The Philippines is inviting Chinese companies to bring in their technology and expertise in equipment design and manufacturing for solar and wind power generation, according to the Department of Trade and Industry (DTI).
“We also welcome investors in the related sectors of battery energy storage systems and off-grid power supply systems,” Trade Secretary Alfredo E. Pascual said during the Offshore Wind Conference held in Makati City on Thursday.
In line with this, the Trade chief pitched to the Chinese officials the incentives available for renewable energy (RE) projects.
“Tax and other incentives are available for renewable energy projects under the Philippines’s 2022 Strategic Investment Priority Plan [SIPP] from the DTI Board of Investments,” Pascual said.
According to Pascual, proponents of RE projects may opt to be qualified under Tier I or Tier II of the SIPP, adding that the choice will depend on the “attractiveness” of applicable incentives and the endorsement to be made by the Department of Energy (DOE).
RE projects are qualified under SIPP which implements the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) under Tier I will follow the incentives package and rules under the Renewable Energy Law, Pascual noted.
“Under the Renewable Energy Law, the Board of Investments administers income tax holidays, duty-free importation, and tax exemption of carbon credits. Other government agencies administer corporate tax rates, net operating loss carry-over, and tax credits,” he said.
“Renewable energy projects under Tier II will follow incentives under CREATE. Renewable energy projects under Tier II may include those renewable sources not defined in the Renewable Energy Law and those emerging, like hydrogen fuel, subject to certain conditions. Incentives under CREATE include income tax holidays and enhanced deductions,” he added.
Pascual laid out these proposals to the Chinese officials as “the demand for energy, especially for green energy, is expected to outpace our current supply level.”
“We need over 52,800 megawatts [MW] of additional renewable energy capacity to reach our RE target by 2040,” Pascual said.
He added that by 2030, the Philippines aims to increase the share of renewable energy in the country’s power generation mix to 35 percent; and to 50 percent by 2040.
Pascual also said the circular, which was issued by the DOE late last year, allows 100 percent foreign equity in RE projects in the Philippines.
“This lifting of ownership restriction, I’m sure, makes the Philippine renewable energy sector more attractive to foreign investors. We look forward to more Chinese investments to harness solar, wind, and tidal energy,” the Trade chief said.
In the first quarter, Pascual said the Board of Investments approved three offshore wind projects with a total capacity of 1,300 megawatts and an estimated investment cost of more than P390 billion.