Ayala Investing $2.5B In Power

In a move that will likely challenge the dominance of existing industry 'big leagues', the energy arm of the Ayala Corporation is lining up $2.5 billion worth of investments in the next five years to put in targeted installed capacity of 1,000 megawatts.

"That (1,000MW) is our benchmark ... 1,000MW will cost around $2.5 billion," Ayala Corporation managing director Eric T. Francia has told reporters on the sidelines of a Renewable Energy Opportunities Forum hosted by the Philippine Stock Exchange (PSE) and CFA Society of the Philippines.

Of the total pipelined capital outlay for power projects, he noted that $500 million will account for equity that the company and prospective partners are bound to inject within the planning horizon.

Francia has emphasized that the targeted installations could be a combination of greenfield developments (new power plant builds) as well as acquisitions.

"If we can land some interesting acquisitions, we can exceed that. But if not, that would be a tall order if it's all greenfield," he pointed out.

When asked if the Ayala group's scaled up investments in the power industry would be a strategy to position itself among the largest players over the short term, Francia tersely commented that "we're patient."

He thus indicated that "for the conventional technologies, we're looking at a few greenfield opportunities. We're looking across the country. We're looking at possibilities in Visayas and Mindanao - there are two areas where we planned new power plants."

If ever, that will add up to the Ayala group's power portfolio which has been kick-started by their 135-megawatt coal plant in Batangas, a joint venture with Phinma Group's Trans-Asia Oil and Energy Development Corporation.

For renewable energy (RE) alone, the target will be 200 megawatts and the capacity installations may be dominated by hydro, given that solar development prospects could be on the 'fledgling path' because of the lower-than-expected feed-in-tariff (FIT) approved by the industry regulator.

The five-year stretch in Ayala's blueprint will refer to the timeframe when they can get financial closing for the targeted projects.

"That's construction. It's virtually impossible if you do all of it for greenfield. It will just be reaching financial close. If there's going to be some acquisitions, then it could be on stream," Francia has explained.

"20% of power will be RE, roughly $150 million of equity would be on renewable because we have a balanced portfolio between the traditional thermal baseload and renewable technologies," he stressed.

Hydro capacity target will be for 100 to 150 megawatts and it will likely be a joint venture with Santa Clara Power Corporation.

The company's planned 30 to 50MW solar capacity, Francia admitted, will have to be reviewed on account of the FIT that has been anticipated to support investment returns for that technology application.

"It's going to be predominantly hydro. Solar, it really depends. We are building 30 to 50 megawatts but given the feed-in-tariff rate, we're going to revisit if it's going to be feasible. It's really a challenge," he averred.

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