Meralco firming up more supply contracts with gas, RE plants

By Myrna M. Velasco

Power utility giant Manila Electric Company (Meralco) is bulking up its power supply portfolio with new power supply agreements (PSAs) that it is currently advancing with gas-fired and renewable energy (RE) generating facilities.

Meralco President Oscar S. Reyes indicated they will likely finalize a PSA for the 414-megawatt San Gabriel gas power facility of the First Gen Group by the end of this month.

Oscar S. Reyes Oscar S. Reyes

He noted that San Gabriel’s offer of P3.70 plus per kilowatt hour (kWh) is now under ‘second price challenge’ under the Competitive Selection Process (CSP) policy of the industry.

“The first challenge failed because no one offered, the second challenge is ongoing,” Reyes said. On record, the San Gabriel facility tender is being matched with a P2.99 per kWh solar capacity by Leviste-led firm Solar Philippines.

Meralco indicated that the contract for the San Gabriel could cover its entire capacity of 414MW and it will be for a duration of six years – effective upon the approval of the Energy Regulatory Commission.

“What we need why we signed up with San Gabriel is a capacity that we can ramp up and ramp down, so it’s a mid-merit service…we need 24/7 supply for 365 days, and the plant would be able to do that,” Reyes said.

A mid-merit facility, which is also called the ‘load following plant’ is an asset that can adjust its generation output depending on demand fluctuations throughout the day.

In addition, Reyes indicated that they are eyeing several new PSAs with solar and wind power generation firms.

For solar, the offer is from Pilipinas Newton Energy Corporation for a 50MW capacity, with the lowest price offer so far of P2.98 per kWh, according to Meralco Vice President Lawrence S. Fernadez.

For wind, he emphasized that the aggregate capacity set for contracting would be 150MW, comprising of two projects at 80MW and 70MW capacities.

On the solar capacity procurement, Fernandez noted that this is currently under CSP process; while for the wind facilities, competitive bidding has yet to be undertaken.

“There are already talks but formal offers have yet to be made…when that is finalized, it will also undergo CSP so we will need to see the final form when announced,” Fernandez explained.

On the overall supply contracting strategy of the utility firm, the Meralco executive averred “we’re open to all technologies as long as it is competitive and it will be for more efficient and more reliable system.”