San Miguel Corp. (SMC), through its power arm SMC Global Power Holdings Corp., is spending more than $1 billion to build new battery energy storage facilities with a rated capacity of 1,000 megawatts (MW).
At 1,000 MW, this is by far the largest portfolio of BESS under a single domestic company. We note that the immediate aim of the facilities is to support power stability and quality only as the projects will be located near National Grid Corporation of the Philippines (NGCP) lines to be used as a regulating reserve type of ancillary service by the latter.
This is expected to benefit the viability of Renewable Energy (RE) industry in the country considering that NGCP will be able to source energy more efficiently from RE plants. Given their low capacity factor, RE plants, particularly Solar and Wind farms, tend to serve the country’s peak requirement only — when demand exceeds the supply coming from baseload and mid-merit power plants.
With the storage capability of the national grid, RE power plants may be able to operate outside the peak demand period. This may translate to higher revenues for renewable energy players, particularly for those with high capacity contribution from solar and wind farms such as ACEN.