DOE wants newer plants to compete with greenfield capacity in CSP

Published November 25, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/11/25/doe-wants-newer-plants-to-compete-with-greenfield-capacity-in-csp/

The Department of Energy (DOE) is advocating that newer power plants – those with ages of one to five years – would compete with greenfield or new power project developments under the policy sphere of competitive selection process (CSP) in underwriting power supply agreements.

This was sounded off by Energy Undersecretary Jesus Cristino Posadas, as he opined that the “economics”of these plants would be closer to those power facilities yet to take off from blueprints.

The energy official makes particular reference to the scheduled CSP or competitive auction of Manila Electric Company (Meralco)– in which the power utility giant is soliciting PSA tenders for greenfield capacity of 1,200 megawatts that shall be scheduled for delivery in 2024.

By then, the newer plants will already be 9-10 years old and almost halfway through their recoveries of capacity fees – or the capital costs they have incurred in the construction of their power plants.

Meralco previously set out the technical and economic parameters on its targeted CSP for pure greenfield capacity, but the energy department interposed some objections to it.

Energy Secretary Alfonso G. Cusi primarily stipulated that he wants a competition of brownfield (existing plants) and greenfield developments and the tenor of the auction must be technology neutral.

Posadas, for his part, has indicated that if such facilities will have to be pitted against each other, it just needs to be assured that it will be the newer plants that will be joining the bidding.

The qualifier he had given would be the plants of around five years of commercial existence. “It should be the newer plants since we have issues of reliability and forced outages, so it shouldn’t be the old plants, otherwise, we will always be problematic with system outages,” he stressed.

Another proposition from the DoE is to undertake power supply contracting by exhausting all available capacities first before the DUs would move into contracting with greenfield projects for their future supply requirements.

Luzon grid though is seen reaching another round of power supply-demand equilibrium by year 2022-2023, and the development gestation period of baseload power plant projects would normally take 3-4 years from start of construction to commissioning phase and then commercial operations.