PE2 seeks expanded list of EEC projects for tax perks

MAKATI CITY, 29 May 2023 – The Philippine Energy Efficiency Alliance (PE2) asked the Department of Energy (DOE) and the Board of Investments (BOI) to consider additional project types to be eligible for fiscal incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the Energy Efficiency and Conservation (EEC) Act.

PE2 president Alexander Ablaza said, “While we are aware that both DOE and BOI are reviewing their respective EEC guidelines for fiscal incentives to capture rooftop solar facilities, it may be a suitable opportunity for both agencies to review the list of eligible projects for DOE endorsement and BOI registration. Beyond the traditional energy efficiency projects aimed at reducing specific energy consumption of private sector and government energy end-users, larger projects involving clean energy production for 100% off-take by the establishments should be explicitly included in the list.”

In May 2021, DOE issued Department Circular No. DC2021-05-0011 which sets the guidelines for the DOE endorsement of EEC projects to BOI for fiscal incentives. Ten months later, DOE followed it up with Department Circular No. DC2022-03-0004, which provides similar endorsement guidelines for EEC strategic investments.

On 8 August 2022, BOI issued its Memorandum Circular No. 2022-008, which amends the EEC guidelines under the CREATE and EEC laws.

In the list submitted to DOE and BOI earlier today, PE2 proposed that end-users, energy service companies (ESCO) and third-party project developers (TPPDs) include the following as eligible projects:

• Energy Efficiency / ESCO Projects - EEC measures to improve energy efficiency of a system or consumption within a defined project boundary
• Own-use Renewable Energy (RE) facilities that are not exporting power to the grid, such as but not limited to rooftop solar, own-use biomass, own-use wind, own-use hydro, own-use geothermal energy to displace power or fuel purchases of an energy end-user
• Cleaner Fuel and Transition Fuel-based Generation facilities that are not exporting power to the grid, such as but not limited to the replacement of bunker, coal and diesel-fed generation of power, heat or cooling with LPG or LNG systems
• Energy Storage Systems that are not exporting power to the grid and intended to store energy of an end-user for use at a later time (e.g., battery energy storage, kinetic energy storage, thermal energy storage)
• Waste Heat Recovery or Combined Heat and Power (CHP) facilities that are not exporting power to the grid and intended to capture waste heat and other forms of waste energy to be converted and cycled back to the end-user's operations as useful forms of energy, such as power, heat or cooling
• District Energy Systems confined within defined commercial or business districts and economic zones such as district cooling systems and district heating systems intended to displace end-user production of chilled water or steam
• Electric Vehicle (EV) Refleeting and Charging Infrastructure intended to displace fossil fuel purchases of an energy end-user for transport vehicles

PE2 believes that clearer language in the EEC guidelines on the additional eligible project types will be useful to designated establishments, ESCOs and TPPDs as they apply for fiscal incentives to make their upfront capital investments commercially viable.