WHO WE ARE

Ayala Corporation established AC Energy, Inc. as its energy platform, one of the fastest- growing renewable energy companies in the region and one of the Ayala group’s core businesses.

In 2017, AC Energy, Inc. began to expand beyond the Philippines and focused on scaling its renewable investments. The company also strengthened its development and operational capabilities through the acquisition of Bronzeoak Clean Energy, a leading renewable energy developer in the country, and PHINMA Energy, one of the pioneers in the Philippine power industry. Afterwards, the Ayala group restructured and announced that it will be consolidating its energy, water, infrastructure, and logistics businesses into the company which was renamed to AC Energy and Infrastructure Corporation. Meanwhile, PHINMA Energy was reconstituted as AC Energy Corporation.

In 2019, ACEIC infused its Philippine energy assets into ACEN through an asset for share swap. With this infusion, ACEN’s portfolio will grow to approximately 2,400 MW of attributable capacity, of which 77% will be from renewable sources. ACEN is in an excellent position to realize it aspiration to become the largest listed renewables platform in Southeast Asia with the goal of 5 GW of renewables capacity by 2025.

MARKET OUTLOOK

The COVID-19 pandemic was an unexpected disruption, undermining the ASEAN regional target to achieve 23% renewables share in total energy supply by 2025. In the Philippines, the pandemic brought one of the longest and strictest lockdowns, causing power demand to drop by around 20% year-on-year, though it recovered fully by the second half of the year.

Critical government support brought a positive outlook for the renewables sector. In September, the DOE announced its plan to launch the Renewable Portfolio Standards, which brought in more than 13,000 MW of solar project applications. Demand is also expected to be driven up by the Total Electrification Program which targets a 100% electrification rate by 2022. A green energy auction initially set at 2,000 MW has also been scheduled for June 2021, which would facilitate supply contracting by qualified suppliers with eligible customers in a competitive process.

The country is expected to grow power consumption annually by 4.6% within the next decade while power capacity will increase by a net capacity of approximately 8 GW according to Fitch Solutions.

Meanwhile in Vietnam the growth of energy demand slowed to 2% at the height of the pandemic from around 10%. However, mid to long-term growth is expected rebound to 8% to 10% on the back of strong government support on economic trade and investment. At the same time, the country aims to double its use of renewable energy and slash carbon emissions by 15% by 2030.

Against COVID-19, Vietnam is forging ahead on its renewable energy goals. In April, the Vietnam government released the second Feed-in-Tariff scheme for solar projects, sustaining the solar energy revolution in the country.

CAPITALS

Financial
Over US$2 billion of invested and committed equity in renewable and thermal energy

Natural
Harnesses solar, wind and thermal energy for power generation

47% of ACEN’s 1,034 MW portfolio is renewable

100% of the ~1,400 MW offshore capacity is renewable

Social and Relationship
Together with the Ayala group, launched a series of social investment and support initiatives, raising over ₱64 million to fund COVID-19 relief operations

Manufactured
Portfolio of power generating plants: 1,034 MW in the Philippines under ACEN (100% basis), ~1,400 MW offshore, and 710 MW of legacy coal assets

The Mui Ne Wind Farm is AC Energy’s first wind power project in Vietnam.

HOW WE CREATE VALUE


Development Platform
Established a strong network of partners and development platforms in scalable markets across the region with the Philippines, Vietnam, Indonesia, India, Australia, and Myanmar as key markets.

Green Bond Leadership

  • Total outstanding Green Bonds: US$ 983 million
  • % Deployed as of end of 2020: 74%
  • Renewable energy capacity funded by Gree Bonds: 2,473 MW (gross)

Power Generation
Generated 4,847 GWh of attributable output of which 41% was from renewable sources.

Job Creation
Generated ~7,000 jobs for its head office, power plants and within its host communities in the Philippines and across the region.

BUSINESS REVIEW

AC Energy remained resilient, backed by its diversified energy portfolio and strong balance sheet. The company contributed ₱6.2 billion1 of net income in 2020, reflecting its strong performance despite the pandemic. This, however, was a decline from ₱25 billion in the prior year, which included gains from its partial divestment in AA Thermal.

Equity earnings from the listed company, ACEN, increased to ₱2.8 billion from almost break even in the previous year on the back of higher operating and contracted capacity and improved plant availability. ACEN now accounts for almost half of AC Energy’s net income.

