Renewable Energy resources include Geothermal, Hydropower, Biomass and Ocean, Solar and Wind. Projects utilizing these resources may enjoy applicable incentives or privileges over a number of years.

Geothermal

All Geothermal Service Contractors may enjoy the incentives under P.D. 1442, or “An Act to Promote the Exploration and Development of Geothermal Resources”

• Recovery of operating expenses not exceeding 90% of the gross value in any year with carry forward of any unrecovered cost;
• Service fee of up to 40% of net proceeds;
• Exemption from all taxes except income tax;
• Income tax obligation paid out of government’s share;
• Exemption from payment of tariff duties and compensating tax on the importation of machinery, equipment, spare parts and all materials for geothermal operation;
• Depreciation of capital equipment over a ten-year period;
• Easy repatriation of capital equipment investment and remittance of earnings; and,
• Entry of alien technical and specialized personnel (including members of family).

R.A. 7156, or “The Mini-Hydro Law” grants the following incentives to mini-hydro developers:

• Special privilege tax rate of 2% of gross receipts;
• Income tax holiday for seven years from the start of commercial operations;
• Tax and duty free importation of machinery, equipment and materials
• Tax credit on domestic capital equipment equivalent to 100% of VAT and customs duties that would have been paid to import machinery, equipment, etc.
• Special realty tax rates on equipment and machinery not exceeding 2.5% of the original cost;
• VAT exemption on gross receipts derived from the sale of electric power whether wheeled via the NPC grid or electricity utility lines.

Ocean, Solar and Wind

E.O. 462 as amended by E.O. 232, “Enabling Private Sector Participation in the Exploration, Development, Utilization and Commercialization of Ocean, Solar and Wind Energy Resources for Power Generation and Other Energy Uses”, provides the following incentives for proponents of ocean, solar and wind energy projects:

• Additional deduction for labor expense;
• Unrestricted use of consigned equipment;
• Additional deduction for necessary and major infrastructure works;
• Reduced duty rates for imported capital equipment, spare parts and accessories under E.O. 313*;
• The government shall waive the signature bonus on the first project to reduce pre-operating cost burden on the solar, wind and ocean production-sharing contract;
• Payment of production bonus shall be applied only after the project has fully recovered its pre-operating expenses;
• Ocean, wind and solar developers shall be allowed to charge the cost of assessment, field verification and feasibility studies of other sites to its current commercial projects; and,
• The government shall assist developers in obtaining all applicable fiscal and non-fiscal incentives, including registration as a pioneer industry under the BOI and securing of access to lands and offshore areas where ocean, wind and solar resources shall be harnessed.

Biomass

Power Generation Projects utilizing biomass as resource may avail of the following incentives: