Posted on May 22, 2017 By Victor V. Saulon, Sub-Editor
AC ENERGY Holdings, Inc. is bullish about its entry into the energy sector of Indonesia as it expects its investments in the regional neighbor to account for at least 20% of its earnings in the coming years.
“Over time, a country like Indonesia can contribute probably, orders of magnitude, 20% of our bottom line,” John Eric T. Francia, AC Energy president and chief executive officer, said on the sidelines of the BusinessWorld Economic Forum at Shangri-La at the Fort, Bonifacio Global City on Friday.
“It will be meaningful,” he said, but declining to give the year when the Ayala Corp. subsidiary would start registering returns on its investments.
In April, AC Energy and its joint venture partners completed the acquisition of Chevron Corp.’s geothermal assets and operations in Indonesia, further boosting AC Energy’s renewable energy portfolio in that country after earlier investing in a wind farm.
The Chevron deal gave AC Energy a 19.8% stake in the 637-megawatt (MW) geothermal steam and power capacity in Darajat and Salak geothermal fields, along with its 75% stake in the 75-MW wind farm project in Sidrap, South Sulawesi. These acquisitions more than doubled the company’s clean energy capacity to at least 264 MW.
Mr. Francia said the Indonesian investments would not contribute yet to the company’s earnings for 2017, which he described as a “partial and transition year” for the regional foray.
“There’s a lot of accounting distortions typically on a first year of a post-acquisition,” he said.
“But the big picture over time, I think Indonesia as a whole could contribute upwards of 20%,” he said. “I couldn’t give you a timeline of when that 20% could be achieved. To give you a sense, it’s not gonna be 3% or 5%. It’s not gonna be 50%. It’s somewhere along 20%.”
The consortium Star Energy Geothermal (Salak-Darajat) B.V., in which AC Energy has a 19.8% economic stake, won the bid for the assets in December last year in an auction that was also participated in by other power developers from the Philippines.
OPPORTUNITIES IN VIETNAM
Mr. Francia said AC Energy was also keen on investing in Vietnam, although the company was still in the “scoping” phase for opportunities.
“But we’re talking to potential partners in Vietnam,” he said. “We haven’t zeroed in on anyone. We’re talking to multiple companies.”
The AC Energy official described the companies as mainly Vietnamese businesses that match AC Energy’s search for a “strong local partner.”
“The advantage with Vietnam is we already have a presence in water, we also have an investment in an infrastructure company. So we’re tapping also those networks that we already have in adjacent infra industries,” he said.
Ideally, Mr. Francia said AC Energy targets to invest in a “platform,” which he described as a company with organizational capabilities, has a portfolio of projects or projects in the pipeline.
But failing that, he said the company would consider investing in specific projects in Vietnam or a single asset.
AC Energy’s expansion comes as it targets to reach by 2020 around 2,000 MW of attributable capacity -- or the equivalent in megawatts of its economic stake in various projects. It reached 1,000 MW in 2016, with renewable energy accounting for less than 10%.