Philippines: Meralco looks for more solar-power providers

Philippines: Meralco looks for more solar-power providers

THE Manila Electric Co. (Meralco) is seeking for more solar-power providers
to supply the utility firm's requirements.

'We might sign an additional 85 megawatts [MW],' said Meralco President
Oscar Reyes, referring to a power supply agreement (PSA) with a
still-undisclosed solar provider.

This is on top of the 175 MW of solar capacity that Meralco will source from
three solar-power firms, pending approval from the regulators, Reyes added.

'We received quite a number of offers for solar at various price point,' he
explained. 'We are considering the possibility of signing up another one.'

Meralco has entered into long-term PSAs for a total of 175MW of solar energy
with three solar-power generators.

Two of the long-term PSAs Meralco entered into have undergone a Competitive
Selection Process (CSP). These are with Solar Philippines and with
PowerSource First Bulacan Solar Inc.

Solar Philippines will supply Meralco with 50 MW at a base price of P5.39
per kilowatt-hour (kWh). Another 50 MW will be supplied by PowerSource First
Bulacan at P4.69 per kWh.

These PSAs will take effect upon approval from the Energy Regulatory
Commission (ERC).

The third PSA, priced at P3.50 per kWh, is completing CSP with Citicore
Power Inc. Meralco is waiting for a price challenger until August 14.

Once the deal between Meralco and Citicore is signed, they would have to
submit the PSA for ERC approval.

Citicore will source power from its three solar plants, including Next
Generation Power Technology Corp. in Mariveles, Bataan; First Toledo Solar
Energy Corp.in Toledo, Cebu; and Silay Solar Power Inc. in Silay, Negros
Occidental.

Both are working for the delivery of 75 MW up to 85 MW from the first to the
fifth years of a 20-year PSA. From the sixth year onward, the supply will
increase to 85 MW.

When finally approved by the ERC, these three PSAs will contribute to
Meralco's renewable-energy portfolio.

Reyes noted that the agreed solar contract price is lower than the solar FiT
(feed-in-tariff) rate of 8.69 per kWh. 'The last one of the three PSAs is
more than half below the latest FiT rate. We assure Meralco customers that
we negotiate the best price for them,' Reyes added.

In their PSA applications, Meralco said it foresees high demand 'thus, there
is an urgent need for the final approval of the PSAs considering a
significant peaking capacity deficit, as well as possible occurrences of
scheduled maintenance shutdowns and forced outage of power plants,' their
application stated.

Based on the utility firm's distribution development plan for 2015 to 2020,
Meralco's aggregate capacity requirement is forecasted to grow by a
compounded average growth rate of 3.7 percent.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com