Meralco keen on switch from coal to gas

MANILA, Philippines — Power distributor Manila Electric Co. (Meralco) is scrapping its plans to build two coal-fired power plants in Luzon, opting instead to convert them into gas-powered generation facilities.

Meralco PowerGen Corp. (MGen), the power generation arm of the Meralco Group, earlier proposed the construction of a 670-megawatt plant in La Union and a 660-MW facility in Zambales.

However, MGen Gas Energy Holdings Inc. (MGas) president and CEO Yari Miralao said both facilities are “subject to the coal moratorium and can no longer be coal plants.”

“The most prudent thing to do is not necessarily to double down but sprinkle it with a little more love to just convert these things into gas plants for our pipeline,” he said.

The La Union and Zambales projects, respectively, are managed by MGen units Global Luzon Energy Development Corp. (GLEDC) and Redondo Peninsula Energy Inc. (RP Energy).

GLEDC is 57 percent owned by the Meralco Group, while RP Energy is a joint venture between MGen, Therma Power Inc. and Taiwan Cogeneration International Corp., with MGen holding a 47 percent stake.

Miralao said the group is looking to secure new environmental compliance certificates from the government to move forward with the projects.

“For MGas, my goal is really to convert them to gas (plants). The site is there, and the interconnection is there,” he said.

Although not yet operational, Miralao noted the projects have already been incurring costs.

“If you are MGen, you’re sitting on two stranded assets that are incurring running costs; that are designed as coal plants that will never be coal plants anymore,” he pointed out.

The construction of these power plants faced a setback following the government’s imposition of a coal ban in 2020, which halted the processing of applications for greenfield coal facilities.

Earlier this year, the Department of Energy clarified that the moratorium is not a total ban, as this excludes existing and operational coal power plants or those that are already committed.

Among those not included in the moratorium are MGen’s 1,200-MW Atimonan plant in Quezon and the 80-MW Toledo project in Cebu.

But to ensure clarity, the Meralco Group sought official confirmation from the government regarding the exemption of these projects from the existing ban.

Last week, MGen president and CEO Emmanuel Rubio estimated an investment of about $1.6 million for each MW of the coal facility or $2 billion for the two coal plants with a combined capacity of 1,280 MW.

Rubio said four local banks and two Indonesian lenders have expressed interest in financing the construction of the projects that are expected to provide additional baseload capacity to MGen’s portfolio.

Coal plants are usually used as a source of baseload power due to their capacity to operate continuously and provide an uninterrupted supply of electricity.

Currently, MGen’s baseload capacity is at 1,395 MW.