development Plans Enhance the existing Competitive Selection Process Policy Conduct policy review on the regulation and performance of Distribution Utilities Review and develop climateproof standards for distribution utility infrastructure. Medium Term 2025-2028 • • Develop policy to incentivize distributed energy resources and prosumer Supplement existing policy toward smart grid systems and interoperability Long Term 2029-2050 • • • Transition to Smart Grid to improve the reliability of distribution facilities Increase utilization of RE resources for power generation Encourage consumers to utilize RE for non-power productive application 51 Entitled, “Prescribing the Omnibus Guidelines on Enhancing Off-Grid Power Development and Operation” POWER DEVELOPMENT PLAN 2023-2050 110 === pdp-2023-2050-ch3-page-111.pdf === 1. Enhance digitalization of Distribution Development Plans The DDP must be responsive to the developments in the electric power industry, thus the need to digitalize and optimize the current DDP Forms through the implementation of digital tools and platforms for efficient management and monitoring. This includes the updating of the existing DDP Forms and the creation of a database information system. The current DDP Forms shall be updated to integrate the new policies, laws, rules, and regulations into a single, uniform, detailed, and comprehensive DDP format. Likewise, a DOE DDP Information System shall be developed to serve as a database system of the contents of the DDP. This will be used internally by the DOE for easy processing of the information contained in the DDP, and externally by providing easy access to stakeholders of the DDP information to be accessible via the DOE website. 2. Ensure timely completion of Distribution Development Plans Pursuant to Rule 7, Section 4(p) of the EPIRA-IRR and Department Circular No. DC2004-02-00252, the DUs shall prepare and submit to the DOE an annual DDP not later than the 15th of March every year. In the case of ECs, it shall be submitted through the NEA for review and consolidation. Thereafter, the NEA shall submit to the DOE the National Electric Cooperatives Distribution Development Plan (NECDDP) not later than the 15th of March every year. To assist the DUs in the preparation of a comprehensive DDP and ensure that the submissions are in accordance with the timelines set forth under the EPIRA, the DUs shall submit their initial DDP every 25th of January of each year for the DOE and NEA’s review pursuant to Section 5.2 of DC2021-03-000353. By March 15, the DUs shall submit their final DDP reflecting the changes based on the comments and recommendations of the DOE and NEA. With the implementation of the said timelines, the DUs are expected to prepare and submit a comprehensive DDP on or before March 15. The NEA shall also be able to consolidate the NECDDP prior to its endorsement to the DOE by March 15. To further strengthen the timely submission of DDP, the DUs are mandated to upload their latest and duly accepted Power Supply Procurement Plan in the DOE CSP Ebased Portal on or before June 30 as provided under Section 4.2 of DC2023-060021. Considering that the plan is crucial in achieving a reliable power supply, the DOE and NEA require the timely preparation and submission of DDP by the DUs. The DOE is also working to further streamline the planning procedures and processes to ensure that the DUs will be able to comply with the timeline in the execution of CSP and project implementation. As part of streamlining the planning procedures and 52 Entitled, “Prescribing the Guidelines for The Formulation of a Five-Year Distribution Development Plan Pursuant to Section 2 Of Department of Energy Circular No. 2003-12-011, Entitled “Enjoining All Distribution Utilities to Supply Adequate, Affordable, Quality and Reliable Electricity” 53 Entitled, “Prescribing the Policy and Guidelines for the Formulation of the Distribution Utilities Distribution Development Plan Integrating the Relevant Laws, Policy Issuances, Rules and Regulations” POWER DEVELOPMENT PLAN 2023-2050 111 === pdp-2023-2050-ch3-page-112.pdf === processes, DOE has to include discussions with ERC in fast-tracking CAPEX approval from the submitted DDPs for the immediate implementation of plans and programs of the DU. 3. Enhance the existing Competitive Selection Process Policy On 30 June 2023, the DOE issued Department Circular No. DC2023-06-0021, which was published in The Daily Tribune and Business World on 04 July 2023, and took effect on 18 July 2023. The said DC amended the previous policies on the CSP which aimed to streamline the conduct of CSP and the responsibilities of the DOE, ERC, and NEA under the EPIRA that is adaptable and flexible to the needs of the DUs to ensure efficient, timely, and transparent procurement of power supply to the captive market. The issuance of this policy will also pave the way for the enhancement of the existing CSP E-based Portal. 4. Conduct policy review on the regulation and performance of Distribution Utilities This is a continuous assessment of the DOE to harmonize the policy and regulatory framework applied to and adopted by DUs. The objectives of this activity are as follows: a) Evaluate the quality of service provided by DUs in their respective franchise areas based on set performance standards. b) Review existing laws, Department Circulars, ERC Resolutions, and other issuances related to DUs’ regulatory framework and rate-making methodology. c) Seek key energy agencies’ evaluation of the current regulations applied to private DUs and ECs. d) Recommend solutions to improve the quality of service provided to all electricity consumers, where both private DUs and ECs conform to the same operational performance standards. 5. Review and develop climate-proof standards for Distribution Utility infrastructures The DUs shall ensure a resilient energy infrastructure through the adoption of energy resiliency in their plans and programs to mitigate the potential adverse effects of disasters on the distribution system in accordance with Department Circular No. DC2018-01-000154. To further support the implementation of the policy, it aims to strengthen the distribution system and improve the resilience against naturally induced hazards through the following: a) Review of the existing distribution construction standards generally adapted by the DUs; b) Evaluation of the performance of the distribution system built using the present standards during the occurrences of naturally induced hazards; and 54 Entitled, “Adoption of Energy Resiliency in the Planning and Programming of the Energy Sector to Mitigate Potential Impacts of Disasters” POWER DEVELOPMENT PLAN 2023-2050 112 === pdp-2023-2050-ch3-page-113.pdf === c) Upgrade the present standards to improve the DU’s performance during the occurrence of natural hazards or force majeure events. 6. Develop policy to incentivize distributed energy resources and prosumer On 19 October 2022, the ERC issued Resolution No. 11, Series of 202255 which aims to encourage the development and utilization of DERs with the following objectives: a) Provide the guidelines, requirements, and standards for the interconnection of DER to address engineering, power quality and reliability, and safety concerns; b) Provide for applicable requirements in securing a COC consistent with existing ERC issuances and any amendment/s thereto; c) Establish pricing methodologies for DER; and d) Promote efficient and cost-effective energy planning and monitoring using the data gathered. The DOE plans to develop a policy to encourage the development of DER and incentivize the prosumers (e.g., tax credits), like the privileges and benefits of other RE technologies. 7. Supplement existing policy toward smart grid systems and interoperability The National Smart Grid Policy Framework and Roadmap for DUs was established in 2020 through DC2020-02-0003. Due to challenges in the acquisition and implementation of smart grid facilities, the majority of the DUs are still at Level 0 and/or 1 based on their Smart Distribution Utility Roadmap (SDUR). The DOE shall review the status of the implementation of the smart grid policy and the SDUR of the DUs to identify the challenges and necessary government assistance to fully implement the policy. A supplemental policy may be issued to improve and support the full implementation of the smart grid program. 8. Transition to Smart Grid to improve the reliability of distribution facilities In the long term, the DOE envisioned the full transition to a smart grid and aim to have a reliable, flexible, resilient, and secure automated distribution system integrated with decentralized energy sources. The modernized distribution system is expected to promote consumer empowerment and to influence consumer behavior towards efficient utilization of energy. 9. Increase utilization of RE resources for power generation In support of the objective of having clean energy, the DUs are encouraged to contract their power supply requirements to RE power suppliers. Likewise, the DUs are also encouraged to develop RE greenfield power projects to provide additional generation capacity. This is in addition to the DUs compliance with the RPS requirements and other RE-related policy issuances. 55 Entitled, “A Resolution Adopting the Rules Governing Distributed Energy Resources (DER)” POWER DEVELOPMENT PLAN 2023-2050 113 === pdp-2023-2050-ch3-page-114.pdf === 10. Encourage consumers to utilize RE for non-power productive application The consumers are encouraged to utilize the non-power applications of RE technologies such as drying, heating, and cooling which will have a beneficial contribution in boosting the economy. To further encourage the consumers, the DOE is looking into developing policy issuances and support mechanisms to provide incentives to consumers utilizing RE for non-power productive applications. Goal 2: Transparent and Fair Playing Field in the Power Industry 4. Supply Short Term 2023-2024 • • • • Implement RCOA in Mindanao Implement Retail Aggregation in Luzon, Visayas, and Mindanao Comprehensive Review of the Retail Rules (switching and disconnection) Amendments to WESM and Retail Rules and Manuals regarding Implementation of the Electric Retail Aggregation Program Medium Term 2025-2028 • • • Adopt lower thresholds for RCOA in Luzon, Visayas, and Mindanao Continuing review of retail rules and manuals Develop policy for enhanced and digitized customer switching procedure Long Term 2029-2050 • • • Further lowering of the RCOA threshold up to the household level Continuing review of retail rules and manuals Implement digitized customer switching procedure 1. Implement RCOA in Mindanao Upon implementation of the commercial operation of WESM in Mindanao, the DOE initiated to review the policies for the RCOA, Retail Aggregation, and GEOP in the region. A TWG was formed together with the ERC, Independent Electricity Market Operator of the Philippines (IEMOP), and Philippine Electricity Market Corporation (PEMC) to conduct a thorough review and harmonization of the relevant rules and policies, along with the conduct of public consultations and forums on the proposed department circular for the commencement of RCOA and GEOP in Mindanao. These activities will be done to gather valuable insights specific to Mindanao, which has peculiar industry characteristics different from Luzon and Visayas, where the existing RCOA policies are based and derived. Pursuant to ERC Resolution No. 12 Series of 202056, separate rules and procedures will be developed and implemented by the ERC for the RCOA in Mindanao. Further, all entities and persons who intend to supply electricity in the retail market shall secure a license or authorization from the ERC. The target declaration of the commercial operation of RCOA, and GEOP in Mindanao will be on 26 December 2023. 56 Entitled, “A Resolution Prescribing the Timeline for the Implementation of Retail Competition and Open Access” POWER DEVELOPMENT PLAN 2023-2050 114 === pdp-2023-2050-ch3-page-115.pdf === 2. Implement Retail Aggregation in Luzon, Visayas, and Mindanao The Rules for the Electric Retail Aggregation Program took effect on June 24, 2022, during the ERC’s Pilot Implementation of Retail Aggregation in UP Diliman Campus through the signing of the Memorandum of Understanding between the University of the Philippines and Meralco. As mandated by the EPIRA, the ERC shall establish a competitive framework in the electricity markets through the issuance of rules and regulations necessary to govern the Competitive Retail Electricity Market (CREM). Among the ERC’s role is to promulgate rules and regulations that shall ensure a level playing field for all market participants, the prevention of anti-competitive behavior, as well as the registration and qualifications of the suppliers and customers in the electricity markets, therefore the Retail Aggregation Program was piloted by the ERC. Upon implementation of the RCOA and GEOP in Mindanao, Retail Aggregation will likewise be implemented. 3. Comprehensive Review of the Retail Rules (switching and disconnection) To address the challenges of switching to a Retail Electricity Supplier (RES) raised by Contestable Customers, the ERC has issued Resolution No. 01, Series of 202357 amending Section I, Article II of the ERC Rules supplementing the switching and billing process and adopting a disconnection policy for the contestable customers. This Resolution provides the following: a) Not allowing Eligible End-users to switch to a RES, shall it have an outstanding balance with its Network Service Provider, in case of an initial switch. b) Allowing a Contestable Customer, already being serviced by a RES to switch or to be supplied by a new RES or Supplier of Last Resort (SOLR) notwithstanding the existence of an outstanding balance. 4. Amendments to WESM and Retail Rules and Manuals regarding Implementation of the Electric Retail Aggregation Program The WESM and Retail Rules and Manuals shall be harmonized with all the policy issuances of the DOE and the ERC relating to the implementation of the Electricity Retail Aggregation Program. Hence, the concerned stakeholder may propose amendments to the WESM and Retail Rules and Manuals to the Rules Change Committee (RCC) for review and approval of the PEM Board. The proposals will then be endorsed to the DOE for review and final approval. 