What is the Philippine Renewable Energy Market?

About two years after the interim commercial operations in August 2022 of the Philippine Electricity Market Corporation (PEMC), on December 26, 2024, Renewable Energy Certificates (RECs) trading officially began, marking the full commercial operation of the Renewable Energy Market (REM)1,2. This was declared in the Department of Energy (DOE) Circular No. DC2024-12-0031 titled “Declaration of the Full Commercial Operations of the Renewable Energy Market.”1,3

RECs represent one megawatt-hour (MWh) of electricity generated from renewable sources like solar, wind, hydro, geothermal, and biomass. The REM provides a platform for trading these certificates, enabling participants to meet compliance with the Renewable Portfolio Standards (RPS), a policy requiring electricity distribution utilities and other related entities to source a portion of their energy from renewables to contribute to the growth of the renewable energy industry in the Philippines1,2.

The REM, established under the Renewable Energy Act of 2008 or R.A. 9513, is a key initiative aimed at accelerating renewable energy development and transitioning to clean energy of the country. This aligns with the Philippines’ goals of achieving at least 35% renewable energy in the power mix by 2030 and 50% by 2040. The REM is deemed to have a vital role in advancing clean energy, fostering investments, and creating a sustainable energy trading framework2.

In 2023, the annual RPS compliance requirement for grid-connected areas increased from 1% to 2.5%, with renewable energy projected to supply 11.4% of total power demand in 2024. Around 285 participants, including generators, distribution utilities, and end-users, are expected to join the REM, which is anticipated to drive compliance with RPS and expand renewable energy capacity2.

Currently, PEMC is the market registrar of the REM. However, the Independent Electricity Market Operator of the Philippines (IEMOP) will be in charge of the REM in the future1.

 

What is the Philippine Electricity Market Corporation?

The Philippine Electricity Market Corporation (PEMC), established in November 2003 as a non-stock, non-profit entity by the Department of Energy (DOE) and power industry representatives, served as the market operator and governing body of the Philippine Wholesale Electricity Spot Market (WESM) for over a decade. The WESM, created under the Electric Power Industry Reform Act (EPIRA) of 2001, is a centralized platform where electricity is traded as a commodity, with prices determined by demand and supply. It began commercial operations in Luzon in June 2006 and expanded to the Visayas in December 2010. WESM Mindanao was launched in June 20174.

Figure 1. Map of the Philippines labelled with the 3 main areas of the Philippines: Luzon, Visayas, and Mindanao.
(Image adapted from Freepik)

 

In line with EPIRA, the PEMC transferred the operation of the WESM to the Independent Electricity Market Operator of the Philippines (IEMOP) on September 26, 2018, with the endorsement of the Department of Energy (DOE) and market participants. PEMC remains responsible for governing the WESM through its Board of Directors and Governance Committees4.

 

What is the Independent Electricity Market Operator of the Philippines?

The Independent Electricity Market Operator of the Philippines Inc. (IEMOP) manages electricity trading in the Philippines as the Independent Market Operator (IMO) of the WESM and the Central Registration Body (CRB) for retail electricity under the Retail Competition and Open Access (RCOA) and Green Energy Option Program (GEOP)5. RCOA, mandated by the EPIRA, enables contestable customers (i.e., large electricity end-users) to choose their electricity suppliers. This initiative aims to provide end-users with more options and foster market growth. GEOP, established under the Renewable Energy Act of 2008, allows consumers to source their electricity from renewable energy providers instead of relying on their distribution utility. This program promotes the use of clean energy and consumer choice6.

Operating under the oversight of the DOE and the Energy Regulatory Commission (ERC), IEMOP oversees wholesale electricity trading, including participant registration, demand forecasting, real-time pricing, market monitoring, and billing and settlement processes. As the CRB, IEMOP supports competition in the electricity sector by managing the registry of eligible end-users and their suppliers, tracking transactions, and facilitating customer switching under RCOA and GEOP policies. Additionally, in line with DOE policies, IEMOP is preparing to serve as the market registrar for the Renewable Energy Market (REM), where Renewable Energy Certificates (RECs) are traded5.

 

Which entities are covered by the DOE Circular “Declaration of the Full Commercial Operations of the Renewable Energy Market”?

The following entities are covered by the DOE Circular “Declaration of the Full Commercial Operations of the Renewable Energy Market”:3,7

  1. Mandatory REM Trading Participants or Mandated Participants
    1. These are entities that are required to comply with RPS requirements in on-grid and off-grid systems, and
    2. Entities with RE generation facilities that are registered in the WESM
  2. Mandatory REM Generators
    1. These are entities with RE generation facilities that are registered in the WESM or are connected to the main grid, and
    2. Entities with RE generation facilities in off-grid systems serving Mandated Participants requried to comply with RPS requirements
  3. Voluntary REM Generators
    1. These refer to net-metered RE generation facilities in on-grid systems,
    2. Entities with embedded RE generation facilities where its total capacity is under a Power Supply Agreement with their Distribution Utility,
    3. Entities with RE generation facilities installed in the end-user’s properties for own use, and
    4. Entities with RE generation facilities accredited under GEOP to provide for the RE generation facilities of the GEOP end-users

 

What is expected of the RE registrar according to the DOE Circular “Declaration of the Full Commercial Operations of the Renewable Energy Market”?

