Published
November 1, 2016, 10:01 PM By
Myrna M. Velasco
Power utility giant
Manila Electric Company (Meralco) will be sending out tender notice to
interested parties on a price challenge that it will undertake for the two
power supply agreements (PSAs) that it recently sealed with solar farm
developers.
According to Meralco
First Vice President Ivanna G. dela Pena, while the contracts were already
signed by the relevant parties, the contracts have yet to be subjected to a
form of bidding in compliance to the requirements under the
government-sanctioned competitive selection process (CSP) policy.
Price challenge is
among the variants currently being accepted by regulators and policymakers when
it comes to CSP compliance for power supply contracts.
Under the PSAs with
Solar Philippines Tanauan Corporation and PowerSource First Bulacan Solar Inc.,
the price offer of both deals had been at R5.39 per kilowatt hour for 20 years,
substantially lower than the second wave feed-in-tariff (FIT) for that
technology type at R8.69 per kilowatt hour.
The two solar farm
projects had been designed at 50-megawatt capacity each – and that will then
partly fulfill Meralco’s aspirations to bulk up on its planned renewable energy
capacity.
In fact, the near term
target of the utility firm for solar capacity had been at 200MW – which it
plans to corner either via power supply pacts or on mergers and acquisition
deals.
Meralco is aggressively
working on shoring up its RE portfolio via its newly-formed subsidiary
Spectrum. Aside from solar, its goal is similarly set on hydropower, wind and
biomass ventures.
Solar installations in
the Philippines are incentivized with FIT, but developers’ bid for a third
round of such incentive may no longer pass the approval of the Department of
Energy.
The lower solar cost
contracts cornered by Meralco may also signal the end of FIT-underpinned solar
project developments. Said deals are deemed close enough to grid parity levels.
For solar to become
genuinely competitive in the long-term, battery storage has to successfully
make its business case for commercial rollout even to smaller markets like the
Philippines.
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