Dear eFOI user,
Thank you for your request dated Feb. 3, 2025, made under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch.
We would like to provide you with the following responses, accordingly:
1. Initial Investment - The capital expenditure required for setting up solar energy systems or other energy infrastructure.
Setting up a solar energy system in the Philippines involves several components and factors that influence capital expenditure, and these include the following:
- Scale: Utility-scale solar farms benefit from economies of scale, achieving lower per-unit costs than smaller systems.
- Location: Regions with higher solar irradiance (sunlight intensity) will see greater energy production, potentially improving long-term cost-effectiveness.
- Technology Choices: The type of PV modules and inverters selected impact overall system pricing.
- Grid Connection Costs: For grid-tied systems, costs may be incurred related to connection fees and grid upgrades.
- Land Acquisition: Costs for acquiring land, especially for large-scale projects like solar farms.
- Construction and Installation: Includes building the necessary infrastructure, such as foundations, support structures, and electrical systems including labor.
- Regulatory Compliance: Securing permits and adhering to local regulations can add to the costs.
- Maintenance and Operations: Ongoing costs to ensure the infrastructure remains functional and efficient
The capital expenditure required has already decreased since 2014 and for a per megawatt (MW) cost this can range from PhP 40M to 100M depending on the components and factors cited above.
2. Government Incentives - Available subsidies, tax breaks, or financial assistance provided for solar energy adoption.
- 7 Year Income Tax Holiday- For the first seven (7) years of its commercial operations, the duly registered RE developer shall be exempt from income taxes levied by the national government.
- Duty Free Importation- Within the first ten (10) years upon the issuance of a certification of an RE developer, the importation of machinery and equipment, and materials and parts thereof, including control and communication equipment, shall not be subject to tariff duties.
- Special Realty Tax Rates on Equipment and Machinery-Realty and other taxes on civil works, equipment, machinery, and other improvements of a Registered RE Developer actually and exclusively used for RE facilities shall not exceed one and a half percent (1.5%).
- Net Operating Loss Carry Over
- Corporate Tax Rate -After seven (7) years of income tax holiday, all RE Developers shall pay a corporate tax of ten percent (10%) on its net taxable income.
- Accelerated Depreciation
- Zero Percent Value Added Tax Rate-The sale of fuel or power generated from renewable sources, shall be subject to zero percent (0%) value-added tax (VAT)
- Cash Incentive of Renewable Energy Developers for Missionary Electrification-entitled to a cash generation-based incentive per kilowatt hour rate generated, equivalent to fifty percent (50%) of UCME
- Tax Exemption of Carbon Credits
- Tax Credit on Domestic Capital Equipment and Services
3. Maintenance and Operating Costs - Recurring costs for maintaining and operating solar and traditional energy systems.
The maintenance and operating costs for a solar farm in the Philippines can vary based on several factors, such as the size of the farm, the type of equipment used, and the location.
For a large-scale solar power system, maintenance costs can range from ₱500,000 to ₱1,000,000 per year while operating costs are generally low since solar power systems do not require fuel and have minimal moving parts.
The primary operating cost is mainly for the occasional replacement of inverters, which may need to be replaced every 5-10 years. The cost of a new inverter for a large-scale system can range from ₱1,000,000 to ₱2,000,000.
4. Energy Storage Costs - Expenses related to batter storage solutions for solar energy usage.
The cost of energy storage for a solar farm in the Philippines can vary significantly based on the type and capacity of the storage system.
The most common type of energy storage for solar farms is battery storage. Lithium-ion batteries are widely used due to their efficiency and longer lifespan. The cost of lithium-ion battery storage systems can range from ₱15,000,000 to ₱25,000,000 per megawatt-hour (MWh) of storage capacity.
In addition to the cost of the batteries themselves, there are costs associated with the installation and maintenance of the storage system. Installation costs can add an additional ₱2,000,000 to ₱5,000,000 per MWh.
5. Energy Output - Data on average energy production from solar and traditional energy sources for manufacturing operations.
Energy data can be found at the DOE website, kindly visit the site below:
https://doe.gov.ph/energy-information-resources?q=compendium-philippine-energy-statistics-and-information
6. System Lifespan - The expected lifespan of installed energy systems (solar panels, storage batteries, etc.)
The average system lifespan is 25 years. Most solar panels come with a 25-year performance warranty. However, their functional life span can extend to 30 or even 40 years with proper maintenance.
Thank you.
Respectfully,
Renewable Energy Management Bureau
FOI Officer
Department of Energy