5. Adopt lower thresholds for RCOA in Luzon, Visayas, and Mindanao Complementing the study currently being undertaken by PEMC and ERC, the DOE will examine the impacts of lowering the threshold of the RCOA, which is envisioned to reach the household level. The proposed DOE study shall: 57 Entitled, “Amendment to the ERC Rules Supplementing the Switching and Billing Process and Adopting a Disconnection Policy for the Contestable Customers” POWER DEVELOPMENT PLAN 2023-2050 115 === pdp-2023-2050-ch3-page-116.pdf === a) Assess the readiness of the retail market and suppliers for greater RCOA participation; b) Evaluate and harmonize existing local guidelines and resolutions in support of RCOA; c) Analyze the economic and technical impact of lowering the RCOA threshold on RES and local RES operated by private entities and DUs; and d) Compare the current and future RCOA policy and regulatory frameworks with other jurisdictions having similar market designs. 6. Continuing review of retail rules and manuals The WESM and Retail Rules and Manuals shall be harmonized and updated regularly to be up to date with all the policy issuances of the DOE and the ERC. Hence, the concerned stakeholder may propose amendments to the WESM and Retail Rules and Manuals to the Rules Change Committee (RCC) for review and approval of the PEM Board. The proposals will then be endorsed to the DOE for review and final approval. 7. Develop policy for enhanced and digitized customer switching procedure The IEMOP as the Central Registration Body shall develop the enhanced process and digitalized procedures for the effective and efficient implementation of switching of Contestable Customers. 8. Implement digitized customer switching procedure The IEMOP as the Central Registration Body shall develop the enhanced process and digitalized procedures for the effective and efficient implementation of switching of Contestable Customers. POWER DEVELOPMENT PLAN 2023-2050 116 === pdp-2023-2050-ch3-page-117.pdf === Goal 2: Transparent and Fair Playing Field in the Power Industry 5. Electricity Market Short Term 2023-2024 • • • Full commercial operation of the WESM in Mindanao Commercial operation of the Initial Reserve Market (Phase 1) Policy support to Renewable Portfolio Standard compliance Study Electricity Derivatives Market (Contracts for Differences) Medium Term 2025-2028 • • • • Implement the Enhanced Reserve Market (Phase 2) Implement Electricity Derivatives Market (Contracts for Differences) Continuous improvement of Market design and rules Study market design to allow higher RE penetration and EV Demand Response Long Term 2029-2050 • • Continuous improvement and enhancement of the design and rules of the electricity market Enhance market design to facilitate integration of RE and EVs in the electricity market 1. Full commercial operation of the WESM in Mindanao On 23 December 2022, the DOE promulgated Department Circular No. DC2022-12003958 providing for the commercial operations date of the WESM in Mindanao starting 26 January 2023. To support the Trading Participants (TP) in their transition to the WESM operation, the said Circular provides that all the TPs with pending requirements are deemed registered in the Market, provided that full compliance shall be observed not later than 25 April 2023. In addition, compliance to Prudential Requirements (PR), Realtime Monitoring Requirements (RTM), and Dispatch Conformance Standards (DCS) were also given relaxation for three (3) months. However, based on the report submitted by the Market Operator (MO) to the DOE, as of 20 April 2023, some TPs are still yet to complete their WESM Registration. Thus, on 26 April 2023, the DOE issued an Advisory Extending the Relaxation of Submission of Registration Requirements in the WESM until 25 June 2023. Meanwhile, another Advisory was issued on 11 May 2023 for the declaration of the implementation of a Single Settlement for the Luzon, Visayas, and Mindanao Regions in the Wholesale Electricity Spot Market (WESM) starting on the May 2023 billing period, due to the energization and actual energy flow in the MindanaoVisayas Interconnection. The integration of the Mindanao grid in the WESM is a significant leap toward achieving the country’s goal of having “one grid, one market” despite being 17 years overdue. DOE initially launched the WESM in Luzon in 2006 and in Visayas in 2010. 58 Entitled, “Declaring the Commercial Operation of the Wholesale Electricity Spot Market (WESM) in the Mindanao Grid” POWER DEVELOPMENT PLAN 2023-2050 117 === pdp-2023-2050-ch3-page-118.pdf === 2. Commercial operation of the Initial Reserve Market (Phase 1) One of the key features of the WESM is the co-optimization of energy and reserves through the Reserve Market. In the Reserve Market, both energy and reserve offers are incorporated in the Market Dispatch Optimization Model of the WESM’s Market Management System to determine optimal schedules and prices to simultaneously satisfy the energy and reserve requirements of the grid at any given interval while considering constraints such as cost and transmission limits, among others. As earlier mentioned, the DOE promulgated Department Circular No. DC2021-03000959 which defined the general framework for the operation of the Reserve Market. Its salient features are as follows: a) Co-optimization of energy and reserves, protocols for the submission of offers, and determination and implementation of dispatch schedules; b) Operational cap, locational reserve sharing, and scarcity hierarchy for reserves; c) Tradeable AS categories and their minimum technical specifications and required levels; d) Criteria for the readiness of market systems and corresponding responsibilities of the power industry participants, and e) Appropriate pricing, billing, settlement procedures, mitigating measures, and cost recovery mechanisms to ensure consumer protection. The Circular, likewise, provided the supplemental policies relative to AS, particularly on the accreditation of third-party AS testing entities and the conduct of CSP for the procurement of AS contracts of the SO. The Reserve Market is targeted to be implemented following the enhancements to WESM Design and operations and is subject to the readiness assessment of the WESM’s Governance Arm and the DOE. Through a DOE Advisory issued on 26 June 2023, the Reserve Market Trial Operation Program (TOP) was commenced by the IEMOP. The successful conduct of the Reserve Market TOP is one of the prerequisites for the commercial operations of the Reserve Market, which is targeted to be launched by the end of 2023. The DOE will likewise promulgate a Department Circular declaring the commercial operations of the Reserve Market once all the market participants, interfaces, and systems are ready for full operations. 