Ayala enters joint venture for hydropower generation

MANILA, Philippines - Ayala Corp. (AC), through its wholly-owned subsidiary Michigan Power Inc., has forged a joint venture with Sta. Clara Power Corp., an independent power producer that focuses on run-of-the-river hydroelectric plants, to mark the conglomerate’s entry into hydroelectric power generation.

In a disclosure to the Philippine Stock Exchange, AC managing director John Eric Francia said Michigan Power will take a 70-percent stake in the joint venture and shell out an initial P600 million to develop run-of-the-river hydroelectric power projects across the country.

Run-of-the-river hydroelectric power plant operation involves “borrowing” some river water to turn its kinetic energy into electricity, and returning the same unpolluted water back into the river. It is green because it does not produce harmful emissions. Like other renewable power technologies, it is economical as it depends on the “free energy” of nature as fuel.

 “This venture builds on our current portfolio of renewable energy assets which focuses on solar, wind and hydro power technologies. This is an important component of our plan to create a portfolio of power assets over the medium term that blends conventional and sustainable energy sources and contribute to the country’s energy requirements,” AC president and chief operating officer Fernando Zobel de Ayala said.

The conglomerate, which has interests in banking, property, telecommunications, water distribution, business process outsourcing, electronics and car dealerships, wants to acquire more power assets as it makes an aggressive push into the energy space, which it identified as one of the new drivers of growth alongside infrastructure and construction.

Francia said the move is in line with AC’s campaign to augment the country’s power supply primarily through renewable and clean energy.

Sta. Clara Power is majority owned by Sta. Clara International, a leading engineering and main contracting groups with local and overseas projects

Francia said Sta. Clara Power’s stakes in three existing hydroelectric power plants – Loboc, Amlan and Bakun – will not be part of the joint venture.

A new entrant in the power arena, AC needs to catch up with companies ahead of the industry like San Miguel Corp., which already has an existing capacity of over 3,000 megawatts, the Lopez Group with 2,832 MW and the Aboitiz Group with 2,015 MW in beneficial capacity.

AC aims to build a portfolio of power generation assets of over 1,000 MW in the next five years as it expects huge demand for electricity in the next few years to open up a lot of opportunities, particularly in the renewable energy space.

Earlier, the Ayala Group had teamed up with Japan’s Mitsubishi Corp. to explore solar power ventures in the Philippines.

Just last month, Michigan Power acquired a 50 percent stake in NorthWind Power Development Corp., which owns and operates a 33-MW wind farm in Balangui, Ilocos Norte - the first of its kind in Southeast Asia.

NorthWind sells electricity to the Ilocos Norte Electric Cooperative, accounting for less than half of the power requirements of Ilocos Norte.