The Department of Energy (DOE) on Wednesday defended its move to cancel 105 non-performing and delayed renewable energy service contracts amid concerns it would hurt investor sentiment.
The DOE said it started sending out letters to renewable energy companies on their contract termination but the agency expects them to file motions for reconsideration.
Energy Secretary Raphael Lotilla said the move would not discourage interested energy investors.
“No, in fact, it would encourage more serious investments in the RE sector. Because there are commitments, and so if they are not able to move then the others who have the technical, the legal and the financial capability should be given an opportunity to develop the same. They become idle assets insofar as our people are concerned if they are not developed,” Lotilla said.
DOE Undersecretary Rowena Guevara said as soon as the review of a particular project is completed and deemed for termination because of delays in the work program, the termination letter would be submitted to the secretary.
“So we have terminated some. The first 105, we have almost finished sending out the letters. But you know that some of them might go for a request for consideration. So that is possible. But even though we have already issued the first batch, we are still doing another review to make sure that there are no more projects that are delayed. And if there are, then we will again write termination,” Guevara said.
Guevara said the DOE approved over 1,400 renewable energy service contracts and the agency wants to make sure that those that are not moving can be removed.
“And therefore, others can actually apply for those areas but we cannot open those areas unless you terminate the projects that have been assigned to those areas,” she said.
The DOE said majority of these contracts were awarded in 2017 and 2019, and the common reasons for project delays included failure to secure possessory rights or system impact studies (SIS), indicating inability to connect to the grid.
It said of the total 105 projects, 88 were either delayed in their pre-development timeline or were not progressing at all. Among the 88 projects, 53 are solar, 17 are hydropower, 10 are wind five are geothermal and three are biomass, the agency said.
“The administration of President Ferdinand Marcos Jr. is committed to ensuring the efficient and timely execution of renewable energy projects by regularly assessing the progress of these projects and refining regulatory framework,” said Guevara.
“If any contracts are deemed non-performing, we will open them up to new developers who can effectively bring these projects into fruition. This strategy not only accelerates the development timeline but also strengthens investor confidence in the country’s renewable energy goals,” Guevara said.
The DOE released the revised omnibus guidelines in June 2024, which governs the award and administration of renewable energy contracts and the registration of renewable energy developers.
The process helps identify and filter out non-serious developers, paving the way for legitimate developers committed to constructing RE projects efficiently.
The DOE said that as part of its contract termination process for existing solar energy service contracts, developers have two years to complete the pre-development stage, which includes obtaining permits, conducting surveys, performing feasibility studies and securing possessory rights.
It said that if a developer failed to submit the declaration of completion (DOC) or demonstrate reasonable efforts within the timeframe, the DOE – Renewable Energy Management Bureau (REMB) would issue a show-cause order to request an explanation for the delay.
It said valid reasons for the delay such as force majeure might be allowed an extension, but if the reasons were insufficient or the developer did not respond, the REMB would recommend to the DOE Secretary the termination of the contract.
The developer would also be required to fulfill all financial obligations such as performance bond, payment of training commitment and development assistance, as provided under the service contract.
