AC Energy

“AC Energy continues its strong growth in the Philippines and around the region. With a highly driven organization of 700 professionals, we commit ourselves to build a sustainable future for all as we scale up investments in renewables. We are making excellent progress towards our goal of reaching 5000MW of renewable capacity by 2025.”

- John Eric T. Francia, President and CEO, AC Energy With solar and wind power plants in and out the Philippines, AC Energy is geared towards being a fully renewable energy international company by 2025.

WHO WE ARE
AC Energy’s energy portfolio registered an attributable capacity of over 1.8 GW in operation and under construction in the Asia-Pacific region as of the end of 2019. It increased its attributable energy output in 2019 by 25 percent to 3,500 GWh, of which 50 percent came from renewable energy sources.

 

As it shifts its portfolio towards renewable energy, AC Energy has developed a pipeline of 1,200 MW in various renewable projects that are expected to reach financial close within 2020. This is in line with the company’s goal of achieving 5,000 MW of attribultable renewable capacity by 2025.

MARKET OUTLOOK
Buoyed by opportunities in the energy sector across Asia Pacific, AC Energy remains optimistic in achieving its 2025 goals. The company has committed to scale up its renewables in the region and has identified the Philippines, Indonesia, Vietnam, Australia, India and Myanmar as key target markets.

 

In the Philippines, AC Energy is encouraged by the government’s push for more renewable energy generation and less on traditional energy sources. Under the Renewable Portfolio Standards, the country aims to generate 35 percent of total energy output from renewables by 2030. To achieve this, the country will need to build over 15GW of renewables in the next decade. AC Energy, for this part, will continue to make significant investments in this space.

 

With electricity demand growing on the back of robust regional growth and improvements in attributable renewable energy cost and efficiency materializing, AC Energy seeks to establish significant market presence by expanding and diversifying its generation capacity.

 

BUSINESS REVIEW
The year 2019 saw AC Energy sustain its growth, with net earnings reaching ₱25.4 billion. This was lifted by contribution from its solar projects in Vietnam, recovery of costs incurred from adjustments in the construction and operations of its power plants, and gains from the partial divestment of its thermal assets.

Transitioning to Low Carbon Portfolio
AC Energy intends to play a leading role in the energy transition process and has integrated its own decarbonization strategy into its business model. As the company sets to rebalance its generation portfolio to grow its renewable energy assets, it recognizes the need to raise significant funds for its expansion.

 

In 2019, nearly US$1.4 billion was raised by AC Energy, and through these strategic initiatives, the company sought to fuel its aggressive expansion.

 

In May, AC Energy completed the sale of 60 percent economic interest in AA Thermal, Inc., which has ownership interest in the 2 x 300 MW coal-fired power plant in Mariveles, Bataan, and in the 2 x 600 MW supercritical coal-fired power plant in Dinginin, Bataan. The transaction was valued at US$572.9 million.

 

AC Energy made its debut in the capital markets in January and raised US$410 million in Green Bonds, the first publicly syndicated US dollar Green Bonds in Southeast Asia to be certified by the Climate Bonds Initiative: US$300 million senior Green Bonds with a 5-year tenor and a coupon of 4.75 percent per annum, and US$110 million senior 10-year Green Bonds with a coupon of 5.25 percent. These successful issuances have the International Finance Corporation and the Asian Development Bank as anchor investors.

 

AC Energy then capped the year with another offering – the world’s first US dollar-denominated senior perpetual fixed-for-life green notes at an aggregate principal amount of US$400 million with a fixed coupon of 5.65 percent per annum for life with no step-up and no reset, priced at par. The notes were certified under the ASEAN Green Bonds Standards and successfully listed in Singapore Exchange.

 

Proceeds from these green bonds will support AC Energy’s investments in scaling up its renewables portfolio and help elevate environmental and social practices towards global standards.

AC Energy is looking to double the capacity of its 75 MW Sidrap wind farm in Indonesia to 150 MW.

Sustainable Development
AC Energy’s commitment to sustainability goes beyond the environmental management and development of social projects. It integrates sustainability principles into its business strategy and day-to-day operations.