3. Policy support to Renewable Portfolio Standard compliance The RE Market involving the trading of Renewable Energy Certificates (RECs) will support the compliance of electric power industry participants to the Renewable Portfolio Standards (RPS). The regular updating of the RE Market Rules and Market Manuals will be continuously sought to cater to the diverse needs and growth of the RE Market and ensure that the market will remain relevant and responsive to the needs of the sector. 59 Entitled, “Adopting A General Framework Governing the Operationalization of the Reserve Market in the Wholesale Electricity Spot Market and Providing further Policies to Supplement DC2019-12-0018” POWER DEVELOPMENT PLAN 2023-2050 118 === pdp-2023-2050-ch3-page-119.pdf === 4. Study Electricity Derivatives Market (Contracts for Differences) The IEMOP, as coordinated with the DOE, has an ongoing study regarding the Electricity Derivatives Market, particularly Contracts for Difference, which can be incorporated and integrated into the Philippine WESM. The Electricity Derivatives Market can provide different benefits to the power sector such as price hedging from volatile WESM prices, minimized pricing risks, increased private sector competition and participation, and incentivized delivery of the least-cost electricity. The proposed Electricity Derivatives Market will involve IEMOP as the Electricity Derivatives Market Operator subject to compliance with the Securities and Exchange Commission’s Securities and Regulation Code and its implementing rules and regulations. The implementation of the Electricity Derivatives Market will provide another venue for the market participants in sourcing their supply requirements. 5. Implement the Enhanced Reserve Market (Phase 2) After Phase 1 of the Reserve Market, Phase 2 shall be implemented incorporating the classification of reserves in the Philippine Grid Code 2016 and the corresponding technical specifications and testing guidelines. Phase 2 shall integrate all the enhancements of the Reserve Market and the amendments to the WESM Rules and Market Manuals pertaining to its operations and compliance, among others. 6. Implement Electricity Derivatives Market (Contracts for Differences) Higher RE penetration in the electricity market shall require more Ancillary Services in the power industry to balance the intermittent nature of variable RE. Market design enhancements particularly on the different products that can be offered in the Reserve Market and demand side participation will be very beneficial and essential in addressing the challenges imposed by the growth of RE in the Philippines. Studying the said enhancements will be grounded on existing policies and laws related to improving the electricity markets to accommodate the integration of higher RE penetration while ensuring the reliability, stability, and security of the electric power supply. 7. Continuous improvement and enhancement of the design and rules of the electricity market Policy developments will be continuously pursued considering the latest updates and innovations in the electric power industry particularly for electricity markets. Amendments and enhancements of the design and rules of the electricity markets shall be implemented with the end in view of ensuring the competitiveness, efficiency, reliability, and transparency of the market while striving for the delivery of the least-cost electricity to consumers. The integration of various market mechanisms shall entail steady updating of rules and manuals to keep abreast with the latest innovations in the power industry and meet the needs of the participants. POWER DEVELOPMENT PLAN 2023-2050 119 === pdp-2023-2050-ch3-page-120.pdf === Goal 3: Electricity Access for All 6. Off-Grid Development Short Term 2023-2024 • • • • Monitor and assess the implementation of the Omnibus Policy, Small Grid SO Policy Implement graduation and rationalization of UC-ME subsidy Policy Review and develop policy on the modernization of off-grid power systems and operation Increase utilization of RE resources for power generation and hybridization Encourage consumers to utilize RE for non-power productive application Medium Term 2025-2028 • • • • Interconnections of BatangasMindoro; Quezon-Marinduque; Catanduanes-Camarines Sur; Palawan-Mindoro Study intraconnection of off-grid islands Enhance graduation and rationalization of UC-ME Subsidy system Continuous modernization of offgrid power system and operation Long Term 2029-2050 • Implement viable intraconnection of off-grid island 1. Monitor and assess the implementation of the Omnibus Policy, Small Grid SO Policy In accordance with the provisions set forth in the Department Circular No. DC201901-0001 (Omnibus Policy), the 2024-2028 Missionary Electrification Development Plan (MEDP) shall be issued to provide major updates from the 2021-2025 MEDP and to present new policies, strategies, and governance reforms for off-grid power development and missionary electrification. Further, the DOE shall evaluate the DC2019-01-0001 for a potential supplemental policy relative to off-grid power development and monitoring to further enhance data management and analytics and formulate proactive policies, plans, and programs. As mentioned in Chapter 1, the DOE issued the Department Circular No. DC202111-003960 or the Small Grid SO Policy to formulate grid interconnection development plans and programs for the off-grid areas and prepare the Distribution Utilities and Generation Companies for the assumption of TransCo as Small Grid SO and the eventual interconnection of the small island grids into the Grid. Subsequently, the DOE shall monitor the implementation of the plans and programs of the TransCo as the Small Grid SO of specific off-grid areas including its role in capacitating the Distribution Utilities in formulating its island interconnection development plan which shall form part of its Distribution Development Plan. 60 Entitled, “titled “Mandating the National Transmission Corporation (TransCo) as Small Grid System Operator (SO) in Specific Off-grid Areas'' or Small Grid SO Policy POWER DEVELOPMENT PLAN 2023-2050 120 === pdp-2023-2050-ch3-page-121.pdf === 2. Implement graduation and rationalization of UC-ME subsidy Policy The rationalization of the Universal charge for missionary electrification (UC-ME) subsidy aims to maximize cost recovery of the electricity service through a more innovative tariff mechanism based on the capacity to pay by the end-users to be supported by corresponding improvement in the electricity services. The main strategy for the subsidy rationalization framework shall be the development of the capacity of each DU with an off-grid area to formulate a holistic and integrated UC-ME Subsidy Rationalization Plan that outlines the various measures that will be employed by the DU and the local power stakeholders to rationalize the utilization of UC-ME subsidy within its franchise area. The UC-ME Subsidy Rationalization Plan shall form part of the DDP and the Power Supply Procurement Plan (PSPP) to be submitted to the DOE in time with the annual submission of DDP and PSPP. The major strategies to graduate from and rationalize the UC-ME subsidy are as follows: a) The interconnection of the off-grid islands into the grid, and in the case of MGSPs, the interconnection of unserved and