# DC2020-02-0003 — National Smart Grid Policy Framework ## Department Circular No. DC2020-02-0003 **Providing a National Smart Grid Policy Framework for the Philippine Electric Power Industry and Roadmap for Distribution Utilities** Signed: 6 February 2020 | Secretary Alfonso G. Cusi Effectivity: 15 days after publication in at least two newspapers of general circulation --- ## WHEREAS RECITALS 1. RA 9136 (EPIRA) §2 — declared State policy to ensure quality, reliability, security, and affordability of electricity supply; protect public interest in rates and services; assure socially and environmentally compatible energy sources; encourage efficient energy use and demand-side management. 2. EPIRA §37 — DOE mandated to supervise restructuring of the electric power industry; formulate policies for comprehensive energy supply/use programs; prepare and update annual Power Development Program (PDP) integrated into the Philippine Energy Plan (PEP); ensure reliability, quality, and security of supply; facilitate DU reforms for greater efficiency and lower costs. 3. Smart Grid uses innovative technologies to modernize the electric grid infrastructure to address 21st century challenges of consumer empowerment, energy supply flexibility and security, grid performance and asset utilization, and environmental protection. 4. DC2013-03-0003 (11 March 2013) — created Inter-Agency Steering Committee for SG Policy Framework and Roadmap; directed DOE (lead agency) along with NPC, TransCo, PEMC, NGCP, and NEA to deliver: (a) SG National Strategy to 2030; (b) transition policies and guidelines; (c) SG Roadmap; and (d) consumer education and information framework. 5. PEP 2040 and PDP 2040 support national economic development toward Ambisyon Natin 2040 — transforming Philippine power sector into a secure, stable, flexible, sustainable, digitally enabled, and interoperable system providing reliable, efficient, and quality energy through grid modernization and consumer empowerment. 6. SO No. S502018-10-0057 (17 April 2018) — created DOE Smart Grid Technical Working Groups (DOE SG-TWGs) focusing on: (a) Power Systems Operations (EPIMB); (b) Sustainable and Renewable Energy (REMB); (c) Standardization (EUMB); (d) ICT and Cybersecurity (ITMS); (e) Regulatory Support (Legal Services); and (f) Consumer Empowerment (CWPO). 7. DUs have adopted various levels of SG initiatives due to: grid upgrade needs; higher customer expectations; increasing VRE penetration and EV deployment; energy and power system efficiency improvement; and requirements for RCOA, RPS, GEOP, and Net Metering implementation. 8. RA 11285 (EEC Act, 19 April 2019) — implements energy efficiency and conservation plans and programs nationally. 9. RA 11234 (EVOSS Act) and its IRR (DC2019-05-0007) — sets timeframes for government agencies to act on energy project applications. 10. Public consultations conducted in Mindanao (3 and 9 July 2019), Visayas (11 July 2019), and Luzon (16 July 2019). --- ## SECTION 1. GUIDING PRINCIPLES Six criteria for transition of the Philippine Power System into a Smart Grid by 2040: 1.1 **Safety** — improve overall system protection to prevent harmful and dangerous effects to consumers from electrical risks. 1.2 **Reliability** — improve grid reliability to ensure delivery of electric power to satisfy consumer demand; enhance power system capability to respond to disturbances without adverse effects while maintaining optimal grid operation. 1.3 **Efficiency** — reduce technical and non-technical power and energy losses to ensure energy-saving benefits for Generation, Transmission, and Distribution sectors. 1.4 **Flexibility / Sustainability** — enhance ability of the power system to respond to changes in demand and supply; allow smooth integration of emerging technologies to the grid. 1.5 **Resiliency** — improve the ability of the grid to resist, absorb, accommodate, and recover from hazards in a timely and efficient manner, through preservation and restoration of essential basic structures and functions. 1.6 **Consumer Empowerment** — improve consumer awareness and engagement through monitoring and managing energy consumption; promote new emerging technologies such as electric vehicles, net metering, smart monitoring equipment and appliances. --- ## SECTION 2. DEFINITION OF TERMS 2.1 **ADMS (Advanced Distribution Management System)** — platform integrating hardware and multiple utility-based systems; provides automated outage restoration and optimization of distribution grid performance. 