MGen Plans to Convert Stranded Coal Plants to Gas-Fired Facilities

Meralco PowerGen Corp. (MGen), the power generation arm of the Philippines’ largest electricity retailer Manila Electric Co., has announced plans to convert two of its stranded coal plants into gas-fired facilities, accoording to the Manila Standard.

These plants are located in Zambales and La Union, and the transition aims to support the company’s clean energy strategy.

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Converting Coal Plants for Better Efficiency

MGen Gas Energy Holdings Inc. president Yari Miralao explained that the two plants, Redondo Peninsula (RP) Energy Inc. in Subic and Global Luzon Energy Development Corp. (GLEDC) in La Union, were originally designed as coal plants but are now outdated due to the Philippines’ moratorium on new coal-fired plants. He emphasized that these assets were incurring unnecessary running costs, and the most sensible solution is to convert them into gas plants.

Miralao noted that the shift to gas plants would allow MGen to tap into the growing demand for cleaner energy while reducing reliance on coal. He further explained that gas investments benefit from economies of scale, allowing for more cost-effective operations and a sustainable energy future.

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Delays in Coal-Fired Projects

RP Energy has been attempting to develop a 660-megawatt (MW) coal-fired power plant in Subic for over a decade. However, ongoing issues with construction and power supply agreements have delayed its progress. Similarly, GLEDChad planned to build a 670-MW coal-fired power plant in La Union, but failed to secure a Power Supply Agreement (PSA).

As both plants are now subject to the coal moratorium, converting them into gas plants is seen as the most viable option for MGen. Miralao highlighted that shifting from coal to gas was the natural next step, considering the market’s evolving needs.

Expanding Gas Investments

MGen’s strategy also includes expanding its gas investments in the Batangas region, where it already operates gas plants. Miralao shared that the company plans to expand its gas footprint further north and south, replacing coal and diesel plants with more efficient gas-fired facilities. This expansion will support MGen’s goal of becoming a major player in the country’s clean energy sector.

Acquiring Stake in Chromite Gas Holdings

In a related move, MGen recently announced its acquisition of a 60-percent interest in Chromite Gas Holdings Inc. (CGHI). The company intends to invest in two gas-fired power plants owned by San Miguel Global Power Holdings Corp. (SMGP). These include the 1,278-MW Ilijan power plant and a new 1,320-MW combined cycle facility currently under construction.

CGHI, together with SMGP, will also invest in an LNG import and regasification terminal in Batangas, owned by Linseed Field Corp. The transaction is still awaiting approval from the Philippine Competition Commission.

A Strategic Shift Towards Gas Power

MGen’s decision to convert its stranded coal plants into gas-fired facilities aligns with the country’s transition towards cleaner and more sustainable energy. The company’s investments in gas plants and LNG infrastructure are expected to play a significant role in meeting the growing energy demand while reducing environmental impact.