Under the Renewable Energy Act (Republic Act No. 9513) (the "RE Act"), it is a policy of the state to increase the utilization of renewable energy ("RE") by institutionalizing the development of national and local capabilities in the use of RE systems. Towards this end, the RE Act instituted the Renewable Portfolio Standards ("RPS"), a policy mechanism that obliges electric power participant such as generation companies, distribution utilities and retail electricity suppliers (referred to as "Mandated Participants") to source or produce a fraction of their electricity requirements from eligible RE resources.
To facilitate Mandated Participants' compliance with the RPS, the RE Act mandated the creation of the renewable energy market ("REM"). The REM is the venue for the trading of Renewable Energy Certificates ("RECs") equivalent to an amount of power generated from RE resources. Under the REM, the Renewable Energy Registrar ("RER") will issue to eligible trading participants one REC for every megawatt hour (MWh) of actual RE generation. A REM trading participant may (i) bank a REC for up to three years from the date of its issuance, (ii) transfer it to another REM trading participant, or (iii) surrender it for compliance with its RPS requirements.
In June 2022, the Department of Energy ("DOE") issued Department Circular No. 2022-06-0019 declaring the interim commercial operations of the REM. This means that the RER can commence to perform its functions, except for any financial transactions, until such time that the full commercial operations of the REM has been declared. In particular, the RER shall facilitate registration and participant support, conduct REM awareness activities, REC data submission and validation, REC issuance and validation, and submit REC reports, among others.
Full commercial operation of the REM is expected once certain regulatory structures are put in place, including the approval of a REC price cap by the DOE and the preparation and approval of the structure and level of transaction fees.
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