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Solar Philippines challenges bid for Meralco's 24/7 power supply

MANILA, Philippines – Solar Philippines is challenging the bid of First NatGas Power Corporation for the 24/7 power supply of the Manila Electric Company (Meralco), coming from the 414-megawatt (MW) San Gabriel gas power plant.

The solar producer said in a statement over the weekend that it submitted an offer for Meralco's 24/7 power supply at P2.99 per kilowatt hour (kWh), in response to the power firm's invitation for a price challenge of an unsolicited proposal by First NatGas.

First NatGas offered to supply power by using gas technology. Solar Philippines, meanwhile, said it offered to use battery storage and solar energy for cleaner, "lower cost" supply.

In the past 3 months, Meralco's average generation rate was at P4.74 per kWh. According to Solar Philippines, its rate of P2.99 per kWh would allow consumers to save "over 30% or an estimated P75 billion per annum."

"Consumers may save even more compared to gas plants, such as First Gas Philippines Corporation's 500 MW, which in the past 3 months supplied Meralco at an average rate of P5.44 per kWh inclusive of value added tax," Solar Philippines said.

The solar producer's offer came after Meralco's failed auction in a competitive selection process (CSP), after no company was qualified to challenge the proposal of First NatGas. This was due to the CSP's requirement that "the fuel for the generation of the Price Challenger must be the same as the Original Power Supplier, which is natural gas."

After the failed auction, Solar Philippines said Meralco may now choose whether to rebid under the same CSP terms or change these to allow other technologies to compete on the basis of cost. (READ: Home solar panels: a beginner's guide to saving electricity)

Energy Secretary Alfonso Cusi has said all power procurement should be "technology-neutral" and should not favor any single supplier.

Back in 2017, the Department of Energy (DOE) halted several CSPs of electric cooperatives due to terms that limited bidders to new technologies.

"The rules espoused by Secretary Cusi and Senator [Sherwin] Gatchalian on the conduct of CSPs will be one of the greatest steps ever taken to lower power rates in the Philippines. Large commercial and industrial customers already enjoy rates near P3 per kWh under Retail Competition and Open Access," said Solar Philippines president Leandro Leviste.

"If competition is opened to the widest field of players, residential customers would also enjoy such low costs, translating to P1,000 in savings per household per year," he added.

Leviste also said his firm's offer would allow Meralco to save an average of 30%.

"WESM (Wholesale Electricity Spot Market) prices are at an all-time low, and new plants from companies like Aboitiz and San Miguel now offer consumers very low rates," he added.

Solar Philippines had installed the nation's first MW-scale Solar-Battery Micro-Grid in Paluan, Occidental Mindoro, to provide 24/7 power for an entire town at a lower cost than gas.

Solar Philippines and Meralco had entered into long-term power supply agreements (PSAs) in the past.

The first deal entailed Solar Philippines supplying Meralco with 50 MW at a base price of P5.39 per kWh.

Another agreement also states that Solar Philippines will supply Meralco 75 MW to 85 MW for 5 years and another 85 MW from the 6th year up to the 20th year for P2.9999 per kWh. – Rappler.com