The Market Monitor Minding the Nation's Business
By Riza Lozada
Energy projects are starting to boom in anticipation of higher electricity demand as the economy pursues a steady growth.
Finance Secretary Carlos Dominguez III said the move by Macquarie Infrastructure Management (Asia) Pty Ltd and Arran Investments to pump P65 billion into the energy sector is a vote of trust and confidence by foreign investors in the Duterte administration and its socioeconomic reform agenda anchored on high and inclusive growth.
A consortium of investors comprising funds managed by Macquarie Infrastructure Management and Arran Investments have formed the Philippines Renewable Energy Holdings Corp (PREHC) and offered to acquire up to 31.7 percent of Energy Development Corp. (EDC), a renewable power producer, for $1.3 billion or about P65 billion.
Macquarie Infrastructure Management is a member of Macquarie Infrastructure and Real Assets (MIRA), one of the world’s largest infrastructure asset managers. Arran, meanwhile, is an affiliate of the GIC Pte Ltd., which manages Singapore’s Sovereign Wealth Fund.
The consortium plans to buy 6.6 billion to 8.9 billion common shares of EDC, mostly from minority shareholders, at P7.25 per share, or a maximum total price of P64.525 billion, said First Gen Corp., the mother company of EDC, in a report to the Philippine Stock Exchange.
Also last Aug. 23, President Duterte inaugurated the Solar Philippines Factory to establish the Philippines as a major player in the global renewable energy revolution, and enabling solar panels to become accessible to everyday Filipinos.
Solar panel costs have fallen 90 percent over the last 10 years, and 50 percent in the last 3 years alone, prompting countries like China and India to source the majority of their new power requirements from renewable energy.
Business news service Bloomberg estimated that 86 percent of planned coal plants globally will be canceled, given the new economics of solar prices.
Mr. Duterte told reporters during the event that “Solar is becoming cheaper now, it used to be very expensive, now the price is diving.”
In his speech, President Duterte said “since developing solar energy projects in the Philippines requires imported materials, it is high time that we begin to establish local solar power factories,” noting this as integral to “helping us achieve energy sufficiency.”
Expressing confidence in Solar Philippines, which he described as a company that is “visionary, and has the will to do it,” Mr. Duterte noted “this state-of-the-art facility in Sto. Tomas, Batangas is timely and relevant as we address increasing demand for renewable energy. I thank Solar Philippines for its efforts to advance the country’s solar energy industry.”
“We in government will continue to support the development of renewable energy,” he said.
“I look forward to the realization of your company’s goal to be the largest exporter of solar panels,” he added.
“This factory has enabled us to generate the lowest cost power in the history of the Philippines,” Solar Philippines CEO Leandro Leviste said referring to its recent offer to replace many planned fossil fuel plants with 5,000 megawatts of of solar farms. “Filipinos can save 30 percent on electricity. The average family paying P3,000 will see their bill decrease to P2,000 pesos a month, and now with the latest batteries, entire towns can use solar energy for 24-hours a day,” he added,
At the event, Solar Philippines also announced its new initiative to help communities with poor electric service to form their own “Solar Power Associations” and avail of low-cost 24/7 power.
“We don’t measure our success in terms of profits or revenues, but our contribution towards the development of the Philippines. This factory will create 50,000 jobs, from manufacturing to installation, and show the world that Filipino ingenuity is second to none,” Leviste added.
Solar Philippines entered solar manufacturing after SunPower, a US solar company, shut down two of its factories in the Philippines.
Since then, Solar Philippines has hired Filipinos experienced in manufacturing solar panels in line with international standards and certifications.
Solar Philippines owns the factory, and is partnering with Chinese companies to manufacture solar panels for export to the US and Europe.
The company has also started selling panels to local distributors, and solar systems to homes and businesses on installment at zero upfront cost.
The Solar Philippines Factory utilizes state-of-the-art technology and the highest quality materials. It will produce 800 MW in 2018, greater than the solar production capacity of the entire United States, making the Philippines a global leader in solar panel manufacturing.
“Around the world, consumers are going solar because they see the renewable energy revolution has already arrived. We are optimistic that not only will Filipinos think the same, but also soon see that the Philippines can become the leader in this global energy transition,” Leviste said.