Fast-Tracking Grid Connectivity Through Third Party Development And Construction Of Transmission Facilities

At present, the Philippines faces critical transmission infrastructure backlogs that delay the commercial operation and integration of new power projects. While a generation company is allowed to construct its own dedicated point-to-point transmission facility with the approval of the Energy Regulatory Commission (“ERC”), this narrow exception has not addressed inadequate transmission capacity or technical constraints, which require upgrades to the main grid or the construction of associated transmission facilities.

In recognition of this reality and to support the country’s economic growth and energy transition, regulators have introduced measures to liberalize the financing and construction of critical grid infrastructure.

Regulations

On January 7, 2026, the Philippine Department of Energy (“DOE”) issued DOE Department Circular No. DC2026-01-0001 (Policy on Allowing Generation Companies to Finance and Construct Associated Transmission Projects for the Timely Integration of Power Projects Critical to the Country’s Energy Transmission and Supply Security). This circular establishes the policy framework permitting generation companies to finance and construct transmission infrastructure designated as Associated Transmission Projects (“ATP”) to ensure timely delivery of their committed capacities. ATP refers to “new or expanded transmission lines, substations, switchyards, control rooms, towers, and other transmission facilities, inclusive of land and land-related rights necessary for such facilities, beyond a generation company’s dedicated point-to-point limited transmission facility, necessary to reliably and securely accommodate new generation capacity into the grid”.

This was followed, on February 16, 2026, by DOE Department Circular No. DC2026-02-0007 (Policy Framework to Allow Transco to Finance and/or Construct Transmission Lines and Facilities Critical to the Country's Energy Transition), which empowers the National Transmission Corporation (“TRANSCO”) to plan, finance and construct transmission assets identified as Priority Projects, either by itself or by engaging qualified third parties and government entities.

In implementation of these policies, the ERC issued ERC Resolution No. 18, series of 2026 (A Resolution Adopting the Implementing Rules for the Development, Ownership, and Operation of Point-to-Point Limited Transmission Facilities and for the Financing and Construction of Transmission Projects by Entities Other Than the Transmission Network Provider) on June 8, 2026. These rules provide procedures for the determination of ATPs, the approval of the qualifications and authority of generation companies that may be allowed to finance and construct ATPs, the turnover of ATPs to the transmission network provider (i.e., the National Grid Corporation of the Philippines or “NGCP”) and transfer of their ownership to TRANSCO upon completion of construction, and the cost recovery mechanism for the reimbursement of the generation company. These rules

also set out the procedure for approval by the ERC of TRANSCO’s authority to undertake the construction of Priority Projects, and the turnover of the Priority Project to the NGCP upon completion of construction.

Conclusion

By providing clear requirements and timelines for the financing, development and construction of transmission facilities by third parties, the new regulations provide a much-needed level of regulatory clarity and procedural certainty to transmission development in the Philippines. They are expected to hasten the commercial operation and integration of new power projects in light of significant increases in the power demand requirements of the country.