Terra Solar Philippines Inc. and Manila Electric Co. jointly filed an application with the Energy Regulatory Commission to approve their 850-megawatt power supply agreement that will result in savings of P14.8 billion to consumers.
Meralco executed a 20-year PSA following the conduct of a competitive selection process for the procurement of 850-megawatt renewable energy mid-merit capacity on Oct. 24, 2022.
“Meralco notes that the annual delivered rate of P5.8 per kilowatt-hour [VAT and line rental inclusive] is lower by about P3.9840 per kWh than the effective cost of P9.7840 per kWh [VAT and line rental inclusive], if the equivalent capacity under the Meralco-TSPI PSA is to be sourced from the WESM,” the joint application read.
WESM, or the Wholesale Electricity Spot Market, is the trading floor of electricity.
“In fact, by sourcing the capacity through the Meralco-TSPI PSA, Meralco’s average blended generation rate will be reduced by about P0.3540 per kWh, resulting in savings to consumers of about P14.8 billion,” the parties said.
TSPI submitted an unsolicited proposal for 850 MW capacity of RE mid-merit supply using a portfolio of solar power plants and battery energy storage systems.
Meralco’s third-party bids and awards committee awarded the contract to TSPI after nobody challenged its unsolicited proposal.
Under the PSA, TSPI will construct, own, operate, manage and maintain at least 2,500 MW solar power plants and 4,000 megawatt-hours of BESS in Cavite, Bulacan, Nueva Ecija and Zambales.
About 600 MW is scheduled to become operational by Feb. 26, 2026 and 250 MW by Feb. 26, 2027.
Meralco foresees a renewable energy mid-merit capacity deficit in its portfolio covering 850 MW based on its power situation outlook for 2026 and the succeeding years, as well as the required minimum percentage share of RE supply based on the prevailing renewable portfolio standards requirement, as shown in its 2021 power supply procurement plan approved by the Department of Energy.
“Thus, in order to ensure continuous and reliable electricity for Meralco’s customers whilst allowing Meralco to continuously comply with the RPS requirement set by the DOE, there is a need for Meralco to source additional RE mid-merit capacity through bilateral power supply contracts,” the joint application read.