Philippines: Ayala energy investments to double

Philippines: Ayala energy investments to double

AC Energy Holdings, Inc., the energy development arm of Ayala Corporation,
is concretizing greenfield project blueprints as well as mergers and
acquisitions in its bid to double power investments to about P80 billion in
the next five years, roughly P40-billion climb from currently committed
capital outlay.

In a lunch briefing with reporters, AC Energy President and Chief Executive
Officer Eric Francia said that it will be aligned with their planned
capacity build up of up to 2,000 megawatts (MW) until year 2020.

The investment portfolio, he said, would still be a combination of loan and
the company's equity contribution on each project - but he has not provided
specific details at this point.

A Company statement has expounded that "Ayala has committed close to P40
billion of investments in AC Energy, and is expected to increase its
investments over the next five years."
image:
http://www.mb.com.ph/wp-content/uploads/2016/10/AC-energy-logo-300x136.jpg

AC energy logo

By then, AC Energy also gains that confidence of registering net income
contribution of R5.0 billion - about double-digit share into the parent
firm's bottom line within the targeted five-year stretch.

In affirming that, Ayala Corporation President and Chief Operating Officer
Fernando Zobel de Ayala noted that "with 1,000 megawatts in attributable
capacity. it (AC Energy) has started to contribute positively to our bottom
line and we expect it to be a significant component of Ayala's portfolio in
the coming years."

At this stage, Francia emphasized that they already hit bullseye when it
comes to the Ayala group's initial energy capacity goal of 1,000 MW - or
even a bit higher including the less than 100 MW of wind power capacity that
they are pursuing in Indonesia.

The five-year horizon project planning that the company has been cementing
will be combination of 'new builds' or brownfield (acquisition)
opportunities in the domestic shore as well as aspired investments within
the Southeast Asian region.

"The company is now positioned to deliver an additional 1,000 MW by 2020, of
which over 60 percent is expected to be in renewable energy," Francia said.
Their RE interests are currently focused on wind, solar and geothermal
projects that could be steered either in the domestic power market or
offshore.

He added, "we're open to anywhere in the Philippines; or even outside the
Philippines, we're looking - Southeast Asia," qualifying further that "when
we go international, we will have to partner."

For the less than 100MW wind farm venture in Indonesia, he disclosed that
"we have an international partner and also a local partner, so it's a
three-way partnership."

On broader scope of renewable energy installations, Francia opined that the
investment terrain is already thriving more competitively - and even more so
in the next five years; with the cost of both solar and wind technologies
continually on downtrend.

Nevertheless, it might take slower for wind costs to really reach grid
parity.

Beyond initial development portfolio that the company is now advancing in
Indonesia, Francia noted that opportunities are also being explored in
Vietnam and Myanmar - albeit, he stressed that in the last two
jurisdictions, there is nothing definite yet that they have been setting
their sights on.

On organic growth, he reckoned that capacity expansion of their existing
assets may still be pursued - either within the same site or at geographical
proximity.

In essence, this may delve on capacity expansions of their coal-fired power
facilities in Bataan and Lanao del Norte. A comfortable level of
developments on this sphere, he said, could be at additional 500 MW to form
part of their next 1,000MW capacity target.

The other area they have for investment consideration would be on gas - but
that shall depend on the policy direction that will be set by government.

"We're viewing (investments) as mostly renewables or depending if gas would
be a realistic play. But our hypothesis at this point is that: Renewables
will be bulk of that capacity, beyond the second unit of Dinginin
(coal-fired power project), that's why we're saying over 60 percent,"
Francia expounded.

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Ref: http://www.mb.com.ph/ayala-energy-investments-to-double-p80-b/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com