Published December 3, 2019, 10:00 PM
By Myrna M.
Velasco
Energy Secretary Alfonso G. Cusi has
formally corresponded with power utility giant Manila Electric Company
(Meralco) directing it to ensure that it can guarantee ample power supply in
next year’s summer months and in the long term.
“I have written Meralco. I’m asking them on
what are their measures to make sure they can cope with the increase in demand
– and there is assurance of supply in the summer months and in the coming
years,” the energy chief told reporters.
Cusi qualified the major question he
raised to the utility firm is on how it can “cover for the increased demand in
its franchise area.”
He emphasized the energy department
is avoiding the recurrence of a power system reaching breaking points during
summer months – when consumers had to be plunged into unwanted double whammy of
rolling power outages and electricity rate hikes due to tight supply conditions
in the grid.
The energy chief averred that hike
in electricity demand in the country presents both bad and good prospects –
with him qualifying that it is “good” because “it means that the economy is
improving.”
Conversely, Cusi asserted that such
scenario is also seen “bad” or ominous because this entails that the project
developers and sponsors should act fast on “building up capacity and that is
not easy.”
Based on industry forecasts, power
supply-demand equilibrium will overwhelm Luzon grid again by year 2022-2023; and
at this point, there are no new big-ticket projects that are ready to take off
from blueprints yet to satiate the country’s longer term energy needs.
And even in the competitive
selection process (CSP) being scheduled for Meralco, there is no specific parameter
on how it can entice new capacity addition – especially so since the mandate of
the DOE is to set off a contest between brownfield and greenfield (new)
capacities, which by design are of differing project economics.
Cusi, at the very least, has sounded
off that “we want to promote early construction of power plants,” but the
formula he has been batting for is “merchant” development of power projects and
not exactly those that shall be covered by power supply agreements (PSAs) at
pre-construction phase.
Project lenders, however, are not
very keen at supporting new builds because determining revenue stream for
capacities without definite markets or PSAs poses market risks that they are
not very comfortable yet to deal with.
Cusi stressed “we want those
constructed ahead as merchants to be able to participate in the CSP…we want to
encourage power plants to be constructed ahead of time even without PSA.”
In the next round of CSP being
slated by Meralco for 1,200-megawatt capacity, the energy department proposed
that the terms of reference be relaxed – that PSA solicitation shall not just
include new plants but also the existing ones; and that the capacity be done on
aggregation and not just one plant with that scale of installation.
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