2.2 **AMI (Advanced Metering Infrastructure)** — integrated system of smart meters, communications networks, and implementation systems enabling two-way communication between utilities and customers. Customer systems include in-home displays, home area networks, energy management systems, and other customer-side-of-the-meter equipment. 2.3 **AMR (Automatic Meter Reading)** — technology for automatically collecting consumption, diagnostic, and status data from energy metering devices and transferring that data to a central database. 2.4 **BEMS / HEMS (Building Energy Management System / Home Energy Management System)** — computer-based control system for houses or buildings that controls and monitors mechanical and electrical equipment. Dwellings or buildings with HEMS/BEMS are considered Smart Homes/Buildings. 2.5 **Conventional Meter** — electronic or mechanical energy-measuring device without any communication capability. 2.6 **Cybersecurity** — collection of tools, policies, security concepts, guidelines, risk management approaches, actions, training, best practices, assurance, and technologies to protect the cyber environment, organization, and user assets. 2.7 **Demand Response (DR)** — mechanism allowing a utility to curtail load at customer premises or disconnect certain equipment remotely from the utility's control center; customer participation sought through incentives and penalties. 2.8 **DRMS (Demand Response Management System)** — software platform for managing all aspects of a utility's DR programs through a single integrated system. 2.9 **DSM (Demand-Side Management)** — plans, programs, and technologies that encourage consumers to optimize their energy use. 2.10 **DER (Distributed Energy Resources)** — smaller power sources that could be aggregated to meet regular demand. 2.11 **DMS (Distribution Management System)** — software applications for monitoring and controlling the entire distribution network efficiently and reliably. 2.12 **DA (Distribution Automation)** — integrated system enabling a utility to automate and remotely monitor, control, and coordinate all distribution components in their franchise area. 2.13 **EMS (Energy Management System)** — computer-aided tools for monitoring, controlling, and optimizing geographically dispersed generation and transmission assets in real-time. 2.14 **EPIRA** — RA 9136. 2.15 **ESS (Energy Storage System)** — facility acting as both load and generator; designed to receive, store, and convert energy to electricity. 2.16 **FLISR (Fault Location, Isolation and Service Restoration)** — technologies and systems that work in tandem to locate faults, reduce impact and length of power interruptions by isolating affected areas, and automate power restoration. 2.17 **Flexible Generation** — power generating facility with fast ramping/fast start-up and shutdown capabilities connected to transmission or distribution system to help manage supply fluctuations and address VRE intermittency. 2.18 **GIS (Geographic Information System)** — collection of computer hardware, software, and geographic data for capturing, managing, analyzing, and displaying geographically referenced spatial data. 2.19 **Grid** — high voltage backbone system of interconnected transmission lines, substations, and related facilities in Luzon, Visayas, and Mindanao or as determined by ERC per EPIRA §45. 2.20 **Interoperability** — open architecture system enabling information systems and SG technologies to work together within and across organizational boundaries. 2.21 **Islanding** — condition in which a power system (DU(s), power source(s), and loads) continues to operate whenever power from the grid is no longer present. 2.22 **Micro-grid System** — group of interconnected loads and DERs within clearly defined electrical boundaries acting as a single controllable entity with respect to the grid; can operate in grid-connected or island mode. 2.23 **MWMS (Mobile Workforce Management System)** — system platform enabling a utility to allot maintenance jobs to field crews in real-time; uses GIS integration. 2.24 **OMS (Outage Management System)** — utility network management software for modeling network topology and safe, efficient field operations related to outage restoration; integrates with call centers and SCADA. 2.25 **Peak Load Management** — plans, programs, and technologies for managing DU customer demand during peak hours. 