Business World Online
Posted on April 04, 2011 11:48:07 PM
ILOCOS NORTE wind mill operator NorthWind Power Development Corp. has asked the government’s permission to charge higher fees for the electricity it generates, warning that such are needed to save the firm from financial setbacks.
NorthWind, half of which is now owned by an Ayala Corp. unit, disclosed its business woes and asked for a so-called specific feed-in tariff worth P9.30 per kilowatt-hour (kWh) in a filing released yesterday instead of the P5.20/kWh it had collected on average from the Ilocos Norte Electric Cooperative, Inc. (INEC) since 2002.
The petition comes as higher rates for electricity generated by renewable energy sources have yet to be issued by the Energy department which had promised such to lure investors. The feed-in tariff had been a guaranteed payment given to renewable energy investors which would have been collected by imposing a universal charge on end-users. Feed-in tariff levels are expected to be recommended for approval by May 16.
“[Our] financial records would readily show that it is difficult to generate positive cash flows even under an energy sales agreement regime with INEC… The company had to restructure its mixed credit facility in 2009 because [we] could not generate sufficient cash flows to service [our] debt…,” NorthWind said in its petition to the Energy Regulatory Commission (ERC).
NorthWind operates the 33-megawatt (MW) Bangui wind farm in Ilocos Norte which has about 20 wind turbines.
The Bangui Bay wind farm is considered the largest wind farm in Southeast Asia and is estimated to cost around $50 million.
“Furthermore, the company had to borrow additional loans for working capital amounting to P100 million to cover the shortfall from the unpaid billing invoices…that have remained unpaid to date,” NorthWind added.
The company also warned that its income tax holiday and equipment warranties are nearing expiry and will thus mean added tax and maintenance costs that will have to be paid.
Selling to the wholesale electricity spot market, meanwhile, will cause the financial profile of NorthWind to turn “dire” as power sells here for at a lower P3.74/kWh on average, the company added.
“As can readily be seen, a feed-in tariff is indispensable to the continued operations of NorthWind,” the company said.
“The reality is that NorthWind is presently and continually experiencing financial setbacks in its cash flows since its contract with INEC…and because of the prolonged lack of an actual feed-in tariff rate,” it stated further.
The National Renewable Energy Board was supposed to recommend feed-in tariff levels to the ERC last month.
But instead asked for an extension of the deadline for its filing as transmission network operator National Grid Corporation of the Philippines is still finalizing a study that measures the amount of electricity from renewable energy resources which the national grid can handle.
NorthWind went on to argue that such rates can be issued already as clean energy plants already in operation prior to the effectivity of the Renewable Energy Act, may be granted lower feed-in tariffs specific to them.
Sought for comment, the regulator ERC confirmed that NorthWind may be eligible for a feed-in tariff unique to its operations.
“The determination of the petition is to see if they are entitled to the feed-in tariff. The feed-in tariff that is yet to be approved is automatic for new companies but for existing companies they still have to apply with us,” said Francis Saturnino C. Juan, ERC executive director, in a telephone interview with BusinessWorld.
He added NorthWind is the first renewable energy company to request for a determination of specific feed-in tariff levels.
Ayala’s subsidiary Michigan Power, Inc. acquired a 50% stake in NorthWind for P512 million last month.
NorthWind had earlier said that Ayala’s infusion would allow it to push through with plans to put up two more wind farms in the country.
The planned 40-MW Aparri wind farm should start generating and selling power by 2013 while another 40-MW farm planned for Pamplona in Cagayan Valley should be ready by 2015.
NorthWind’s subsidiary Northpoint Wind Power Corp. will be developing the Aparri wind farm.
It is expected to cost around $95 million and will consist of about 20 to 25 wind turbines.
The Pamplona wind farm will be constructed by another subsidiary NorthEast Wind Systems Corp. The project with unspecified costs will have 16 wind turbines with a capacity of 1.65 MW each.
