A power-supply agreement (PSA) that underwent competitive selection process (CSP) was executed between the Manila Electric Co. (Meralco) and Solar Philippines Tarlac Corp. (SPTC).
Under the agreement, Solar Philippines will supply Meralco 75 megawatts (MW) to 85 MW for five years and another 85MW from the sixth up to the 20th year.
The price by which Solar has sold the said capacity to the distribution-utility firm is P2.9999 per kilowatt-hour (kWh). This rate is significantly lower than the prevailing solar feed-in tariff (FiT) rates and a welcome development for consumers, Meralco said on Tuesday.
The solar power will be sourced from a power facility that is currently being constructed in Concepcion, Tarlac.
“Effectivity of the PSA is upon approval by the Energy Regulatory Commission (ERC). Both parties are committed to file the ERC application for approval of the PSA on or before October 20, and secure the ERC’s issuance of a provisional authority, in time for an implementation of the PSA by January 2018,” the utility firm said.
This is the third competitive bidding conducted by Meralco for solar supply contracts. Solar Philippines Tanauan Corp. and PowerSource First Bulacan Solar Inc. have offered 50 MW each at a price of P5.39 per kWh for 20 years, lower than the latest solar FiT rate of P8.69 per kWh.
Solar Philippines will supply 25 MW from its solar farms in Tanauan, Batangas, and Naic, Cavite, which are targeted for completion in February and April 2017, respectively.
Solar Philippines is confident that it will be able to complete its projects ahead of the ERC approvals.
“We purchased equipment as early as 2016 to comply with our Meralco PSA, and will just sell to contestable customers if the PSA is still pending at ERC. The sooner the ERC approves this PSA, the sooner consumers can enjoy savings,” Solar Philippines President
Leandro Leviste said.
Hundreds of PSAs are said to be awaiting approval at ERC, with a growing backlog given the regulator’s limited manpower and resources. This has delayed power projects, recently brought the Luzon grid to yellow alert, and may result in power shortages by next summer if investors continue to await PSA approvals before beginning their projects.
“We have secured off-take agreements with private customers at higher rates than the PSAs now for ERC approval. If our PSA rates are reduced any further, we would be better off just selling to these private customers,” Leviste said.