Summarized in the table below are the responsibilities of the RE registrar according to the DOE Circular “Declaration of the Full Commercial Operations of the Renewable Energy Market”:3

Responsibility Details
Registration and support to REM participants This includes the processing of applications and ensuring that the information regarding the REM is easily accessible on the Market Information Website.
REM awareness activities This includes conducting trainings and lectures on REM and the Philippine Renewable Energy Market System (PREMS) at least twice a month and publishing online materials on REM and PREMS on the Market Information Website.
RPS requirement computation This includes the facilitation of the upload to the PREMS of the Mandated Participants’ gross sales data and the computation of the RPS requirements for a compliance period, including the issuance of preliminary and final statement reports to the Mandated Participants.
REC data submission and validation This includes the following:

  • Securing and processing data sets as required from the National Transmission Corporation and uploading them to the PREMS
  • Facilitating the submission of data of the Distribution Utilities in relation to registered voluntary generators
  • Facilitating the validation of data of the REM participants through Data Validations forms, meetings, and email correspondences
  • Addressing concerns and issues of REM participants on their data before REC issuance
  • Coordinating with data providers regarding issues and concerns on the REM data
REC issuance and validation This includes the following:

  • Preparing and updating, if necessary, the REC Manual Computation Template for issued RECs under the Feed-in Tariff  (FIT) mechanism
  • Issuance of RECs under the FIT and non-FIT compliance mechanisms
  • Addressing concerns and issues of REM participants on their issued RECs
  • Adjusting issued RECs, if necessary
REC reports submission This includes the preparation and submission of REM reports to the DOE, including the Annual REC Report required by RPS and other related DOE-required reports.
Operability of the PREMS This includes the following:

  • Ensuring that the PREMS and PREMS public websites are easily accessible
  • Proposing and implementing PREMS and PREMS public website enhancements, as approved by the DOE
Support services to the REM Governance Committee (RGC) This includes the following:

  • Provision of technical and administrative support to the RGC
  • Facilitating regular meetings and other activities of the RGC
  • Facilitating the processing of the REM Rules and Manual change proposals
  • Monitoring compliance of the REM participants
  • Conducting studies in relation to REM implementation and development
REM transaction fees This includes the determination of the market transaction fees and filing to the Energy Regulatory Commission (ERC) for approval.

 

Ending remarks on the Philippine Renewable Energy Market

The operationalization of the REM, which is born from the collaborative efforts of government agencies, market operators, and private stakeholders, marks a major milestone in the Philippines’ journey toward a cleaner and greener energy future. The REM facilitates the trading of RECs, which play a vital role in meeting the growing demand for renewable energy. RECs and RE can be obtained by utilizing the country’s abundant natural resources—such as solar, wind, hydro, geothermal, and biomass—which reduces dependence on imported fossil fuels, thereby enhancing energy security and stabilizing energy costs. RE also mitigates greenhouse gas emissions, strengthening the nation’s resilience to climate change, a critical need for a country highly vulnerable to its impacts. The REM may also stimulate local economies through job creation, particularly in rural areas, due to foreign and local investments looking to tap the economic potential of RECs trading. These benefits support the Philippines’ commitment to sustainable development, energy independence, and long-term economic growth.

 

References

  1. Esmael, L. K. PH’s renewable energy trading goes full blast on December 26. net https://business.inquirer.net/495875/phs-renewable-energy-trading-goes-full-blast-on-december-26 (2024).
  2. Department of Energy. REC trading starts 26 December 2024 with the full operationalization of REM. https://doe.gov.ph/press-releases/rec-trading-starts-26-december-2024-full-operationalization-rem#:~:text=Beginning%20Thursday%2C%2026%20December%202024,Renewable%20Energy%20Market%20(REM) (2024).
  3. Department of Energy. DOE Department Circular No. DC2024-12-0031: Declaration of the Full Commercial Operations of the Renewable Energy Market. https://www.wesm.ph/downloads/download/TWFya2V0IFJlcG9ydHM=/MzM3Mg== (2024).
  4. Philippine Electricity Market Corporation. About PEMC. https://www.wesm.ph/about-us/about-pemc
  5. The Independent Electricity Market Operator of the Philippines Inc. What We Do. https://www.iemop.ph/about/what-we-do/
  6. First Gen. What is RCOA and GEOP? https://www.firstgen.com.ph/our-business/fges-faqs
  7. Philippine Electricity Market Corporation. Renewable Energy Market Rules. Philippine Renewable Energy Market https://www.wesm.ph/downloads/download/TWFya2V0IFJlcG9ydHM=/MjA1NA== (2022).