DoE shows fangs vs idle RE deals
By Maria Bernadette Romero – 09 Jan 2025, 03:43
from The Daily Tribune
Under existing regulations, solar energy service contracts give developers two years to complete the pre-development phase
Energy Secretary Raphael Lotilla Photograph courtesy of DoE
The Department of Energy (DoE) will hasten efforts to terminate idle renewable energy (RE) projects, aiming to accelerate their completion and signal the government’s commitment to attracting serious investors to the sector.
Energy Secretary Raphael Perpetuo Lotilla announced on Wednesday that the DoE is actively reviewing RE service contracts to address backlogs and make stalled projects available to new developers.
“If these projects are not progressing, others with the technical, legal and financial capability should be given the opportunity to develop them. For our people, idle projects are wasted assets if left undeveloped,” Lotilla stated.
Initially, 105 RE projects are slated for termination due to non-compliance with project timelines. Most of these contracts were awarded between 2017 and 2019. The number is expected to grow as the DoE conducts a comprehensive review to identify additional projects that have failed to meet their work program commitments.
Common causes of delays include difficulties in securing possessory rights or system impact studies that reveal an inability to connect to the power grid.
2nd batch of termination
The DoE is finalizing the second batch of terminations but has not yet disclosed specific numbers or the capacities affected, as some developers’ reconsideration requests are still under review.
While some industry stakeholders have voiced concerns about the potential impact on future investments, Lotilla assured that the DoE’s actions would attract more serious players and maximize the development of renewable energy sources.
Under existing regulations, solar energy service contracts give developers two years to complete the pre-development phase. This includes obtaining permits, conducting surveys, performing feasibility studies and securing possessory rights.
Developers who fail to submit a declaration of completion or demonstrate reasonable progress within this timeframe receive a show-cause order from the DoE’s Renewable Energy Management Bureau (REMB), requiring them to explain the delay.
Extensions may be granted for valid reasons, such as force majeure. However, if explanations are deemed insufficient or developers fail to respond, the REMB recommends contract termination to the secretary of Energy.
Additionally, developers must meet all financial obligations, including performance bonds and payments for training commitments and development assistance as stipulated in their service contracts.
