The Energy Regulatory Commission (ERC) drafted new rules to accelerate the adoption of renewable energy (RE) in off-grid areas, lower electricity costs and reduce the Universal Charge for Missionary Electrification (UC-ME) paid by consumers nationwide.
The proposed Off-Grid Renewable Energy (RE) Distributed Energy Resources (DER) Rules set a framework that prioritizes the dispatch of renewable energy sources over diesel generation through targeted operational and financial mechanisms, aiming to expand clean energy deployment in missionary areas, reduce dependence on imported diesel fuel, stabilize electricity prices, and ease the Universal Charge subsidy burden shared by all power users.
ERC Chairperson and CEO Francis Saturnino Juan said the initiative is aimed at improving affordability and sustainability in underserved communities.
“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,” Juan said.
“Renewable energy sources such as solar and wind will be dispatched ahead of diesel plants through a priority dispatch mechanism.”
Under the draft rules, renewable energy sources such as solar and wind will be dispatched ahead of diesel plants through a priority dispatch mechanism. Diesel generators, including those under existing contracts, may be placed on standby when distributed renewable energy supply is sufficient, allowing them to recover fixed costs without incurring additional fuel expenses.
The framework also introduces an 80/20 export payment scheme, wherein distributed energy resource (DER) owners will receive 80 percent of the subsidized and approved generation rate (SAGR), while distribution utilities will retain 20 percent to support grid upgrades.
Qualified developers may also access incentives, including a cash incentive equivalent to 50 percent of the UC-ME rate per kilowatt-hour generated, while Renewable Energy Certificates for compliance with national renewable energy targets will be earned and attributed to the mandated participants in the off-grid area.
“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.”
Juan said 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.
Meanwhile, the Commission will post the draft rules on July 10, accept public comments until July 23, and hold a public consultation on July 30, 2026 via Microsoft Teams.
The ERC said the proposed rules form part of its forward-looking and anticipatory reforms aimed at strengthening the role of renewable energy in off-grid systems and ensuring long-term cost efficiency and sustainability in the power sector.