Meanwhile, renewable energy investors hit the government for delays in the approval of the feed-in tariff, a statement from the Philippine Solar Power Association showed.
“We have to put more focus on renewable energy development in our near-term plans, instead of prolonging our dependence on imported, dirty and volatile oil and coal,” the statement read. -- Emilia Narni J. David
The petition comes as higher rates for electricity generated by renewable energy sources have yet to be issued by the Energy department which had promised such to lure investors. The feed-in tariff had been a guaranteed payment given to renewable energy investors which would have been collected by imposing a universal charge on end-users. Feed-in tariff levels are expected to be recommended for approval by May 16.
“[Our] financial records would readily show that it is difficult to generate positive cash flows even under an energy sales agreement regime with INEC… The company had to restructure its mixed credit facility in 2009 because [we] could not generate sufficient cash flows to service [our] debt…,” NorthWind said in its petition to the Energy Regulatory Commission (ERC).
NorthWind operates the 33-megawatt (MW) Bangui wind farm in Ilocos Norte which has about 20 wind turbines.
The Bangui Bay wind farm is considered the largest wind farm in Southeast Asia and is estimated to cost around $50 million.
“Furthermore, the company had to borrow additional loans for working capital amounting to P100 million to cover the shortfall from the unpaid billing invoices…that have remained unpaid to date,” NorthWind added.
The company also warned that its income tax holiday and equipment warranties are nearing expiry and will thus mean added tax and maintenance costs that will have to be paid.
Selling to the wholesale electricity spot market, meanwhile, will cause the financial profile of NorthWind to turn “dire” as power sells here for at a lower P3.74/kWh on average, the company added.
“As can readily be seen, a feed-in tariff is indispensable to the continued operations of NorthWind,” the company said.
“The reality is that NorthWind is presently and continually experiencing financial setbacks in its cash flows since its contract with INEC…and because of the prolonged lack of an actual feed-in tariff rate,” it stated further.
The National Renewable Energy Board was supposed to recommend feed-in tariff levels to the ERC last month.
But instead asked for an extension of the deadline for its filing as transmission network operator National Grid Corporation of the Philippines is still finalizing a study that measures the amount of electricity from renewable energy resources which the national grid can handle.
NorthWind went on to argue that such rates can be issued already as clean energy plants already in operation prior to the effectivity of the Renewable Energy Act, may be granted lower feed-in tariffs specific to them.
Sought for comment, the regulator ERC confirmed that NorthWind may be eligible for a feed-in tariff unique to its operations.
“The determination of the petition is to see if they are entitled to the feed-in tariff. The feed-in tariff that is yet to be approved is automatic for new companies but for existing companies they still have to apply with us,” said Francis Saturnino C. Juan, ERC executive director, in a telephone interview with BusinessWorld.
He added NorthWind is the first renewable energy company to request for a determination of specific feed-in tariff levels.
Ayala’s subsidiary Michigan Power, Inc. acquired a 50% stake in NorthWind for P512 million last month.
NorthWind had earlier said that Ayala’s infusion would allow it to push through with plans to put up two more wind farms in the country.
The planned 40-MW Aparri wind farm should start generating and selling power by 2013 while another 40-MW farm planned for Pamplona in Cagayan Valley should be ready by 2015.
NorthWind’s subsidiary Northpoint Wind Power Corp. will be developing the Aparri wind farm.
It is expected to cost around $95 million and will consist of about 20 to 25 wind turbines.
The Pamplona wind farm will be constructed by another subsidiary NorthEast Wind Systems Corp. The project with unspecified costs will have 16 wind turbines with a capacity of 1.65 MW each.
Meanwhile, renewable energy investors hit the government for delays in the approval of the feed-in tariff, a statement from the Philippine Solar Power Association showed.
“We have to put more focus on renewable energy development in our near-term plans, instead of prolonging our dependence on imported, dirty and volatile oil and coal,” the statement read. -- Emilia Narni J. David
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