Solar PHL challenges price offer of First NatGas Power

By Lenie Lectura - January 28, 2018

https://businessmirror.com.ph/solar-phl-challenges-price-offer-of-first-natgas-power/

SOLAR Philippines challenged the price offer of First NatGas Power Corp. to supply the Manila Electric Co. (Meralco) from the Lopez-led firm’s San Gabriel 414-megawatt (MW) gas power plant.

The solar-power provider said over the weekend that it submitted to Meralco an offer for 24/7 power at P2.99 per kilowatt-hour (kWh), in response to the utility firm’s invitation for price challenge of an unsolicited proposal by First NatGas.

While First NatGas offered to supply Meralco power utilizing gas technology, Solar Philippines will utilize solar energy and battery storage to supply consumers reliable, clean energy at a lower cost than gas.

Compared to Meralco’s average generation rate in the past three months of P4.74/kWh, a rate of P2.99/kWh would allow consumers to save over 30 percent ,or an estimated P75 billion per annum. Consumers may save even more compared to gas plants, such as First Gas Philippines Corp.’s 500 MW, which in the past three months supplied Meralco at an average rate of P5.44/kWh inclusive of value-added tax.

Solar Philippines’s offer comes in the wake of Meralco’s declaration of a failure of bidding in a competitive selection process (CSP), in which no company qualified to challenge the proposal of First NatGas in light of the CSP’s requirement that “the fuel for the generation of the ‘price challenger’ must be the same as the ‘original power supplier,’ which is natural gas.”

Since it was a failed bid, Solar Philippines said Meralco may now choose whether to rebid this under the same terms, or amend the terms to allow other technologies to compete on the basis of cost.

Earlier, Energy Secretary Alfonso G. Cusi said all power procurement should be “technology neutral” and not favor any single supplier. The Department of Energy (DOE) last year stopped several CSPs of electric cooperatives due to terms that limited bidders to specific technologies.

Sen. Sherwin T. Gatchalian has also filed “An Act Institutionalizing Reforms in the Procurement By Distribution Utilities of Supply for the Captive Market,” which proposes the appointment of a third-party auctioneer to administer the conduct of all CSPs under standard terms of reference.

“The rules espoused by Secretary Cusi and Senator Gatchalian on the conduct of CSPs will be one of the greatest steps ever taken to lower power rates in the Philippines. Large commercial and industrial customers already enjoy rates near P3/kWh under Retail Competition and Open Access,” Solar Philippines President Leandro Leviste said. “If competition is opened to the widest field of players, residential customers would also enjoy such low costs, translating to P1000 in savings per household per year.”

Leviste claims Solar Philippines’s offer would allow Meralco to save an average of 30 percent.

“WESM [Wholesale Electricity Spot Market] prices are at an all-time low, and new plants from companies like Aboitiz and San Miguel now offer consumers very low rates,” he said. “Rebidding this requirement in line with the DOE’s technology-neutral policy will encourage competition and ensure consumers can enjoy significant savings.”

Solar Philippines recently installed the nation’s first MW-scale Solar-Battery Micro-Grid in Paluan, Occidental Mindoro, to provide 24/7 reliable power for an entire town at a lower cost than gas. The pioneering project features batteries from Tesla, the world’s leading electric-vehicle manufacturer, and panels from the Solar Philippines Factory. It aims to demonstrate the viability of solar and storage to offer Filipinos lower-cost power than carbon dioxide-emitting natural gas.

Solar Philippines and Meralco entered into long-term power-supply agreements in the past. The first agreement, Solar Philippines will supply Meralco with 50 MW at a base price of P5.39 per kWh.

A separate agreement also states that Solar Philippines will supply Meralco 75 to 85 MW for five years and another 85 MW from the sixth up to the 20th year for P2.9999/kWh. The rate is significantly lower than the prevailing solar feed-in tariff rates and a welcome development for consumers.