EDC sets P40 billion capex, raises P10 billion from green bonds

MANILA, Philippines — Energy Development Corp. (EDC), the renewable energy subsidiary of First Gen Corp., is spending P40 billion this year to bolster its portfolio and support geothermal development in the country.

EDC chief financial officer Erwin Avante said half of the amount would be used for growth projects, while the other P20 billion is for the company’s usual recurring capital expenditures.

“We’re drilling a lot of wells this year,” Avante said.

To support this year’s spending, the Lopez-led geothermal energy company raised P10 billion via the issuance of fixed rate ASEAN green bonds.

The bonds, which represent the second tranche of EDC’s P15 billion ASEAN green bonds, were listed on the Philippine Dealing and Exchange Corp. yesterday.

The P5 billion first tranche bonds were issued and listed on June 25, 2021.

EDC said it saw strong investor demand for the second tranche bonds, with the issuance being more than seven times subscribed over its P6 billion base issue size.

This allowed the company to exercise the oversubscription option and raise an additional P4 billion.

The second tranche bonds were priced at the lowest end of the credit spread range, fetching rates of 6.7478 percent, 6.8873 percent and 7.0626 percent for the three-year, five-year and seven-year series, respectively.

“As we are all feeling in the past few weeks, the Philippines is experiencing dangerously high heat indexes. This has led to a surge in electricity demand, particularly for cooling, which has significantly reduced our reserve levels and has put upward pressure on electricity prices,” EDC president and COO Jerome Cainglet said.

“We look forward to adding renewable energy capacity to address these and, through the green bonds, present the public with the opportunity to participate in financing clean and renewable energy projects in line with our company’s mission of forging collaborative pathways for a decarbonized and regenerative future,” he said.

For this year, Cainglet said EDC is adding 83 megawatts (MW) in its geothermal project portfolio as well as another 40-megawatt hours of battery energy storage systems.

“We expect to compete all of these this year. These are all local projects,” he said.

Abroad, EDC is still aggressively looking for opportunities but there is nothing definite at the moment, according to Cainglet.

“The First Gen group, we’re expanding our existing capacity to 13,000 MW or 13 gigawatts by 2030. As part of the First Gen group, EDC is expected to contribute at minimum another 800 MW on top of our existing now,” he said.

EDC has a total of 1,464 MW of clean and renewable energy composed of 1,170 MW of geothermal, 150 MW of wind, 132 MW of hydroelectric power and 12 MW of solar power.

Recognized as a world leader in wet steam field technology, the company operates in Bicol, Leyte, Negros Island and Mindanao.

Through its subsidiaries, EDC also operates a combined wind and solar farm located in Burgos, Ilocos Norte and has substantial hydropower assets located in Nueva Ecija.

The company accounts for 18 percent of the country’s total installed renewable energy capacity and 60 percent of the country’s total installed geothermal capacity based on the Philippines’ 2022 total installed capacity figures.