SOLAR PHILIPPINES Power Project Holdings, Inc. is looking to sell the power generated by its two solar farms to contestable customers, or those whose consumption reached the required threshold and can buy their electricity through retail suppliers.
The company is building two solar farms, which are contracted with Manila Electric Co. (Meralco), which will generate 50 megawatts (MW) in Tanauan, Batangas and 150-MW in Concepcion, Tarlac. The PSAs of both are pending approval at the ERC.
“We purchased equipment as early as 2016 to comply with our Meralco PSA, and will just sell to contestable customers if the PSA (power supply agreement) is still pending at ERC. The sooner the ERC approves this PSA, the sooner consumers can enjoy savings,” said Solar Philippines President Leandro L. Leviste in a statement over the weekend.
Meralco has three pending solar PSAs, two of which are with Solar Philippines, which offered P2.99 per kilowatt-hour (kWh) for its second contract. The price is significantly lower than the P8.69/kWh rate approved by the ERC under a 20-year feed-in-tariff (FiT), a defunct scheme that offered attractive rates to encourage investments in solar farms.
“The fact these PSAs are significantly below FiT, and emerged as the lowest cost in a CSP (competitive selection process), affirms the competitiveness of these rates. Allowing the market to determine rates via CSP may be a solution to both lower electricity rates and ease the workload of ERC,” Mr. Leviste said.
Distribution utilities are required by the ERC to subject power supply offers to price challenges to ensure that they agree to the least costly deals from generation companies. Generation charges are pass-through costs that are billed monthly to consumers.
“We have secured off-take agreements with private customers at higher rates than the PSA’s now for ERC approval. If our PSA rates are reduced any further, we would be better off just selling to these private customers,” Mr. Leviste said.
He previously said Solar Philippines had created a retail electricity supply (RES) business, although the approval of its license is pending with the ERC. But the Supreme Court issued a temporary restraining order (TRO) on provisions relating to RES, including the issuance of new licenses.
The Department of Energy (DoE) has drafted two circulars that seek to re-start regulations on retail competition and open access (RCOA), which seeks to give customers the power to choose where to buy their electricity.
Under the draft circulars, contestable customers are not anymore mandated to buy their electricity from a licensed retail electricity supplier. The mandatory provision was questioned by various entities before the high court, which issued the TRO. The DoE now wants to make the switch voluntary.
Contestable customers use an average of at least 1-MW a month for the past year. RCOA rules aim to gradually lower that threshold until they reach the consumption level of an average household. — Victor V. Saulon
