Razon’s Prime Infra renewable energy unit inks 20-year power supply deal with Meralco

Terra Solar Philippines, a unit of Enrique Razon’s Prime Infra-led Terra Renewables Holdings, Inc., has signed 20-year power supply agreement (PSA) for the 850-megawatt (MW) mid-merit requirement of the Manila Electric Company (Meralco).

In a statement on Thursday, Prime Infra said Terra Solar will provide Meralco with 850MW mid-merit supply, which can approximately power 1.55 million houses per year or an average of 200-kilowatt-hour (kWh) a month.

The renewable energy supply is also seen to displace an annual consumption of approximately 1.4 million tons of coal or 930 million liters of oil.

Under the PSA, the initial 600MW will be available to Meralco by 2026 while the remaining 250MW will be delivered in 2027.

“This contract with Meralco is our response to help meet the increasing demand for power through a more cost-efficient and sustainable manner. We applaud Meralco for its drive to decarbonize the energy industry and ensure reliable quality power supply to support its customers. Meeting the power supply needs is of paramount importance to sustain the economic growth of the country, particularly following the challenges we faced through the pandemic and will continue to face in light of the economic headwinds the world is facing today,” said Razon.

“Terra Renewables’ further investments in renewable energy infrastructure also aims to help bring down cost of power while creating long-term economic, environmental and social values,” he added.

The signing of the 20-year PSA with Meralco marks the culmination of the competitive selection process the renewable energy project underwent per regulations of the Department of Energy, according to Prime Infra.

“Prime Infra, together with its partner, will invest some P200 billion into developing Terra Solar. It is a step change in the way power generation is approached. As a company pursuing economically critical and socially relevant infrastructure, Prime Infra is committed to do its part in accelerating the clean energy transition and strengthening the country’s energy security,” said Terra Renewables president and CEO Guillaume Lucci. 

In a separate news release, Meralco said Terra Solar’s supply was priced at a levelized cost of electricity (LCOE) rate of P5.80 per kilowatt-hour.

“The rate for this renewable energy supply offer is very competitive and lower than fossil-powered generation plants, especially at this time when fuel prices are skyrocketing. This PSA between Meralco and Terra Solar is very strategic as we ensure availability of adequate and cost-competitive power for our more than 7.5 million customers in the coming years,” said Atty. Jose Ronald Valles, Meralco head of Regulatory Management.

“In addition, this PSA forms part of our compliance to the Department of Energy’s (DOE) Renewable Portfolio Standards policy and at the same time cements our commitment to source up to 1,500 MW of our power requirements from renewable energy,” Valles added.

The PSA, which was based on the Terms of Reference earlier approved by the DOE, will be filed with the Energy Regulatory Commission and will be subject to regulatory proceedings and approval prior to implementation, according to Meralco.

The signing of the PSA serves as the culmination of the competitive challenge for Terra Solar’s unsolicited proposal, the power distributor said.

Meralco said the Third Party Bids and Awards Committee (TPBAC) earlier this year administered two rounds of Competitive Selection Process (CSP) for the offer, both of which failed due to lack of challengers.

Since there were no outstanding disputes, the TPBAC advised Meralco that it may enter into direct negotiation for the contract capacity requirement, pursuant to the Revised CSP Rules, the company said. —Jon Viktor D. Cabuenas/KBK, GMA News