MANILA, Philippines – Power distributor giant Manila Electric Co. (Meralco) has signed up 100 megawatts (MW) of solar power as part of efforts to diversify supply and bring down rates.
The company has inked contracts for 50 MW each with Solar Philippines Tanauan Corp. and PowerSource First Bulacan Solar Inc., the first renewable energy power supply contracts in its portfolio, Meralco senior vice president and head of utility economics Larry Fernandez said in an interview.
The contracts are timely, Fernandez said, since the offers coincided with the recent conclusion of the second round of Feed-in Tariff (FIT) for solar last March. FIT is a set of incentives given to developers for building the more expensive renewable projects.
Both solar developers have offered a price of P5.39 per kilowatt-hour (kWh) for a period of 20 years, lower than the latest solar FIT rate of P8.69 per kWh, once their respective projects start operation.
“That was included in the proposed supply of electricity of the power plant developers. Solar technology came to the point where costs have become cheaper,” Fernandez said.
Australia-based International Energy Consultants (IEC) managing director John Morris said the offer price is quite competitive for the power supplied to the overall market. “It’s almost, if not quite competitive, with other sources,” he said.
Having RE within Meralco’s supply portfolio will definitely shield it from outside factors, such as coal prices and foreign exchange, Morris also said.
Solar Philippines will supply 25 MW from solar farms from its solar farms in Tanauan, Batangas and Naic, Cavite, which are targeted for completion in February and April 2017, respectively.
Meanwhile, PowerSource is currently developing a 50-MW solar farm in the municipality of San Miguel, Bulacan which is scheduled for completion in August 2018.
However, these supply offers are still subject to a price challenge as well as regulatory approvals.
Meralco published invitations for price challenge for both proposals, wherein expressions of interest will be received until 4 p.m. today.
Currently, Meralco gets its supply from contracts with a capacity worth about 2,000 MW, composed of 1,500 MW from First Gas plants of the Lopez Group and around 400 MW from the Quezon coal power plant.