Energy efficiency industry asserts eligibility for 10 years’ worth of incentives

Date Published: 
August 24, 2020
  • (File Photo: PhilStar, BusinessWorld)
    (File Photo: PhilStar, BusinessWorld)

THE energy efficiency industry said it is seeking fiscal incentives for 10 years, claiming that the industry is eligible for such treatment under the law regulating the sector as well as the Philippines’ investment priority plan.

The broader energy industry is convening for a two-day virtual consultation to aid the Department of Energy (DoE) in updating the Philippine Energy Plan with the goal of attracting more investment over the next two decades.

The Philippine Energy Efficiency Alliance (PE2) said it wants the plan to reflect the importance of energy efficiency and conservation (EEC) projects in order to ensure a stable investment environment.

“The long-term predictability of EEC tax-based fiscal incentive packages is crucial to mobilizing debt and equity capital investments in the EEC asset class, amid legislative efforts to rationalize fiscal incentives,” the group said in its presentation.

Renewable energy, including energy efficiency technologies, is recognized as a priority sector by the Philippine investment authorities.

Republic Act No. 11285 or the EEC Act provides for a 10-year inclusion of energy efficiency projects in the Board of Investments’ investment priority plan, which lists sectors entitled to tax breaks.

Separately, PE2 asked the DoE to defend the granting of pioneer status for all EEC projects, entitling them to incentives.

Executive Order No. 226, or the Omnibus Investments Code, provides for a six-year tax break for pioneering projects which use a design, formula, scheme, method, process, or system of production that is new and untried in the Philippines.

The industry added that third-party investments of energy service companies (ESCOs) and other investors in EEC assets installed in non-owned and non-leased premises “will need at least six years of income tax holiday for them to approach commercial viability as far as after-tax equity returns are concerned.”

PE2, which advocates for EEC technologies’ integration into the generation mix, claims that EEC projects can produce savings of 182 million tons of oil equivalent by 2040, equivalent to $726 billion.

The industry is also seeking a share of the stimulus package during the post-pandemic recovery.

Written/Posted by: 
Adam J. Ang

About PE2

Philippine Energy Efficiency Alliance Inc. (PE2), is a non-stock, non-profit organization of energy efficiency market stakeholders.

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Republic Act 11285

R.A. 11285 - An Act Institutionalizing Energy Efficiency and Conservation, Enhancing the Efficient Use of Energy, and Granting Incentives to Energy Efficiency and Conservation Projects

RA 11285 - Text

RA 11285 - Signed

IRR - Signed

Beyond COVID-19: How governments, ESCOs and innovative financial modalities can mobilize energy efficiency capital through 2040

Working Together to Bridge an Energy Efficiency Financing Gap

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Infographics on Roadmap Targets for Energy Efficiency and Conservation

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The Philippine Energy Efficiency Alliance, Inc. (PE2) is a non-stock, non-profit organization of energy efficiency market stakeholders.

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