underserved areas into the distribution lines of the DUs without adverse impact to the overall distribution system. Upon interconnection, the provision of UCME ceases. b) On the supply side in off-grid areas, the main strategy is the entry of reasonable-cost RE and advanced generation technologies to replace or hybridize with the existing diesel and bunker power systems. This can be done through least-cost generation planning. For small applications, the promotion of RE-based hybrid microgrids is important. Capacity building of off-grid DUs in conducting CSP for their new requirements must also be undertaken. c) On the demand and consumer side, there is a need to rationalize the current level of SAGR. UC-ME subsidy must prioritize low-income consumers in off-grid areas. Overall UC-ME subsidy to consumers must also be reduced which is commensurate to the current and foreseen economic progress in these areas. d) The energy efficiency programs and activities at the customer level shall be implemented to mitigate the impacts of the current high cost of generation in off-grid areas and the application of UC-ME subsidy rationalization to the electricity consumers in off-grid areas. 3. Review and develop policy on the modernization of off-grid power systems and operation. The DOE shall develop a policy to supplement the provisions set forth in Rule 8 of the Omnibus Policy for the promotion of reliability and efficiency for off-grid power systems including modernization. The goal of this policy shall transform the existing configuration of off-grid power systems into a system that can accommodate new and emerging technologies towards enhancing quality, reliability, and resiliency. Moreover, the policy shall encourage the distribution utilities to invest in new technologies and devices that will improve the operation and management of the POWER DEVELOPMENT PLAN 2023-2050 121 === pdp-2023-2050-ch3-page-122.pdf === distribution systems in off-grid areas, such as SCADA, modern telemetry and communication system, and other similar devices and equipment. 4. Increase utilization of RE resources for power generation and hybridization To achieve greater utilization of renewable energy resources, the DOE has issued the Department Circular No. DC2023-05-001461 to require Mandated Participants to source or procure and subsequently maintain a certain percentage of their generation from eligible RE resources, consistent with the optimal supply mix per off-grid area. 5. Encourage consumers to utilize RE for non-power productive application The DOE shall study and develop policy on the utilization of renewable energy (RE) for non-power productive applications, particularly in off-grid areas. RE sources offer a viable and sustainable alternative for non-power productive applications such as heating, cooling, and transportation which often rely on fossil fuels. Further, RE for non-power applications can achieve a level of energy independence for consumers which benefits economically and increases resiliency. 6. Interconnections of Batangas-Mindoro; Camarines Sur; Palawan-Mindoro Quezon-Marinduque; Catanduanes- The DOE, in coordination with the TransCo and its concessionaire or successor-ininterest, shall monitor the implementation of various major interconnection projects such as the Batangas-Mindoro Interconnection Project (BMIP), QuezonMarinduque Interconnection Project (QMIP), and Catanduanes-Camarines Sur Interconnection Project (CCIP) which will provide access for the above-mentioned large island grids to generation sources in the main grid. 7. Study intraconnection of off-grid islands The archipelagic nature of the country presents a unique challenge in ensuring reliable and sustainable energy access for off-grid islands. The DOE shall continue to monitor the implementation of interconnection and intraconnection projects for off-grids islands in coordination with TransCo. Further, TransCo shall continue to conduct a comprehensive study to explore and implement intraconnection solutions for off-grid islands to achieve energy connectivity for economic development, social well-being, and environmental sustainability. 8. Enhance graduation and rationalization of UC-ME Subsidy system The DOE shall continue to improve the implementation of the provisions set forth in the UC-ME policy to ensure the sustainability and effectiveness of the subsidy system. In addition, the DOE shall develop an enhancement of the UC-ME subsidy system which aims to streamline the process and programs, promote efficiency, and foster equitable access to electricity among the off-grid and missionary areas. Further, 61 Entitled, ““Promulgating the Revised Rules and Guidelines Governing the Operationalization of the Renewable Portfolio Standards for Off-Grid Areas Pursuant to Section 12 of the Renewable Energy Act of 2008” POWER DEVELOPMENT PLAN 2023-2050 122 === pdp-2023-2050-ch3-page-123.pdf === 9. Continuous modernization of off-grid power system and operation The evolving needs of communities and industries in the off-grid and missionary areas shall involve the continuous modernization of off-grid power systems and operation to ensure reliable, resilient, and sustainable energy access. This modernization shall involve the alignment of technological advancements in accordance with the standards and policies including the community needs and environmental sustainability for lasting positive impact. 10. Implement viable intraconnection of off-grid island The DOE shall review the existing policies and programs for the implementation of viable intraconnection of off-grid islands. Intraconnection of off-grid islands will enable such areas to ensure reliable and efficient energy access, fostering economic development, and minimizing environmental impacts. Goal 3: Electricity Access for All 7. Total Electrification Short Term 2023-2024 • • • • Publish the National Total Electrification Roadmap (NTER) Conduct Pilot Microgrid System Service Provider – Competitive Selection Process (MGSP-CSP) Issue supplemental policies on the operationalization of Microgrid Systems Act Achieve household electrification target rate for 2023 and 2024 based on 2020 Census Develop an improved electricity access statistics and monitoring system Medium Term 2025-2028 • • • Achieve household electrification target rate for 2025-2027 and 100% household electrification target by 2028 Full implementation of RA 11646 (Implementation of NTER and Conduct of MGSP-CSP) Continuous improvement of electricity statistics and monitoring system Long Term 2029-2050 • • Ensure electricity access to all household in the country Continuous Improvement and Enhancements of Policies, designs, and strategies to ensure electricity access for all households in the country 1. Publish the National Total Electrification Roadmap (NTER) The NTER aims to meet the total electrification services at 100% by 2028, consistent with the declared policy of the State to ensure and accelerate the total electrification of the country as provided in Sec. 2(a) of the EPIRA of 2001. EPIRA also mandates the DUs to provide universal service in their franchise areas