AC Energy sees generation investments growing

Posted on October 20, 2016
http://www.bworldonline.com/content.php?section=Corporate&title=ac-energy-sees-generation-investments-growing&id=135132

AC ENERGY Holdings, Inc. has estimated its investments in power generation projects to reach close to P80 billion by the time the Ayala-led company reaches its target 2,000 megawatts (MW) by 2020, its top official said.

“Our existing platforms have expansion potentials,” John Eric T. Francia, AC Energy president and chief executive officer, said in a press briefing on Wednesday at El Cirkulo restaurant in Makati City.

By 2020, he expects AC Energy’s net income to reach P5 billion, or accounting for around 10% of Ayala Corp.’s bottomline.

“Last year, we made P2.1 billion,” he said, but this year’s profit will “not necessarily be higher.” He declined to give a more specific projection.

The company this year reached an installation target of 1,000 MW, which represents the equivalent capacity of its holdings in seven completed and ongoing projects all over the Philippines.

All of the projects are in partnership with various investors, the latest of which is Aboitiz Power Corp., which bought into two coal-fired power plants in Mariveles, Bataan.

“In the next few months, we will be breaking ground in our next project -- in Indonesia,” Mr. Francia said, adding that the schedule will be within the year.

Parent firm Ayala Corp. has committed nearly P40 billion in the energy development arm. The overseas foray forms part of AC Energy’s new 1,000-MW target for new projects, for which an additional investment of close to P40 billion will be needed.

Of the new target, the company expects 60% to come from renewable energy sources, including solar and wind technologies.

Mr. Francia said the Indonesian project would be less than 100 MW in capacity using wind power. He said the company’s first overseas project would be in partnership with international and Philippine partners. He placed AC Energy’s stake in the venture at between 70% and 75%.

“We expect renewable energy to be more competitive over the next five years, and this will be good from a sustainability, diversification and resiliency standpoint,” Mr. Francia said.

In a statement issued during the briefing, the company quoted Fernando Zobel de Ayala, Ayala Corp. president and chief operating officer, as saying: “With 1,000 megawatts in attributable capacity, AC Energy is emerging to be a major contributor to the country’s energy resource. Furthermore, it has started to contribute positively to our bottomline and we expect it to be a significant component of Ayala’s portfolio in the coming years.”

The 60% renewables target is a marked departure from AC Energy’s current portfolio mix, which nearly 94% are sourced from coal-fired power plants.

The company has a 20.03% stake in the 604-MW GNPower Mariveles Coal Plant Ltd. Co.; 50% in the 668-MW GNPower Dinginin Ltd. Co.; 50% in the 244-MW South Luzon Thermal Energy Corp.; and 80.07% in the 552-MW GNPower Kauswagan Ltd. Co.

AC Energy’s investments in renewables make up a little over 6% of its 1,088 MW installed capacity as of this year.

The company holds 35.8% in the 81-MW North Luzon Renewable Energy Corp.; 50% in the 52-MW NorthWind Power Development Corp.; and around 78% in the 18-MW Monte Solar Energy, Inc.

Five of the seven projects are already operating. GNPower Kauswagan and GNPower Dinginin are set for commercial run in March 2018 and March 2019, respectively, based on schedule submitted to the Department of Energy.

Mr. Francia said the company’s strategy to reach its target is to expand its existing assets, for an estimated 500 MW more, through acquisition and partnership, and via “organic development” or building new greenfield projects.

“We will continue looking for acquisitions and partnerships not just in our shores but regionally,” he said.

He said Indonesia has a big unserved power demand, which he placed at equivalent to the Philippine situation of seven or eight years ago.

“The market is growing and supply-demand trajectory is such that if you don’t do anything, you’re gonna have a shortage,” he said.

“We don’t intend to be a leading player in Indonesia,” he said, adding that the company still does not have firm target numbers.

But Mr. Francia said the Philippines would remain to corner the bulk of AC Energy’s portfolio, describing the company’s investment in Indonesia as “meaningful” but not coming close to its local venture in terms of attributable capacity.

“We’re interested in looking more broadly in other parts of Southeast Asia, countries like Vietnam and Myanmar. But whether in the next five or 10 years, we don’t know yet,” he said. -- Victor V. Saulon