2.26 **SDA / SSA (Smart Distribution / Substation Automation)** — automated control techniques that optimize distribution network performance by allowing devices to sense grid conditions and adjust to improve power flow. 2.27 **Smart Grid** — modernized electrical grid utilizing innovative technologies with two-way and/or multi-way communication, real-time monitoring and control systems to: - 2.27.1 Improve overall reliability, power quality, security, efficiency, and management of the electricity grid with full cybersecurity and interoperability; - 2.27.2 Allow suitable integration of bulk and flexible generation, DERs, micro-grids, and EVs with management systems; and - 2.27.3 Empower customers with timely information and control options through enhanced energy management systems. 2.28 **Smart Appliances / Devices** — real-time, automated, interactive technologies that optimize physical operation of appliances, communication technologies, and consumer devices. 2.29 **Smart Meter** — electronic real-time energy-measuring device with remote connect/disconnect switching, outage and tamper detection, two-way utility-meter communication; records consumption in hourly or shorter intervals. 2.30 **SCADA (Supervisory Control and Data Acquisition)** — system of software and hardware components allowing the utility to: (2.30.1) control processes locally or remotely; (2.30.2) monitor, gather, and process real-time data; (2.30.3) interact with equipment through HMI software; and (2.30.4) record events into a log file. 2.31 **SA (Substation Automation)** — integrated system enabling a utility to automate and remotely monitor, control, and coordinate distribution components installed in the substation. 2.32 **VPP (Virtual Power Plant)** — network of aggregated decentralized medium-scale power generating units (CHP, wind farms, solar PVs, flexible consumers/prosumers, ESS) dispatched through a central control room. 2.33 **WAMS (Wide Area Monitoring System)** — system to improve situational awareness and grid visibility using Phasor Measurement Units (PMUs) with fast, accurate, time-stamped synchro-phasor measurements. --- ## SECTION 3. SCOPE AND COVERAGE Applies primarily to Distribution Utilities (DUs), including grid-connected, micro-grids, and off-grid systems. Supported by and linked to: - 3.1 Generation Companies (GenCos) - 3.2 Transmission Network Provider (TNP) - 3.3 Customers/End-users: (3.3.1) Utility Customers; (3.3.2) Non-Utility Customers - 3.4 System Operator (SO) - 3.5 Market Operator (MO) - 3.6 Market Governance --- ## SECTION 4. SMART GRID VISION By 2040, the Philippines shall reach a level of Smart Grid development capable of: - 4.1 Self-healing grid; - 4.2 Full customer choice; - 4.3 Full implementation of RCOA, RPS, GEOP, and Net Metering; - 4.4 Optimized ESSs, EMSs, and DER Management Systems; - 4.5 VPP integration; - 4.6 Islanding; - 4.7 Demand Response, DSM, and Peak Load Management; and - 4.8 Smart Homes and Cities. --- ## SECTION 5. OVERALL FRAMEWORK AND INFRASTRUCTURE 5.1 **Smart Power Generation (SPG)** — secure, fast, dynamic, flexible, and efficient resource capacity integrating new and emerging technologies (DERs, Hybrid Systems, ESSs, Flexible Generation) into the Generation Sector. SPGs gradually integrated into wholesale and retail electricity markets for energy and ancillary services. Expected to improve market competition, grid efficiency, reliability, and flexibility. 5.2 **Transmission Modernization** — modernized transmission grid features: (5.2.1) Wide Area Monitoring and Control; (5.2.2) Regional Frequency and Voltage Stability Control; (5.2.3) Full Transmission Automation; and (5.2.4) Island-to-Grid interconnection. SG integration expected to improve system efficiency and minimize transmission losses. 5.3 **Smart Distribution Utility (SDU)** — reliable, flexible, resilient, and secure automated distribution system integrated with decentralized energy sources; promotes consumer empowerment. 5.3.1 **SDUR Networks Levelling:** - Level 0 — manually operated; no SG plans - Level 1 — reclosers, sectionalizers, load break switches, fault circuit indicators, SCADA systems, GIS initiated - Level 2 — remote voltage regulators, capacitor banks, DA, SA, DMS, OMS, MWMS initiated - Level 3 — FLISR and/or ADMS with SDA and SSA initiated - Level 4 — full SDA and SSA 5.3.2 **SDUR Customer Service Levelling:** - Level 0 — conventional metering; no AMI plans - Level 1 — AMR installation initiated - Level 2 — AMI initiated: smart meters, Data Management System, Data Center and Server - Level 3 — additional smart meters installed - Level 4 — full AMI implementation 5.3.3 **AMI — DU Requirements:** - 5.3.3.1 *Consumer Access Rights* — consumers can access their own data at any time through all DU communication means; must be properly informed on how to request consumption data; - 5.3.3.2 *Data Privacy* — detailed energy consumption data protected and treated as highly confidential; DUs may release information to third parties only upon customer request and approval; - 5.3.3.3 *Consumer-Facing Devices* — DUs may install additional energy monitoring and control devices upon consumer request and approval; must be simple and user-friendly; DUs may charge additional rates for value-added services subject to ERC approval. 