Meralco needs 3,920MW until 2030 to meet demand

BY LENIE LECTURA – JULY 12, 2021
from Business Mirror

The Manila Electric Co. (Meralco) will need 3,920 megawatts (MW) of capacity from 2021 up to 2030 to meet the projected 4.12-percent increase in peak demand every year.

Of the figure, 2,270MW would be sourced from baseload plants, 300MW from renewable energy (RE) baseload and 1,350MW from RE mid-merit, according to the utility firm’s 2021-2030 Power Supply Procurement Plan (PSPP).

“The forecasted supply considered a capacity allocation for baseload, intermediate and peaking requirements that would result in a least generation cost for Meralco’s captive customers,” the utility firm said.

Baseload plants are those that run optimally flat all throughout the day, such as coal, nuclear, and geothermal.

Mid-merit plants are those that can ramp up and ramp down faster than baseload plants. These are more flexible and could run during the day when load is increasing and approaches peak. These could be gas and hydro plants.

Peaking plants, meanwhile, can rapidly ramp up and down. They operate only within a limited time during the day that the peak occurs. Oil-based plants, gas and other very flexible plants are considered peaking plants.

All 3,920MW of capacity requirement to service Meralco customers until 2030 would be procured via Competitive Selection Process (CSP), starting with 70MW of baseload supply this year. Meralco may publish the bid invite this month.

Other Power Supply Agreements (PSAs) tentatively lined up for CSP this year are 100MW RE baseload, 850MW RE mid-merit and 500MW RE mid-merit.

For 2022, Meralco intends to conduct a CSP for 1000MW baseload and 200MWRE baseload.

The CSP for the remaining 1,200MW baseload has yet to be scheduled by Meralco.

“The actual conduct of CSP will be staggered,” said Meralco Utility Economics head Lawrence Fernandez.

Meralco’s PSPP indicated that peak demand is expected to grow at a rate of 4.12 percent annually over the period of 2021 to 2030. This year, peak demand was expected to increase by 2.2 percent as some businesses have reopened, albeit at limited capacity. In 2020, peak demand reached 7,614MW in March. This was lower than the 7,740MW in 2019.

“The long-term forecast of the movement of peak demand will also be affected by how much renewable energy systems are introduced into the system; by the effectiveness of new energy efficiency measures put in place; and by the changes in consumption behavior arising from the new normal post-quarantine. The magnitude of these will only be realized as the industry continues to develop,” Meralco said.

Peak demand, according to Meralco, was assumed to occur during the month of May due to the seasonal increase in electricity consumption during the hot dry season. Monthly peak demand is projected to be at its lowest during the month of January due to cooler temperature.

The PSPP also indicated a projected deficit capacity, which could last for two to three hours. Based on increasing demand trend in March, an interim PSA may be executed to address additional peaking requirements during the hot dry season. The capacity and duration of this interim PSA will be finalized pending official metering data from the March power bills.

Meralco’s residential customers are expected to grow at an average rate of 4 percent annually until 2030. Captive commercial connections are also expected to increase at a rate of 3.2 percent during the 10-year period. Captive industrial connections, meanwhile, are expected to grow at a slower rate of 0.3 percent.