Meralco receives offer for 50-MW solar capacity

MANILA ELECTRIC Co. (Meralco) has received an offer for an additional capacity of 50 megawatts (MW) of solar energy and has subjected the same to a competitive selection process (CSP), the outcome of which will be known by end-February, company officials said.

Lawrence S. Fernandez, Meralco vice-president and head of utility economics, said the distribution utility had so far signed with three solar power developers, with all power supply contracts awaiting approval from the Energy Regulatory Commission (ERC).

The fourth offer came from Pilipinas Newton Energy Corp. for 50 megawatts at P2.98 per kilowatt- hour ( kWh), the lowest solar cost received so far by Meralco, he added.

“The three are still pending with the ERC. One has not yet been filed,” he told reporters, referring to the offer of Pilipinas Newton. “It’s still undergoing CSP (competitive selection process).”

Meralco’s first solar power supply agreement is with Solar Philippines Power Project Holdings, Inc. at P5.39 per kWh. It was followed with a deal with PowerSource First Bulacan Solar, Inc. for P4.69 per kWh, and another contract with Solar Philippines for P2.99 per kWh, Mr. Fernandez said.

ERC rules require power supply contracts to be subjected to price challengers through a CSP, which is aimed at sourcing energy at the lowest cost.

“Malalaman natin ( We will know by the) end of this month kung may (if there is a) price challenger,” he said.

Based on data from the Department of Energy, Pilipinas Newton is building a 70-MW solar farm in San Manuel, Pangasinan. The target commissioning and commercial operation dates of the project are yet to be disclosed.

Mr. Fernandez said Meralco is sourcing the new solar capacity based on the power situation in the past five years which bared that demand from 2012 to 2017 in the Luzon grid has grown by around 2,900 MW against a capacity addition of only around 2,600 MW.

“Naa- outpace ng demand ’yung capacity addition ( Demand is outpacing the capacity addition). We’re not even considering potential maintenance or replacement of old capacity,” he said.

“The grid itself really needs more and more new capacity not just for this summer but going forward if demand continues to grow,” he added.

Separately, Oscar S. Reyes, Meralco president and chief executive officer, said the company had signed with Lopez-led First NatGas Power Corp. for the entire capacity of latter’s 414-MW San Gabriel gas-fired power plant in Batangas.

The power supply contract is for six years, he said.

“What we need is — [ that’s why] we signed with San Gabriel — capacity that we can ramp up and ramp down,” he said.

“So it’s mid-merit,” he said, referring to energy that can quickly switched on when needed. “24/ 7/365 so the plant must be able to do that.”

Mr. Fernandez said Meralco is open to sourcing energy from all technologies “as long as it’s competitive, it will lead to a more efficient and a more reliable system,” adding the company would know by the end of the month if the San Gabriel offer is topped by a lower price offer.

He said the first CSP for San Gabriel resulted in a failed bidding because no price challenger came forward. ERC rules call for a second round of bidding.

Last year, natural gas accounted for 37.5% of Meralco’s fuel sources, with coal making up the second biggest at 34.1%. The balance is a mix of sources, including hydropower, biomass and geothermal.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.