Meralco urged to tap RE sources

By Jordeene B. Lagare April 17, 2021
https://www.manilatimes.net/2021/04/17/business/green-business/meralco-urged-to-tap-re-sources/864609/

Greenpeace is calling on the Manila Electric Co. (Meralco) to source electricity from renewable energy (RE) sources in the coming years and abandon fossil fuels altogether.

Sought for comment, Meralco spokesman Joe Zaldarriaga said RE suppliers will be able to meet the power distributor’s energy requirements as long as they provide “the least cost.”

A report by Greenpeace titled “Decarbonizing Meralco” co-written by the Center for Renewable Energy and Technology, revealed it is technically feasible for the country’s largest power distributor to shift to RE sources.

In the study, the group urged Meralco to source all of their new future power supply agreements (PSAs) and other future energy demands from RE; in particular, prioritize those coming from solar and wind energy.

“Existing coal contracts should not be renewed and should be retired as soon as possible while ensuring a just and managed transition for coal plant workers. Fossil gas projects should be reviewed and deprioritized as these are still fossil fuels that emit greenhouse gas emissions,” the study stated.

The study mentioned if Meralco sources all of its new and future demands from renewables, the firm’s generation cost will drop to P3.5858 per kilowatt hour (kWh) in 2030 from the current price of P4.4807 per kWh.

To mitigate stranded asset risks, Greenpeace said future PSAs of Meralco with baseload generators should have carve-out provisions, permitting Meralco to purchase less electricity according to changes in demand.

Zaldarriaga, in a message, said for Meralco’s competitive bidding for mid-merit supply in 2019, an RE bidder submitted a bid with a headline rate of P5.19 per kWh.

He also said Meralco’s generation charge decreased by almost P1 per kWh from 2014 to 2020. However, the feed-in-tariff rate for solar and wind rose by P1.60 per kWh and P1.36 per kWh, respectively, during the same period.

“To achieve the least cost for consumers, supply from various sources will have to be optimized,” he said.

Zaldarriaga noted that Meralco’s supply process undergoes a competitive selection process by a third-party bid and awards committee as supervised by the Department of Energy.

“Based on the process, the lowest bid is obtained and this is then submitted to the regulator for approval after all requirements have been met,” Zaldarriaga explained.

“If there will be RE suppliers in the future that will compete and obtain the least cost among all the bidders, then they will be able to supply Meralco’s requirements,” he said.

Also, Greenpeace said Meralco should invest more in hybrid RE plants and reduce its reliance on baseload plants or power facilities that provide uninterrupted power supply.

Aside from that, the study said the power company should pursue investments in energy storage and smart grids.

“A substantial decrease in the cost of variable renewables will increase demands for flexible power, subsequently reducing demands for inflexible baseload power, such as coal plants.

And in a future power grid where flexibility is crucial, coal plants will only serve as stranded assets,” the study stated.

To prevent such risks from being passed to electricity end-users, the group is proposing that Meralco start reducing power purchases from coal-fired power plants and other inflexible power generators.

The study also stated Meralco should mandate straight energy pricing for future power contracts since “it removes the burden of absorbing coal’s financial risks such as price fluctuations, currency exchanges and others.”

Moreover, the group called on Meralco to implement measures to increase the accessibility of its net metering application process, to further develop the potential of distributed energy generation.