including unviable areas at a reasonable time. Consistent with its mandates, the DOE serves as the oversight agency for policy, planning, and implementation of this NTER. The NTER rationalizes all electrification initiatives, interventions, and strategies toward sustainable energy development, POWER DEVELOPMENT PLAN 2023-2050 123 === pdp-2023-2050-ch3-page-124.pdf === improvement of the quality of life of every Filipino as well as reliable, and secure electricity services at reasonable rates in unserved and underserved areas while promoting private sector participation for electrification efforts, and prioritizing lowcost, indigenous, renewable, and environment-friendly sources of energy. The different electrification programs and activities shall be implemented in cooperation with NEA, NPC, all 149 DUs, the partner LGUs, and other Program partners, among others. The NTER covers the entire Philippines, including both grid and off-grid areas. The roadmap targets all households in the country, particularly those in unserved and underserved areas, which include remote communities, island communities, indigenous communities, mountainous regions, and geographically isolated areas. The roadmap will utilize a range of technologies and solutions to achieve universal access to electricity, including microgrids, household electrification connections, distribution line extensions, and solar home systems. The implementation of the roadmap will involve the collaboration and coordination of different stakeholders, including the DOE, NEA, NPC, DUs including, ECs, Private Investor-Owned Utilities (PIOUs), LGUs, private sector companies, and the communities themselves. Each stakeholder will have specific roles and responsibilities, such as providing technical assistance, funding, and project management. The roadmap will also prioritize the participation and empowerment of local communities and indigenous peoples in the planning and implementation of electrification projects, in line with the principles of social inclusion and participatory governance. 2. Conduct Initial Microgrid System Provider – Competitive Selection Process (MGSPCSP) Pursuant to the provisions of RA No. 11646, the DOE will conduct a transparent CSP such as but not limited to auction, unsolicited proposal, and Swiss Challenge to determine a prospective MGSP. The awarded MSGP shall provide for an integrated power generation and distribution to the areas declared as unserved and underserved under the DOE’s NTER. The first batch of MSGP–CSP will happen by the 4th quarter of 2023. The invitation to bid to cover all unserved and underserved areas in the Philippines will be in batches. The batches will serve as prioritization based on the viability of the areas for microgrid systems, number of households to be served and total demand as projected by the concerned DUs which will undergo evaluation in coordination with the concerned DUs, NPC, and NEA. 3. Issue supplemental policies on the operationalization of Microgrid Systems Act and Total Electrification Support Programs a) Supplemental Policy on the LTER Development Guidelines Pursuant to RA No. 11646, under Section 15, the DU shall integrate the LTER in its DDP. Accordingly, the DOE shall issue a supplemental policy on the LTER Development to guide the DUs in their LTER preparation harmonized with their DDP. This will institutionalize the submission of the LTER and provide further the roles of the DOE, NEA, NPC and the DUs for the implementation of projects to attain total electrification. Further, this LTER will replace the barangay and household electrification provision of the DDP. POWER DEVELOPMENT PLAN 2023-2050 124 === pdp-2023-2050-ch3-page-125.pdf === b) Supplemental Policy to DC2018-08-0021 (ER 1-94 Allocation and Digitized Financial and Reportorial Compliance Monitoring) On Chapter 1, the ER1-94 Funds were mentioned and utilized for COVID119 response projects pursuant to Department Circular No. DC2020-04-0008. Now that the state of public health emergency has been lifted, the ER1-94 resumed its implementation to its intended purpose as such, the EF will be utilized for electrification projects identified under Section 10.3 of DC 201808-0021. Accordingly, on the NTER Framework, the EF has been identified as one of the funding sources for the achievement of total electrification. To further efficiently and effectively utilize the EF, the DOE shall issue a supplemental guideline to have an equitable allocation to the DU hosting a power plant and serving the host communities and other DUs within the host province and region. c) Revised Policy for the implementation of the Total Electrification Project to include other Instrumentalities The DOE commenced the implementation of LFP-TEP in 2021, following the issuance of the TEP Policy 1–Policy Guidelines on the Implementation of LFPTEP to support the government thrust of achieving the total electrification of the country. The previously allocated LFP-TEP approved various projects and implemented by NEA and NPC. To intensify the effective and timely implementation of the LFP-TEP to support the DUs in achieving the Government goal of 100% Household electrification by 2028, the DOE encourages the active involvement of other qualified project implementers including the Higher Educational Institutions (HEIs), Nongovernmental Organizations (NGOs), qualified Distribution Utilities. Thus, this policy will be issued to prescribe the implementing guidelines to ensure efficient, sustainable, and appropriate electrification strategies to address the needs of remaining unserved and underserved households/areas. 4. Develop an improved electricity access statistics and monitoring system To provide a clearer picture of the country’s electrification situation, the DOE is keen on developing comprehensive electricity access statistics and monitoring systems. As an initial step in this undertaking, the DOE recently launched a Microgrid System and Photovoltaic Mainstreaming (PVM) dashboard which contains the microgrid systems and PVM dashboard database, relevant statistics, and a comprehensive listing of the existing microgrid and PVM installations. a) Visual Mapping Platform - Philippine Space Agency The DOE also aims to develop the platform that can assist in the validation of target NTER unserved households and areas with the use of Satellite Imagery and service offered by the Philippine Space Agency. In particular, real-time images of profile of areas offered for MGSP CSP will assist in the due diligence activity of the proponent, and for the case of the DOE will also assist in monitoring developments in the communities served by MGSP and by off-grid solutions implemented by the DOE and its attached agencies and by the Dus themselves. POWER DEVELOPMENT PLAN 2023-2050 125 === pdp-2023-2050-ch3-page-126.pdf === b) Crowdsourcing Application for Household Electrification Targeting (Phases 1-2) Further, the DOE aims to develop a Crowd-Sourcing Platform that enables voluntary reporting of unenergized households, its location for the DOE to address and program based on appropriate and available electrification solutions. In this way, there will be another tool that can assist the DOE, NEA, NPC and DU and other qualified third-party implementers of electrification projects of identifying areas and households who do not have access to electricity and implementing appropriate and sustainable solutions and provide electricity access. 