Power utility giant Manila Electric Company (Meralco) will be contracting at least 1,500 megawatts of renewable energy (RE) capacity to form part of its supply portfolio that will be utilized in servicing its more than seven million customers.
According to Meralco President and CEO Ray C. Espinosa, the initial batch of its targeted RE contracting shall be carried out within five-year period and this will likewise serve as one of the anchors of the firm’s sustainability agenda.
“At the contracting side for our supply, we are committing ourselves to secure 1,500MW of renewable energy for the next five years and to make a strong point about our objective of moving quickly to clean energy by 2050,” he noted.
Espinosa qualified the targeted RE capacity procurements will “replace our mid-merit requirements, which is about 29-percent of the total supply mix we need for our captive customers with renewable energy.”
By policy, distribution utilities (DUs) like Meralco are also sanctioned by the government-designed Renewable Portfolio Standards (RPS) to source certain percentage of their supply from RE-generated capacities. It will be accelerating at an annual increment to be prescribed by the Department of Energy.
The RPS is an alternative incentive mechanism to lure capital flow in the next wave of RE installations in the country, as cast in the Philippine Energy Plan – and this buildup is seen hitting more than 71,000 megawatts by year 2040.
Espinosa specified that the “energy transition agenda” will be a space that the utility firm will be making significant contributions to – not just on its power distribution network, but also on the power retailing segment of its business as underpinned by the Retail Competition and Open Access (COA) policy of the restructured electricity sector.
“On the retail side, we have secured at least 400MW of solar supply for our contestable customers for the period 2022 and 2026,” he stated.
The Meralco chief nevertheless opined that the “energy transition” does not just end with procuring RE capacity, because with the intermittency of such technologies – chiefly for solar and wind, it must also be a conscious decision on the part of the power utility to prudently procure baseload capacity; and these facilities shall be able to provide reliable power round-the-clock and must not unduly burden also the pocket of consumers.
“Even if we couple it (RE) with batteries – because batteries are very expensive, the cost of power would rise, so you would have to balance the move to clean energy versus the economic needs of the people and the country,” he stressed.
Espinosa expounded “in order to address this dependable energy issue as we move to clean energy, we are now seriously looking at nuclear as providing that dependable baseload capacity in an effort to finally say, we are veering away from fossil fuels – whether that is coal or whether that is gas.”
And while gas is generally upheld as a “transition fuel,” Espinosa emphasized, that “it is not a solution to getting a carbon-free 2050 Philippines.”