By Victor V. Saulon, Sub-editor
MERALCO PowerGen Corp. (MGen) is in talks with multilateral lending agencies for a possible partnership in building merchant power plants to test the financing market that has been used to extend funding only to projects with approved power supply agreements.
“We’re talking to multilaterals whether they can come in and co-invest,” Rogelio L. Singson, MGen president and chief executive officer, told reporters in an informal gathering on Thursday.
He identified the multilateral agencies as the World Bank (WB), Asian Development Bank (ADB) and International Finance Corp.
“They were the ones who came to us,” he said.
He said MGen is willing to put in 50% of the equity in building the power plant, with the rest being shouldered by the multilateral lending agencies.
Should the deal materialize, the partnership could “give confidence” to banks, knowing that the merchant power plant project had gone through rigid evaluation, he said.
Unlike conventional ones, merchant power plants do not have long-term power purchase agreements to cover their output.
At present, lenders require projects to present an approved power supply agreement (PSA) before extending loans to energy developers. MGen has shovel-ready projects that await approval from the Energy Regulatory Commission (ERC).
Mr. Singson is looking at projects with a capacity or around 20 to 50 megawatts (MW) in solar, wind or “whatever is available.” He said the possible project could be greenfield or brownfield, referring to new projects or existing ones that can be revived or upgraded.
“We’re willing to put equity up to an amount that will give them comfort,” he said.
The MGen official expects a decision on the partnership with the multilateral lending agencies within the year. Personally, he said he prefers renewable energy projects over coal-fired power plants.
Mr. Singson earlier said he expects MGen’s renewable energy projects to account for 20% of its attributable capacity in the coming years. In the next three to four years, he expects an installed RE capacity of at least 500 to 600 MW.
MGen, a unit of Manila Electric Co. (Meralco), is developing three power plants — all coal-fired — either on its own or in partnership with other entities.
Its unit Atimonan One Energy, Inc. (A1E) is building a two-unit ultra supercritical coal-fired power plant, each with a capacity of 600-MW in Atimonan, Quezon.
A1E’s PSA with distribution utility Meralco was submitted to the ERC in April 2016 and had gone through public hearings, technical working group review and assessment of the tariff.
Another unit, San Buenaventura Power Ltd. Co., is constructing a 455-MW facility in Mauban, Quezon province. It will be the country’s first supercritical coal-fired power plant. The plant is targeted to be completed in mid-2019.
The third project, a coal-fired power plant under Redondo Peninsula Energy, Inc., has two units, each with a capacity of 300 MW using the circulating fluidized bed technology.
A PSA with Meralco for 225 MW, which was submitted to ERC for approval in April 2016, had gone through public hearings, technical working group review and tariff assessment.