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The Philippines expects the full operation of the renewable energy market to drive the development.(Photo: Wikimedia Commons)
Starting on Dec. 26, the Department of Energy (DOE) of the Philippines has announced that the Renewable Energy Certificate (REC) trading system will fully return to a market-driven mechanism, ending more than two years of pilot operation under the Renewable Energy Market (REM).
In the future, REC prices will be determined by market supply and demand. This change is expected to further increase the share of renewable energy in the Philippines as demand drives supply.
Government sets minimum green power supply
To achieve renewable energy targets, the Philippine government has established a Renewable Portfolio Standard (RPS), which requires electricity suppliers to purchase a certain percentage of renewable energy. This policy has been in effect for over four years, and the required percentage has now risen to 11%. The REC can be used as a tool to meet this requirement, with electricity suppliers able to obtain the certificates through market trading.
Under the current system, RECs are issued and verified by the Philippine Electricity Market Corporation (PEMC), and the maximum price for the certificates is set by the DOE and approved by the Energy Regulatory Commission (ERC). The current price is set at ₱241.56 per 1,000 kilowatt-hours (about 4.15 USD).
Each certificate represents 1,000 kWh of green power, and once used by the electricity supplier, the certificate is canceled and cannot be traded again. If not used, the certificate can be transferred under conditions of price and quantity disclosure. Furthermore, a green certificate can be retained for up to three years.
The Philippines‘ RPS mandates electricity suppliers to source 11% renewable energy, with RECs as a key tool. (Photo: iStock)
Market expected fair, transparent REC trading
With the full operation of the renewable energy market, the issuance, safekeeping, and verification of certificates will be handled by the Independent Electricity Market Operator of the Philippines (IEMOP), a non-profit organization that manages the electricity spot market and retail operations. The price will be determined by market supply and demand.
Currently, coal-fired power generation remains dominant in the Philippines, with renewable energy accounting for around 22% of total generation. The government aims to increase this share to 35% by 2030 and 50% by 2040. As renewable energy demand continues to grow, the government anticipates that REC trading and usage will become more frequent, further driving the development of renewable energy.
The establishment of the renewable energy market ensures that REC trading is fair and transparent, while the pricing mechanism reflects the addition of new renewable energy capacity. According to IEMOP data, as of the end of November, 328 entities, including distribution utilities, electric cooperatives, and retail power suppliers, had registered in the renewable energy market system, with nearly 90% of them participating.
Source: Philstar, Manila Times, Business World, APERC
