The Manila Electric Company, the country's largest power distributor, has forged a 20-year Power Supply Agreement with Razon-led Terra Solar Philippines for the supply of 850 megawatts of renewable energy.

Meralco said Thursday that the supply of clean energy will cover its mid-merit requirement starting 2026, which can approximately power 1.55 million houses per year at an average of 200kWh per month.

It will also displace an annual consumption of approximately 1.4 million tons of coal or 930 million liters of oil.

The PSA provides that a total of 600 MW of power supply will be available by 26 February 2026, while an additional 250 MW will be delivered starting 26 February 2027 at a headline and levelized cost of electricity rate of P5.80 per kilowatt-hour.

The rate was based on assumptions at the time when the competitive challenge for the unsolicited proposal was launched.

Renewable energy

"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," Atty. Jose Ronald V. Valles, Meralco FVP and Head of Regulatory Management said.

"This PSA between Meralco and Terra Solar is very strategic as we ensure the availability of adequate and cost-competitive power for our more than 7.5 million customers in the coming years," he added.

Valles also pointed out that the PSA is part of Meralco's compliance with the Department of Energy's Renewable Portfolio Standards policy.

"(It also) cements our commitment to source up to 1,500 MW of our power requirements from renewable energy," he said.

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 before implementation.

The signing of the PSA serves as the culmination of the competitive challenge for Terra Solar's unsolicited proposal.