Foreign firms now allowed to explore renewable energy in the PH

The Department of Energy has issued a new circular allowing foreign citizens or foreign-owned entities to explore, develop, and utilize the country’s renewable energy (RE) resources, such as solar, wind, biomass, ocean, or tidal energy.

DOE issued the circular as an amendment to Section 19 of the Implementing Rules and Regulations (IRR) of the Renewable Energy (RE) Act of 2008.

Energy Secretary Raphael P.M. Lotilla signed on November 15 circular 2022-11-0034, which stemmed from the opinion released by the Department of Justice on September 29 that constitutional foreign ownership restriction on the exploration, development, and utilization of natural resources only covers things that are susceptible to appropriation.

“The country has a vast potential in RE development. Now that the foreign equity restrictions in the RE sector has been relaxed, we expect an increase in investments in the sector which would certainly contribute to our economy, provide jobs to our people, and help meet the goal of increasing the RE in the power generation mix of 35 percent by 2030 and 50 percent by 2040,” Lotilla said.

The appropriation of water direct from the source shall continue to be subject to the foreign ownership restriction in the Water Code.

Rule 6, Section 19 (B) of the IRR of the RE Law stipulates that “the exploration, development, production, and utilization of natural resources shall be under the full control and supervision of the State.”

It further states that “the State may directly undertake such activities, or it may enter co-production, joint venture or co-production sharing agreements with Filipino citizens or corporations or associations at least 60 percent of whose capital is owned by Filipinos.

Foreign RE developers may also be allowed to undertake RE development through an RE service/operating contract with the government.