SMC Global keen on joining auction for Meralco power supply requirement
By Lenie Lectura – August 27, 2020
from Business Mirror
SMC Global Power Holdings Corp., the power unit of conglomerate San Miguel Corp. (SMC), may participate in the competitive auction for 1,800megawatts (MW) of Manila Electric Co.’s (Meralco) power capacity requirement.
“The Company intends to use the capacity of its greenfield power plants to bid for the upcoming 1,800MW Meralco and other capacities for CSP [Competitive Selection Process],” SMC Global Power said in a report to the Philippine Dealing & Exchange Corp.
SMC Global Power is one of the largest power firms in the country with a total installed capacity of 4,347MW, having a diversified portfolio of power sources such as coal, natural gas and hydro. It currently holds a market share of 25 percent in the Luzon Grid, 8 percent of the Mindanao Grid and 19 percent in the National Grid. The Luzon Grid represents 73 percent of the nationwide demand.
Its greenfiled power plants include the 600MW Limay plant and the 300MW Davao plant.
The company has also lined up other major greenfield power plant projects with a combined capacity of 2,135MW. All four are currently being developed. These are the Masinloc units 3 (335MW) and 4 (350MW) 335MW power plants in Zambales, which are targeted for commercial operations in December 2020 and 2024, respectively; 600MW Mariveles power plant, in which half of the capacity will be ready by 2022 and the other half by 2023; the 850MW Ilijan LNG (liquefied natural gas) expansion, with target commercial operation date (COD) in 2023; and the 1,000MWhour Battery Energy Storage System project, which is targeted for substantial completion by next year.
SMC Global said it would fund the projects through 30-percent equity and 70-percent debt.
The engineering, construction and procurement (EPC) contract of the Masinloc greenfield plants are being finalized. Meanwhile, the 1,200-MW Ilijan combined cycle power plant in Batangas will undertake an expansion to boost its capacity by another 850MW.
SMC Global Power is interested to utilize the capacity of its greenfield power projects to supply Meralco’s requirements.
Meralco recently sought approval from the Department of Energy (DOE) for the CSP of 1800MW greenfield baseload capacity for its requirements in 2024-2025.
The 1,800MW PSA consists of the 1,200MW capacity from the failed CSP in 2019 and an additional 600MW from the target 1500MW baseload capacity supposedly scheduled for bidding in 2020.
SMC Global Power expects the preparations for the CSP to commence in the next few weeks and the formal bidding to happen in the next two to four months.
DOE earlier said it wants Meralco to proceed with the competitive auction for the 1800MW “at the soonest time possible.” It advised Meralco to explore other ways by which it can conduct the CSP amid the quarantine imposed by the government. Meralco had asked the DOE if it could delay the auction to October this year.
DOE Assistant Secretary Redentor Delola suggested instead the conduct of an online CSP in lieu of a face-to-face auction.
“We approved it last March. We expected that they would begin with the CSP immediately. What we are trying to tell them, there are mediums they can utilize to be able to proceed with the procurement, perhaps online conduct of the CSP or other medium that will allow the continuation of the bidding process.
We want to be assured that the delivery will still be as scheduled by 2024. What we don’t want to happen is that a deferment of the bidding schedule may delay the delivery of the power supply,” Delola said.
Meralco’s biggest concern is the volatility of fuel prices and uncertainty of prices going forward.
“The volatility is so high that it would be difficult for us to have a proper valuation, which is a distinguishing criteria to determine who will win in the CSP,” Meralco President Ray Espinosa earlier said.