5.3.4 **Consumer Education** — DUs shall conduct programs for active consumer participation through education and information campaigns, including uses and benefits of SG technologies. 5.3.5 **GIS** — DUs shall update/upgrade their GIS periodically. 5.3.6 **ESS and DER** — Integration to host DUs subject to the monitoring and control technologies at the respective SDUR level; proponents must also comply with ERC Rules and Regulations and DOE Policies. 5.3.7 **EV Charging Stations:** - 5.3.7.1 To promote EV use, DUs may establish/facilitate establishment of charging stations; private and government instrumentalities can install charging stations under non-regulatory pricing (prevailing rates) and market-based environment; - 5.3.7.2 DOE through SG-IASC, in collaboration with all electric power industry participants, DOTr, DTI, and relevant agencies, shall formulate a long-term National Strategy and Roadmap for EVs and EVCS consistent with PEP. 5.3.8 **Pilot Projects:** - 5.3.8.1 DUs that have yet to implement SG technologies are encouraged to conduct demonstration/pilot projects or develop in-house technologies; - 5.3.8.2 DOE and related agencies shall actively engage DUs in developing demonstration projects to ensure benefit to the future grid while ensuring consumer protection. 5.4 **Information Sharing and Education Campaigns:** - 5.4.1 DOE, with stakeholders and relevant agencies, shall conduct intensive IEC campaigns addressing consumer concerns on data privacy, energy-saving practices, digitalization trends, and grid modernization; - 5.4.2 Campaigns shall explain SG benefits and empower customers to make informed energy decisions; - 5.4.3 DOE shall support information sharing and experience exchanges on SG deployments; centralized public repositories for data from SG conferences, exhibitions, seminars, and capacity buildings encouraged; - 5.4.4 DOE and relevant agencies shall actively participate in SG fora and conferences for latest trends. 5.5 **Communication Infrastructure Support:** - 5.5.1 Communication provider–DU partnerships encouraged for appropriate SG ICT integration; - 5.5.2 Reasonable rates, fast and reliable service by telecoms to electric industry participants for SG deployments; - 5.5.3 DUs encouraged to implement all internationally accepted communication standards (WiMax, RF Mesh, LPWAN, Zigbee, etc.); and - 5.5.4 DOE shall coordinate with NTC for allotment of radio frequencies for GenCos, TNP, and DUs. 5.6 **Interoperability:** - 5.6.1 DOE through SG-IASC has primary responsibility to coordinate with agencies and stakeholders to develop a framework including protocols and technical standards for interoperability; - 5.6.2 SG interoperability protocols and standards shall align policies, business models, and technology approaches to enable all electric participants to share and use information securely and effectively. 5.7 **Cybersecurity:** - 5.7.1 To prevent potential cyber-attacks/breach during SG deployments, GenCos, TNP, and DUs shall develop cybersecurity infrastructure and ensure cost-effective protection; - 5.7.2 Cybersecurity infrastructure shall comply with all relevant laws and regulations and internationally accepted standards at the appropriate level of adoption and application. --- ## SECTION 6. DUTIES AND RESPONSIBILITIES 6.1 **Inter-Agency Steering Committee (IASC):** - 6.1.1 Ensure proper and smooth transition of the electric power industry to future SG deployment; - 6.1.2 Ensure coordination and consultation with government agencies, private sectors, academe, and international agencies with SG expertise prior to any related policy; - 6.1.3 Monitor SG initiatives to protect consumer interests, prevent anti-competitive practices, and identify regulatory barriers; - 6.1.4 Conduct regular review of the SDUR and propose amendments if necessary; and - 6.1.5 Perform all other tasks incidental to effective implementation; provisions of DC2013-03-0003 consistent hereto continue to apply. 