Meralco’s CSP Of Solar Proves Consumer Benefits of True CSP … and the Excessive Cost of Fit Subsidies

David Celestra Tan, MSK

20 August 2017

Meralco, after their apparently successful circumvention of the CSP policy for their 3,551mw of 20 year coal power contracts, is now highly publicizing their embracing competitive selection process (CSP) for renewable energy supply, mainly solar. And it is quite revealing.

Meralco heralded their signing of contracts 50mw of solar power from Solar Philippines at P5.39 per kwh, another 50mw at 4.69 per kwh from PowerSource, and now 85mw at only P3.50 per kwh from Citicore on swiss challenge. All within a matter of months. Note that just a year ago in June 10, 2016 Solar Phils CEO Leandro Leviste announced that they can sell solar at P4.00 per kwh. Now Meralco is boasting that it signed for P5.39 per kwh? That’s a premium of P189 million a year! Was there a Loren factor?

Meralco also originally agreed to a P5.39 per kwh price with PowerSource out of a Bulacan location. The swiss challenge was submitted by Equis of Singapore at P4.69 per kwh which PowerSource immediately matched. It is curious that no one dared to challenge the P5.39 rate of Solar Philippines when there are at least 200mw of stranded solar projects that were left out of the 2nd fit despite meeting the March 2016 deadline.

Meralco apparently is content with boasting that these contracts are lower than the P8.69 per kwh FIT, a very high bar to beat easily.

Now Solar Philippines is offering only P2.95 per kwh in the Citicore Challenge! Yet another evidence that the consumers will get much better rates under a true CSP. Why don’t they just do a straight CSP for solar and RE? The difference is almost P2.00 per kwh and P4.69 under Solar FIT.

The solar alliance

Efforts through the National Renewable Energy Board (NREB) a government agency that seem to act as lobbyist for subsidies for the solar industry are continuing for more government (actually consumer) subsidies.

If we assume that the true market rate for solar is now at P3.50 per kwh which is on par with the international rates in the middle east and latin America, then the FIT losses of the government on solar is P5.19 per kwh. 500mw of solar projects in the 2nd FIT round would cost the consumers is P5.2 billion a year or P104 billion for 20 years on them alone.

Solar needs to be lower than coal and natural gas. Because solar is only intermittent with only 6 to 7 hours of generation and little when the rains, clouds, and typhoons come. The utilities still need to buy reserve power and for the remaining 18 hours of reliable continuous power supply. Even storage batteries become cheaper, solar power for the grid can be extended only a few hours during nighttime. Storage batteries can be more economical for rooftop solar when homeowners use more power at night peak. To the solar lobbyists who go overboard and claim that they can replace coal, geothermal, natural gas, just try to be more realistic. It is ruining the credibility of solar.

There is nothing wrong with establishing Renewable Power Standards or RPS with a target minimum of utility purchases and RE installations. However, they must be all subjected to straight competitive bidding. Swiss Challenge is not really competitive because few people decide to really take the time to bid, only to be matched by a favored proponent.

We, and Meralco, have seen the good results of competition for consumers. Why are we insisting on all sorts of variations that only hoodwink us into believing it is a CSP. The drop in international rates for solar had been known even before they finalized the P8.69 rate. Why did we even continue to dole out those subsidies?

Filipino electric consumers do not really get any respect. They are the meek and subservient people to take advantage of. And the government is of no help either.

When will we get a savior?

Matuwid na Singil sa Kuryente Consumer Alliance Inc.


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