VMC allowed to build transmission line for 40-MW biomass-fired plant
Leading sugar producer Victorias Milling Co., Inc. (VMC) has received a go-signal from the government to build and own the transmission facilities needed to sell excess energy generated from its 40-megawatt biomass-fired power plant.
VMC is barred, however, from operating and maintaining the same facilities, which will instead be under the wings of National Grid Corp. of the Philippines (NGCP).
In a disclosure to the Philippine Stock Exchange on Wednesday, VMC said it had obtained a decision from the Energy Regulatory Commission (ERC) relative to its application to develop, own, operate and maintain dedicated point-to-point limited facilities to connect to the transmission backbone.
The ERC has approved VMC’s bid to develop and own the transmission facilities linking its 40-MW biomass-fired cogeneration power plant to the Visayas grid. However, the ERC denied VMC’s application to operate and maintain such facilities, noting that NGCP has those functions.
40-MW annual capacity
By linking to the country’s electricity superhighway, VMC would be able to sell its excess power to the grid, potentially generating around P100 million in additional revenues annually, based on rough company estimates.
Out of the 40-MW annual capacity of VMC’s cogeneration facility, about 25 MW would be able to cover internal requirements, while the surplus of 15 MW could be sold to the grid.
Article continues after this advertisementA well-placed source from VMC explained the cogeneration facility would operate only during the peak of the sugar milling season, since it uses bagasse, the byproduct after the extraction of juice from sugarcane.
Article continues after this advertisementPeak operations
Normally, VMC’s mill operates for about nine months in a year, but peak operations usually last about five to six months depending on the volume of sugarcane harvests and other factors. It is during this peak operation that it could consistently export committed power to the grid.
The grid usually penalizes a firm whose dispatch falls below the volume or capacity promised.
VMC’s cogeneration facility started operations in 2019. The company invested in this facility through wholly owned subsidiary VGEC.
In the nine-month period ending May this year, VMC booked a consolidated net income of P636.8 million, 14-percent higher year-on-year. Revenues increased by P2.1 billion or 48 percent year-on-year, mainly due to the increase in raw sugar sales and the recognition of the milling service revenue of P1.4 billion with the adoption of new revenue rules for sugar millers.
