The Energy Regulatory Commission (ERC) is accelerating the shift to renewable energy in off-grid areas through a new regulatory framework to reduce electricity costs and lower the Universal Charge for Missionary Electrification (UCME) paid by consumers nationwide.

The commission said Thursday it drafted Off-Grid Renewable Energy (RE) Distributed Energy Resources (DER) Rules, which would prioritize renewable energy sources such as solar and wind over diesel-fired generation in missionary areas through new operational and financial mechanisms.

The ERC said the proposal is intended to expand clean energy deployment in off-grid communities, reduce dependence on imported diesel fuel, stabilize electricity prices, and ease the UCME subsidy burden shared by electricity consumers across the country.

“At the heart of these reforms is a simple objective: to deliver more affordable, reliable, and sustainable power to our off-grid communities while easing the burden on all electricity consumers who bear the UC-ME charge,” ERC Chairperson and Chief Executive Officer Francis Saturnino C. Juan said.

Under the draft rules, renewable energy facilities will be dispatched ahead of diesel power plants through a priority dispatch mechanism. 

Diesel generators, including those operating under existing contracts, may be placed on standby when renewable energy supply is sufficient, allowing them to recover fixed costs without incurring additional fuel expenses.

The proposed framework also introduces an 80/20 export payment scheme, under which distributed energy resource owners will receive 80 percent of the subsidized and approved generation rate, while distribution utilities will retain the remaining 20 percent to support grid upgrades.

To encourage investment, qualified developers may receive a cash incentive equivalent to 50 percent of the UCME rate for every kilowatt-hour generated.

Renewable Energy Certificates from off-grid projects will also be credited to mandated participants to help meet national renewable energy targets.

The ERC will publish the draft rules tomorrow to receive public comments until 23 July, and hold a public consultation via Microsoft Teams on 30 July.

“These mechanisms are intended to ensure that renewable energy deployment is not only encouraged but also prioritized in actual system operations in the off-grid areas, displacing costly diesel generation whenever available,” the ERC chief said.