New power player: Ayala Corp to spend $2.5-B on plants

MANILA, Philippines – Ayala Corp, a new power player, is planning to beef up its energy portfolio with plans to build at least 1,000 megawatts of power generation capacity in the next 5 years, making the country’s oldest conglomerate a key player in the capital-intensive sector.

Of the US$2.5 billion estimated required investments for these power plants, Ayala Corp managing director Eric Francia told reporters on Thursday, August 30, that the group has already earmarked US$500 million as equity investments.

“The 1,000 MW is our benchmark. If we can exceed that, and if we are fortunate to land some interesting acquisitions, then we can exceed that. But if not, that can be a tall order if it’s all going to be greenfield projects,” Francia said. “Greenfield” means new power plants.

Francia said they plan to make the energy business a strong contributor in their group profits.

“Our aspiration is to make it one of the major legs in 5 to 10 years down the road,” he said.

The conglomerate is targeting a balanced portfolio between conventional power systems and renewable energy-based systems, Francia said at the sidelines of the  Philippine Stock Exchange’s Renewable Energy Opportunities Forum.

Renewable energy

Francia said that one-fifth of the targeted 1,000 MW is expected to be renewable energy-based projects.

He added that bulk, or about 137.5 MW, are expected to be hydropower projects and will be done in partnership with Sta. Clara Power Corp, which holds several hydropower service contracts in different sites around the country.

The recently approved feed-in tariffs (FIT) for renewable energy projects have made them rethink if some of their existing projects, most of them using solar energy, are still feasible.

“We have a pre-development plan for anywhere around 15 MW to 50 MW. But given the approved FIT rate, we need to revisit if it’s going to be feasible,” he said.

The approved feed-in tariffs for solar was set at P9.68 per kilowatt-hour.

Ayala has a partnership with Mitsubishi Corp. to form PhilNewEnergy Inc., which will build the P7-billion Darong solar power project in Sta. Cruz, Davao del Sur.

He added that Ayala will also review their wind power projects under Northwind Power Development Corp.

Ayala-led Michigan Power Inc. has acquired a substantial stake in NorthWind for for P512 million.

Coal plants

Francia said they are also proceeding with the expansion of the 135 MW coal project in Batangas under South Luzon Thermal Energy Corp, a joint venture between Ayala-led AC Energy Holdings Inc. and Trans-Asia Oil & Energy Development Corp.

“We’re looking across the country, including the current plant that is being constructed now in Batangas. We’re also looking at Visayas and Mindanao. We do know those the two areas need new power plants,” Francia said. – Rappler.com