5. Achieve household electrification target for 2023-2028 and 100% household electrification target by 2028 The DOE, through the TESC, aims to achieve 100% household electrification of the country using the total number of households from the PSA-POPCEN 2015 as the baseline. As earlier mentioned, the country’s electrification rate as of December 2022 stood at 96.17%, with the remaining 3.83% or 879,232 unserved households. To electrify these areas, the TESC will implement the following: a) Program-matching criteria and roll-out scheme to identify the appropriate electrification strategies for each unelectrified and unserved area and household; b) Customized electrification solutions considering the viability and geographical set-up of the area (contiguous, island, isolated, etc.); and c) Specific policies and programs separate for household, grid, and off-grid electrification. Pursuant to RA11646, each DU must submit their respective LTER to include all unserved and underserved households and areas indicating but not limited to the appropriate electrification solution, required funding sources, and target of implementation/completion year. In the medium- to long- term, the DOE’s thrust for 100% household electrification based on the latest PSA-POPCEN data will remain. The DOE shall continually improve its existing electrification strategies, utilize advanced and emerging technologies, and adopt innovative solutions, among others, to achieve this goal. Further, once the updated NTER is finalized, the Department will be releasing the revised projected household electrification targets based on the 2020 Census of Population. Moreover, the adoption of a new computation for electricity access rate will be discussed with the TESC to account all forms and initiatives for electrification of unserved households. Anchored by the strategies stipulated under the NTER, the energy sector’s goal is to meet its annual household electrification targets in the short-term period. POWER DEVELOPMENT PLAN 2023-2050 126 === pdp-2023-2050-ch3-page-127.pdf === 6. Full implementation of RA 11646 (Implementation of NTER and Conduct of MGSPCSP) In the medium- to long-term, the DOE’s goal is to accelerate the total electrification of the unserved and underserved areas of the country. The DOE with continuous collaboration with NEA and NPC, will ensure the full and effective implementation of RA 11646. As such, the DOE intends to conduct successful CSPs for prospective MGSPs in a transparent and timely manner. Furthermore, the DOE will make way to smoothen the processes that will ensure the private sector participation in off-grid electrification through the enhancement of the processes and developing competitive and suitable terms of reference to promote more competitive selection among MGSPs. 7. Continuous improvement of electricity statistics and monitoring system In addition to the launching and enhancement of the Microgrid and PVM dashboard, a comprehensive database of electricity statistics and monitoring systems is targeted to be developed in the medium-term. The database can be a critical tool in identifying effective electrification strategies that can serve as the basis for policy formulation. 8. Ensure electricity access to all households in the country As the population steadily increases, so does the total number of households. Given this reality, the Department will be firm in its total electrification agenda, and this will be pursued and guided with the latest available information on the census as a reference in implementing policies and programs. 9. Continuous Improvement and Enhancements of Policies, designs, and strategies to ensure electricity access for all households in the country To keep abreast with the ever-changing electrification landscape, the improvement of policies and strategies is one of the critical deliverables of the DOE in the long-term. This practice guarantees that the programs to be implemented are pragmatic and aligned with current trends and developments thereby facilitating expansion of access to reliable electricity services. POWER DEVELOPMENT PLAN 2023-2050 127 === pdp-2023-2050-ch3-page-128.pdf === 8. Overarching Policies and Program Goal 1: Energy Security, Resiliency, Affordability and Sustainability Goal 2: Transparent and Fair Playing Field in the Power Industry Goal 3: Electricity Access for All Short Term 2023-2024 • • Implementation of automated submission of reportorial requirements Establish an integrated power sector database Medium to Long Term 2029-2050 • • • • Fast-track the approval process for power facilities and infrastructure Implement the smart grid policy and roadmap Continuous evaluation and implementation of necessary amendments in the EPIRA Continuous improvement of power development planning and policymaking 1. Implementation of automated submission of reportorial requirements On 14 March 2023, the DOE promulgated Department Circular No. DC2023-03000562 which provides the distribution utilities with guidelines in filling up the templates for their reportorial requirements. On 12 April 2023, the DOE promulgated Department Circular No. DC2023-04-000663 with the objective to provide RES and Local RES with guidelines in filling up templates for their reportorial requirements. As of 30 June 2023, 116 DUs and 18 RES have successfully uploaded their reports covering the billing periods of January 2023 to May 2023. On 05 July 2023, the DOE started the enhancement of the DOE’s Electric Power Industry Database Management System (DEPDMS) to add new and improved existing features that will make the end-user experience better. The enhancement of the DEPDMS is not only limited to the comments and suggestions of the end-users during the various rollouts but also covers features that will help the DOE to monitor and generate reports, formulate policy, gather information, and interact with the end-users faster and easier. Also, it will prepare the system for future reportorial requirements of the DOE to easily create and configure on how to collect information from stakeholders. Through online submission of data, the DOE envisions providing an efficient way of report submissions from the power industry participants at the same time expecting an increase on the level of compliance from the stakeholders and reducing costs in the submission. 