6.2 **Generation Companies:** - 6.2.1 Integrate SPG into the transmission or distribution system, consistent with the Power Development Plan; - 6.2.2 Design, ownership, operation, and maintenance of any SPG facility shall comply with relevant laws, ERC rules and regulations, and DOE policies. 6.3 **Transmission Network Provider:** - 6.3.1 Formulate and submit to DOE and ERC an SG deployment plan and roadmap including: transmission system enhancement, WAMS, automation and network optimization, and long-term interconnection-wide transmission expansion plans; - 6.3.2 SG roadmap shall form part of the annual Transmission Development Plan. 6.4 **Distribution Utilities:** - 6.4.1 Comply with the SDUR levelling structure; complete initial levels before proceeding to succeeding levels; evaluate current SG level in reference to the National SDUR and formulate an SG deployment plan submitted to DOE (copy furnished to ERC); may request acceleration/deferral as justified in business cases, subject to DOE endorsement and ERC approval; - 6.4.2 Incorporate all proposed SG projects (per SDUR) in the annual update of their Distribution Development Plans. 6.5 **Market Operator** — shall review and/or propose WESM Rules and Manuals amendments for possible integration of SG technologies into wholesale and retail electricity markets. 6.6 **System Operator** — shall ensure grid reliability and stability during implementation of SG technologies. --- ## SECTION 7. REGULATORY AND GOVERNMENT SUPPORT 7.1 **Department of Energy:** - 7.1.1 Through SG-TWGs, prepare and formulate relevant policies and guidelines for SG technologies; - 7.1.2 Endorse SG projects to appropriate agencies for available subsidies or incentives (tax holidays, etc.) with BOI and related agencies; - 7.1.3 Coordinate with relevant agencies to establish new incentive mechanisms for SG development if needed; - 7.1.4 Establish strong cooperation and partnership with local and international government agencies, stakeholders, academe, and private entities for SG research, development, and demonstration; - 7.1.5 Coordinate with: - 7.1.5.1 DOST and research agencies to encourage R&D leading to commercialization of advanced SG technologies; - 7.1.5.2 DTI, DICT, NTC, DOST, and Bureau of Customs to develop technical standards and safety codes for SG technologies. 7.2 **Energy Regulatory Commission:** - 7.2.1 Promulgate related guidelines **within 6 months** from effectivity of this Circular; - 7.2.2 Review and amend the existing Electric Cooperative Distribution Utility Planning Manual and Investor-Owned Electric Distribution Utility Planning Manual; - 7.2.3 Develop SG standards to be harmonized into the Philippine Distribution Code and Philippine Grid Code; - 7.2.4 Review all CAPEX and OPEX applications filed by TNP and DUs to ensure efficient and reasonable costs for effective and timely SG project implementation; and - 7.2.5 Ensure timely approval of said applications, considering objectives herein, risk of technology obsolescence, and all SG adoption benefits (customer energy savings, DU savings, etc.). 7.3 **National Electrification Administration:** - 7.3.1 Ensure provision of concessional loans to SG projects for Electric Cooperatives, subject to NEA requirements; and - 7.3.2 Propose a national strategy for SG deployments to ECs based on current performance assessment and evaluation. --- ## SECTION 8. REPEALING CLAUSE Rules, regulations, policies, and other issuances, as well as mechanisms and institutions created pursuant thereto, that are inconsistent with this Circular are hereby amended, modified, or repealed accordingly. --- ## SECTION 9. SEPARABILITY CLAUSE --- ## SECTION 10. EFFECTIVITY Takes effect 15 days from publication in at least two (2) newspapers of general circulation; shall remain in effect until otherwise revoked. Certified true copies filed with UP Law Center-ONAR. Signed: 6 February 2020 at DOE, Energy Center, Rizal Drive cor. 34th Street, Bonifacio Global City, Taguig City. Secretary Alfonso G. Cusi --- ## ANNEX A — SMART DISTRIBUTION UTILITY ROADMAP (SDUR) BY 2040 The Annex A is a matrix displaying the progression from Level 0 through Level 4 across two tracks (Networks and Customer Service), with "Continuous/Parallel Programs" running across all levels. A "Vision" column at Level 4 lists the SG Vision 2040 outcomes. The OCR rendering of the tabular layout is substantially garbled; the definitive description is in the SDUR text in §5.3.1 and §5.3.2. Continuous/Parallel Programs include: integration of ESS and EV Charging Stations, DER Integration and EMS, Consumer Education, GIS updating, Interoperability and Cybersecurity, and Telecommunications Infrastructure.