PHINMA Energy pins hopes on DOE's new renewable energy policy
MANILA, Philippines – PHINMA Energy Corporation plans to hold off coal projects for now as it pins its hopes on the government's new renewable energy (RE) policy, its chief said on Tuesday, April 11.
"We don't plan on more coal projects for the time being, not just because of the environment but also because there's too much coal and competition is already very tough," PHINMA Energy president and chief executive officer Francisco Viray said after the firm's annual stockholders' meeting on Tuesday.
"We're looking into renewable energy and we're pinning our hopes on the DOE's Renewable Portfolio Standard," he added.
RE advocates and developers see the long-awaited Renewable Portfolio Standard (RPS) as the successor to the government's previous Feed-in-Tariff (FIT) scheme.
Essentially, the policy would require a certain percentage of electricity to be sourced from renewable sources through a competitive bidding process.
Based on the DOE's draft of the policy rules released in June 2016, the aim is to get the energy mix to 35% renewables by 2030.
"We look at that as a market opportunity and so you have to be competitive and we're awaiting that, especially for wind energy," Viray said.
The PHINMA head pointed out, however, that he is not certain of the timeframe of the RFS or in what form it would be implemented.
The firm owns and operates a 54-megawatt (MW) wind farm in San Lorenzo, Guimaras under subsidiary Trans-Asia Renewable Energy Corporation (TAREC). It earlier revealed plans to expand it by 40 MW should another round for FIT be announced.
Viray also noted that the economics of solar energy may become compelling enough even without incentives.
"For solar, we hope that we won't need an FIT to be competitive. We don't expect another round of FIT under the administration," he said.
"Hopefully with the price of solar panels falling, then maybe it will be competitive with conventional power even without FIT and RPS. But we'll have to see," he added.
PHINMA Energy also plans to focus on its retail electricity supply, which has become a major component of its business. The firm has grown to become the second largest single electricity supplier, with a market share of 12.02%, according to the Energy Regulatory Commission (ERC).
The firm had its strongest year in 2016, hitting a net income of P1.38 billion on the back of P15.47 billion in revenues, with electricity sales up 15% and total energy sales volume up 33%.
Its bottom line was also aided by the sale of 5% of its stake in South Luzon Thermal Energy Corporation (SLTEC) to the Marubeni Group in December 2016.
SLTEC operates a 2x135MW coal power plant in Calaca, Batangas.
PHINMA's original partner in the group, AC Energy of the Ayala group, also sold 15% to Marubeni, leaving SLTEC now split 3 ways with PHINMA at 45%, Ayala with 35%, and Marubeni at 15%.
"Our sale of 5% was an opportunity to realize a good value now, better than what would be realized under the original business model, so we took it," Viray explained, adding that the firm is open to additional divestment depending on the opportunity.
AC Energy, for its part, said the sale of its 15%-stake was to "aggressively pursue its goal of having 2000 MW of capacity by 2020."
The Ayala-led firm has since made good on that promise, particularly on the RE front.
Since the deal, AC Energy has bought Chevron Global's geothermal assets in the Philippines and Indonesia, won a contract to build a $150-million 75 MW wind farm in Indonesia, and acquired RE developer Bronzeoak.
It would seem then that the two partners are set to face each other in the RE field, with the RPS as an incentive. Viray brushed off such concerns.
"We see no effect of Ayala's push on our partnership [in SLTEC]. Eventually, we may compete [with them] but you cannot avoid it. You're friends in certain areas and competitors in certain areas," he said. – Rappler.com
In these changing times, courage and clarity become even more important.
Take discussions to the next level with Rappler PLUS — your platform for deeper insights, closer collaboration, and meaningful action.
Sign up today and access exclusive content, events, and workshops curated especially for those who crave clarity and collaboration in an intelligent, action-oriented community.
As a bonus, we’re also giving a free 1-year Booky Prime membership for the next 200 subscribers.
You can also support Rappler without a PLUS membership. Help us stay free and independent by making a donation: https://www.rappler.com/crowdfunding. Every contribution counts.