 

In September, the company rolled out its environmental and social policy and management system anchored in three pillars: 1) Transitioning to low carbon portfolio while addressing the energy needs of the markets in which it operates, and 2) Excellence in environmental management, and 3) Commitment to the community

 

Expansion In High Growth Regional Markets
To capture strong growth momentum, AC Energy accelerated the expansion of its power generation portfolio in the Philippines and across the Asia-Pacific through greenfield projects and M&As.

 

Philippines
In the Philippines, AC Energy continued to make significant strides to be the leader in renewable energy in the country, with a goal to reach 1,500 MW of renewables by 2020.

In June 2019, AC Energy completed the acquisition of the PHINMA group’s combined 51.48 percent stake in PHINMA Energy, which was subsequently renamed to AC Energy Philippines (ACEPH). As of December, AC Energy directly owns 66.34 percent economic stake in AC Energy Philippines, which will become its main platform in the Philippines.

 

AC Energy focused on strengthening ACEPH’s balance sheet by increasing its capital stock by more than 50 percent to ₱7.5 billion. Further, it infused power generation assets valued at more than ₱14 billion through an asset-for-share swap, doubling ACEPH’s equity value and adding 176 MW of capacity to ACEPH’s portfolio. This is subject to regulatory approvals.

 

AC Energy likewise strengthened its domestic portfolio through acquisitions and consolidation of economic interest in some of its thermal and renewables assets. Similarly, AC Energy stepped up its greenfield investments with the start of construction of the 120 MW solar farm project in Alaminos, Laguna, and a 150 MW peaking plant project in Pililla, Rizal. Both projects are being developed by its in-house development platform, ACE Endeavor.

SLTEC, a joint venture between AC Energy, Phinma Energy, and Marubeni Corp., is a 244 MW thermal plant that services the energy demands of Luzon.

Vietnam
In April, AC Energy and the BIM Group switched on their US$294 million, 330 MW Ninh Thuan solar farm in Vietnam. The joint venture is comprised of three facilities with installed capacities of 30 MW, 250 MW, and 50 MW, respectively and is expected to generate 545 million kWh of renewable energy annually.

 

A second renewable energy project in Vietnam was completed by AC Energy in partnership with AMI Renewables in May. These were the 50 MW Khanh Hoa and the 30 MW Dak Lak solar plants. The facilities have been completed in time for the Vietnam government’s feed-in tariff deadline in June 2019.

 

AC Energy and Singapore-based leading renewable energy developer and operator The Blue Circle began the construction of the Mui Ne Wind Farm located at the Binh Thuan province in the Southeastern coast of Vietnam. Construction for the 40 MW first phase has an estimated cost of US$92 million. Project completion is expected in time for the existing wind feed-in-tariff deadline of November 2021. AC Energy will continue to be an active participant in Vietnam’s renewable energy sector.

 

Australia
As the capital costs of renewable energy in Australia continue to drop, and given Australia’s world class solar and wind resources, the country is in a prime position to replace its aging coal fleet with a combination of renewable energy and energy storage.

AC Energy, together with UPC Renewables, intends to harness Australia’s strong potential in renewable energy through large scale projects that will increase leverage and return capital expeditiously to its shareholders. The consortium’s most imminent project in Australia is the New England Solar Farm, a 519.5 MW solar farm near Uralla, New South Wales.

 

India
In October 2019, AC Energy and UPC Renewables’ UPC Solar Asia Pacific formed UPC-AC Energy Solar, a solar energy platform for the development, construction and operations of solar projects in the Asia- Pacific region. The joint venture company targets the construction of a portfolio of over 1GW in the next few years, with an initial focus on India, South Korea and Taiwan. AC Energy is investing US$20 million via a development loan to finance this pipeline, and expects to provide all the construction equity required for these projects.

 

Myammar
In October, AC Energy formed a partnership with Yoma Strategic Holdings to co-develop 200 MW of renewable projects in Myanmar, with a joint investment of US$30 million. The 50-50 joint venture will explore Myanmar’s underserved renewable energy market and develop large utility scale renewable projects within the country. Myanmar has one of the lowest electrification rates in Asia, with more than 60 percent of the population not having access to grid electricity.