MANILA – While power companies await the Energy Regulatory Commission (ERC) approval of Power Supply Agreements (PSAs), Solar Philippines has proceeded with the construction of its solar farms, in line with the Department of Energy’s (DOE) push for merchant power plants to avert a power shortage next summer.
“We purchased equipment as early as 2016 to comply with our Meralco PSA. We will only 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,” said Solar Philippines president Leandro Leviste.
The company is now constructing two projects contracted with the Manila Electric Company (Meralco), including a 50 MW solar farm in Tanauan, Batangas that is at the lowest cost of any solar farm in the Philippines today.
The Tanauan facility is among the first solar farms to be constructed after the end of the Feed-in-Tariff (FIT), for which ERC approved rates of PHP8.69/kWh, and the first to undergo a Competitive Selection Process (CSP).
“The fact these PSAs are significantly below FIT, and emerged as the lowest cost in a CSP, 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,” Leviste said.
Leviste also pointed out that with hundreds of PSAs awaiting approval at ERC, and a growing backlog given the regulator’s limited manpower and resources, there have been delays in power projects, recently bringing the Luzon grid to yellow alert. This may result in power shortages by next summer if investors continue to await PSA’s 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.
While other companies remain unwilling to invest in new power projects unless fully contracted, DOE Secretary Alfonso Cusi earlier advised investors to build merchant power plants to cater to the spot market with the intent of entering a contract at a later date.
Following Cusi’s advice, Leviste said: “Unless we act now, Filipinos may suffer power outages if not higher rates next summer. While others await ERC PSA approval, we have proceeded with our projects to demonstrate our faith in our country’s economy and regulatory approval process.”