Corporate News

Ayala forays into solar with initial P1.3-B budget

Posted on September 10, 2015

AYALA Corp., the country’s oldest conglomerate, has finally decided to foray into solar energy -- extending its renewable energy projects beyond wind farms -- with an initial budget of P1.3 billion, it told the stock exchange yesterday.

The conglomerate, through wholly owned subsidiary AC Energy Holdings, Inc., said it is taking in as a partner Bronzeoak Clean Energy, Inc., builder of the 45-megawatt (MW) San Carlos Energy project -- the country’s first solar farm.

Together, the two groups will build an 18-MW solar power plant in Negros Oriental that is expected to be completed by March next year.

The budget for that is P1.3 billion, Ayala said in a disclosure, with a plan to expand the facility further to generate power of as much as 40 MW.

“AC Energy Holdings, Inc... signed on September 8, 2015 a Subscription and Shareholders’ Agreement with Bronzeoak Clean Energy, Inc., the investment arm of Bronzeoak Philippines, Inc... for the development, construction and operation of a solar power farm in Bais City, Negros Oriental,” the disclosure read.

A special purpose vehicle company, Monte Solar Energy, Inc. (MonteSol), will own and operate the project, according to the regulatory filing.

Wednesday’s announcement signaled the Ayala group’s bold move to foray into solar power after earlier qualms of venturing into a business it said it still was studying and would wait out until the industry becomes competitive.

In July, AC Energy CEO John Eric T. Francia had said the group’s “aspiration is to get to a stage where solar becomes very competitive.”

“That’s in the medium to long-term for us instead of imminent,” Mr. Francia had told reporters then.

Much of the Ayala group’s energy venture in the past years were wind farms -- the Bangui farm in Ilocos Norte and another in Pagudpud also in northern Philippines.

AC Energy also owns coal projects.

Over the past three years, the Ayala-led power firm allotted an equity investment of around $500 million to develop various power generating projects.

In the disclosure yesterday, Mr. Francia was quoted as saying: “We are excited to pursue this opportunity and expand our renewable energy assets in line with our broader objective to create a balanced energy portfolio.”

“This project serves as a good entry platform for our investment in solar power, particularly as technology costs have dramatically improved over the past few years,” he added.

The Ayala group’s partner said the Negros project will boost its power portfolio to 202 MW.

“[T[he investment of AC Energy will only accelerate the ongoing rapid development of Negros,” Montesol President Xavier P. Zabaleta said.

Bronzeoak’s Negros Occidental solar facility was the first to avail of the premium rate for solar projects under the feed-in tariff scheme. Through several subsidiaries, Bronzeoak is also building more solar farms across Negros.

Ayala, apart from its investments in power, has interests in other key industries like real estate (Ayala Land, Inc.), banking (Bank of the Philippine Islands); water distribution (Manila Water Company, Inc.); and telecommunications (Globe Telecom, Inc.). -- report from C.A.M.C. Feliciano