Philippines: Meralco eyes deals with renewable energy firms

Philippines: Meralco eyes deals with renewable energy firms

MANILA Electric Co. (Meralco) is on the lookout for more deals with
renewable energy companies after it received an offer from two solar farm
developers for electricity supply at P5.39 per kilowatt-hour, which are way
below the current subsidized rate for solar energy.
"We always continually review our portfolio," said Lawrence S. Fernandez,
head of Meralco's utility economics.

"We're waiting for other proponents if they can beat the price that was
offered," he said, referring to proposed power supply agreement from two
solar power developers.

Meralco, the country's biggest distribution utility, received power supply
offers from Solar Philippines Tanauan Corp. and PowerSource First Bulacan
Solar, Inc., for which it asked a "price challenge" from other suppliers as
required by the Energy Regulatory Commission.

"They have around a month to submit alternative offers," he said. "We'll
have to wait for the deadline."

The offered price is P3.3 lower than the guaranteed feed-in-tariff (FiT) of
P8.69 per kilowatt-hour (kWh) awarded to developers during the second round
of installation target set by the Department of Energy for solar energy.

"For this we saw that adding 100 megawatts (MW) to our portfolio will
benefit the entire generation cost," Mr. Fernandez said.

He said if a power supply agreement (PSA) is forged with the two solar
developers, it would be Meralco's first contract for the renewable energy.

He described the offers as a "coincidence" because they were received after
the 500-megawatt (MW) installation target was reached after the deadline for
the "first to build, first to FiT" race on March 15.

"The second batch of FiT was already filled so maybe developers are now
beginning to talk to utilities," Mr. Fernandez said. "At least people now
know that P5.39 is possible," he said.

Solar Philippines offered to supply 50 MW for 20 years from solar power
plants it is developing in Tanuan, Batangas and in Naic, Cavite and their
surrounding areas, or an alternative site embedded within Meralco's
franchise area. The first site is expected to operate in February 2017 while
the second is to start two months later.

PowerSource's offered supply of 50 MW will come from its proposed solar farm
in Barangay Labne in San Miguel, Bulacan. Like Solar Philippines, it is open
to an alternative site embedded within Meralco's franchise area. The
required contract period is 20 years, starting August 2018.

Price challengers are given until 4:00 p.m. of Oct. 3 to submit their
expression of interest.

Mr. Fernandez said the company does not have a specific preference for a
fuel source or the type of technology from power suppliers, as long as they
agree on contract terms and how it fits in Meralco's portfolio mix.

"By their nature they will produce during their peak hours," he said about
the solar power suppliers.

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 an interest
in BusinessWorld through the Philippine Star Group, which it controls.

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Ref:
http://renewableenergy.einnews.com/article/347520407/sUBqYxSJEAMcLctg

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com