Philippines: PHINMA Energy pins hopes on DOE's new renewable energy policy

Philippines: PHINMA Energy pins hopes on DOE's new renewable energy policy

With the tight competition in coal energy, the firm plans to focus on
renewable energy projects and retail electricity as it waits for the DOE's
next renewable energy incentive

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 CEO Francisco Viray said
after the firm's annual stockholder's 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 it 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.

Competitive partners

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 that 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 bought Chevron Global's geothermal assets in the
Philippines and Indonesia, won a contract to build a $150-million 75MW 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.

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Link to Original Article:
https://www.rappler.com/business/166627-phinma-energy-renewable-portfolio-st
andards-rps

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com