62 Entitled, “Providing Supplemental Policy for the Systematic Management of the DOE Reportorial Requirements for the Electric Power Industry Participants – Distribution Utilities” 63 Entitled “Providing Supplemental Policy for the Systematic Management of the DOE Reportorial Requirements for the Electric Power Industry Participants – Retail Electricity Suppliers”. POWER DEVELOPMENT PLAN 2023-2050 128 === pdp-2023-2050-ch3-page-129.pdf === 2. Establish an integrated power sector database As mandated under EPIRA, the DOE is required for the timely and complete provision of information that can be achieved through a single unified database or system that covers all the power industry sub-sectors. Undertaking this initiative will involve all the concerned power sector stakeholders from generation up to distribution. To date, the DEPDMS warehouses market data and grid information. This is in collaboration with both MO and SO. Similarly, DEPDMS also receives and processes reportorial requirements from various electric power industry participants i.e., Generation Companies, DUs, RES, and QTP in a safe, secure, timely, and efficient manner. The integrated database will enable the DOE to generate periodic reports containing valuable insights and conclusive information that will support the decisions of the national government for the power sector. 3. Fast-track the approval process for power facilities and infrastructure The DOE will continue to encourage the entry and utilization of needed power facilities and infrastructure by streamlining and fast-tracking approval and permitting processes of government services through the EVOSS System. EVOSS64 is an online system that allows for the coordinated submission and synchronous processing of all required data and information, providing a single decision-making portal for actions on applications for permits and certifications of a proponent for new power generation, transmission, and distribution projects. As of December 2022, the EPIMB currently has seven active processes under the EVOSS for the following applications: a) Clearance to Undertake SIS Endorsement to NGCP b) Certificate of Endorsement to ERC c) Certificate of Endorsement to Board of Investments d) Certificate of Endorsement to NCIP for Generation Projects e) Certificate of Endorsement to NCIP for Transmission Projects f) Certificate of Endorsement to PNP g) Application of Clearance for Direct Connection to the Grid Additional processes were also added to the EVOSS system, which were reviewed and developed by the EPIMB and the Investment Promotion Office from 2021 and were rolled out in the EVOSS portal on the first half of 2023: a) Certificate of Endorsement Point-to-Point Limited Transmission Facilities b) Letter of Endorsement to the Department of Agrarian Reform for Land Use Conversion c) SIS Exemption for Power Projects under 20 MW for Luzon and 5MW for Visayas and Mindanao d) Certificate of Endorsement to ERC for Microgrid Systems Provider 64 EVOSS https://www.evoss.ph/Home/DisplayFaq/6 POWER DEVELOPMENT PLAN 2023-2050 129 === pdp-2023-2050-ch3-page-130.pdf === 4. Implement the smart grid policy and roadmap The National Smart Grid Policy Framework and Roadmap for DUs was established in 2020 through Department Circular No. DC2020-02-000365 shall be fully implemented during the entire planning horizon. Smart grid uses advanced technologies modernizing and enhancing the efficiency of electrical grid infrastructure, ensuring power supply security and flexibility, and promoting consumer empowerment, among others. To realize this vision, a huge number of investments in the whole power supply chain is needed, along with strong regulatory support to implement smart grid projects. Since the promulgation of the above-cited policy, the DOE has continuously issued policies and programs that are supportive of the smart grid vision, such as the following: (a) Green Energy Auction Program; (c) National Framework for Energy Storage Systems; and (d) Competitive Selection Process among others. Shown in the illustration below the current update of SDUR as of December 2022: Table 54. SDUR Submission of DUs as of December 2022 Networks % Share Customer Service 28 28% Partially Level 1 51 52% 45 % Share 45% Level 0 16 16% Partially Level 2 1 1% 32 15 4 1 1 1 99 32% 15% 4% 1% 1% 1% 100% Level 1 1 1% Partially Level 3 1 1% Requires Resubmission 1 1% 99 100% Level 2 Total 5. Continuous evaluation and implementation of necessary amendments in the EPIRA Pursuant to EPIRA law, the DOE continues to perform its mandated function for the supervision, assessment, and monitoring of the EPIRA Implementation among others in complying with submissions of reportorial requirements which not only provide significant accomplishments and developments undertaken by the attached agencies as mandated but also to recognize the continuing challenges in the EPIRA implementation thus possible formulation of amendment in the Act may be done. The DOE has consolidated and reviewed the proposals being received from various industry stakeholders for the amendment of the EPIRA which seeks to widen the sources of energy, encourage investors in the power industry, empower the DOE, Energy Regulatory Commission, and other government-mandated agencies, and entities in the power sector, modernize the distribution sector, streamline and fast track processes on critical energy infrastructures that will ultimately increase the supply of energy, render efficient and optimal utilization and allocation of power, and lower electricity prices in the Philippines, among others. 65 Entitled, “Providing a National Smart Grid Policy Framework for the Philippine Electric Power Industry and Roadmap for Distribution Utilities” POWER DEVELOPMENT PLAN 2023-2050 130 === pdp-2023-2050-ch3-page-131.pdf === 6. Continuous improvement of power development planning and policymaking The DOE is committed to the continual improvement of the assessment and enhancement process of the country’s power development planning, which will seamlessly integrate emerging technologies, existing policies and programs, and adaptation to prevailing energy trends. By responding precisely to the dynamic shifts in the global energy landscape and incorporating this into the modeling simulation, the DOE works to provide the least-cost generation capacity expansion planning for the country. Conversely, policymaking necessitates a dynamic and responsive approach to keep in pace with the evolving energy trends. Periodic assessment of existing policies, identifying gaps, and addressing inefficiencies, among others, will be the future threading path of the DOE. These approaches may include, but are not limited to, Generation Adequacy per grid by assessing the Lossof-Load Expectation (LOLE) or Loss-of-Probability (LOLP), considering assessment including per-island power situation of Visayas grid, development of criteria for retiring power generation facilities based on their performance and operation in the power system, and updating the reliability indices for generating plant in the guidelines prepared by ERC in the Resolution No. 10, series of 202066. These improvements will be supported by the needed manpower, capacity building, and resources to the Department in order to achieve these goals. These endeavors and strategies are expected to transform the country’s power development planning into a dynamic and adaptive process. 66 ERC Resolution No. 10, series 2020: A Resolution Adopting the Interim Reliability Performance Indices and Equivalent Outage Days Per Year of Generating Units POWER DEVELOPMENT PLAN 2023-2050 131