Equity earnings from international assets increased by 68% to ₱2.5 billion, supported by full-year operations of the company’s solar assets in Vietnam.

Aside from the Philippines, AC Energy is now present in Vietnam, Indonesia, Australia, and India.

Sustainable Transformation

In 2020, AC Energy further expanded its geographical reach and is now present in Vietnam, Indonesia, Australia, and India. The Philippines remains to be the company’s core market.

ACEN has more than 1,304 MW of attributable capacity in the Philippines, a 2.6x growth from its 400 MW capacity upon acquisition, with around almost half coming from renewable energy. AC Energy continues to scale up its renewable energy portfolio offshore and currently owns approximately 1,400 MW of attributable capacity in the region.

In Vietnam, the government has been making a serious push for renewables with a compelling Feed-In Tariff program that resulted in over 4 GW of solar in just two years. AC Energy is well-positioned to address the attractive growth opportunities in the country and has made significant solar and wind investments totaling to more than 600 MW in capacity.

Another key market is Australia. AC Energy formed a joint venture with UPC Renewables in 2018 and established an extensive renewable energy pipeline amounting to over 2,400 MW. The joint venture also established UPC-AC Energy Solar in India and currently holds over 450 MW of solar projects under construction and in the pipeline. India’s clean energy expansion program has set an ambitious target of 175 GW renewables capacity by 2022.

In Indonesia, AC Energy’s wind and geothermal assets with an attributable capacity of over 180 MW continue to contribute to its net income.

To realize its 2025 vision, ACEN will grow its balance sheet through its latest set of capital raising initiatives. In January 2021, ACEN completed its stock rights offering, raising ₱5.4 billion. By March, the private placement of Singapore sovereign wealth fund, GIC Private Limited, completed a ₱12 billion investment into ACEN. The company also announced plans to conduct a follow-on offering in 2021.

Leading the Region’s Sustainable Transformation

The Asia Pacific is at the early stage of the energy transition as solar and wind account for less than 10% of output. The upside is massive as demand continues to grow and coal plants are shut down over time.

AC Energy is in an excellent position to capture these opportunities. Through its strong network of partners and banking relationships and its highly motivated, dynamic, and agile team that has consistently surpassed expectations, AC Energy is well on track to realize its aspiration to become the largest listed renewables platform in Southeast Asia.

As AC Energy scales up its renewables business, it also ensures its power plants are operating at top efficiency.

AC Energy and Sustainability

The Philippines was cited as a regional leader in sustainable finance with the third most investments in the region in the green bond market according to the Climate Bonds Initiative. AC Energy was cited as the largest issuer in the Philippines in 2020 with four tranches of green bonds outstanding, ranging from US$75 million to US$400 million.

The green bonds further strengthen AC Energy’s liquidity and enable it to continue scaling up its renewable investments despite the challenging environment. In July, AC Energy successfully launched a US$60 million tap on its senior Green Bonds due 2024 via private placement. By November, AC Energy issued US$300 million in perpetual green bonds on the Singapore Exchange. Its sustainability frame is built on three areas: Low carbon portfolio by 2030, environment protection, and community investment.

AC Energy has started to develop targets and measures to help drive its sustainability agenda across the organization and business partners.

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1 Y2020 NIAT differs vs. the reported NIAT of ACEIC due to cut-off adjustments taken up at AC consolidated FS. Along with other cut-off adjustments, the net effect to consolidated NIAT is less than 1 percent.

STRATEGY 2020 PERFORMANCE 2021 PRIORITIES
Energy Transition
  • Growing the renewables portfolio complemented by peaking plants in the short to medium term and battery storage over the medium to long term.
  • Provide the most affordable, reliable, and sustainable energy
  • Increased renewable energy capacity
    • ~490 MW of renewables under ACEN and ~1,400 MW internationally
    • Among the largest renewable portfolios in Southeast Asia
  • Largest issuer of green bonds in the Philippines in 2020
    • Deployed >70% of net proceeds as of end 2020
    • Launched a US$60 million tap on its senior Green Bonds due 2024
    • Issued US$300 million in perpetual green bonds in SGX
  • Capital raising activities to fund investments in renewables:
    • ACEN stock rights offering
    • Investment of Singapore sovereign wealth fund, GIC Private Limited
    • ACEN follow-on offering
  • Infusion of international assets into ACEN
  • Completion of projects under construction in the Philippines, Vietnam, and India
  • First tranche of GNPower Kauswagan asset divestment
Expand in high growth regional markets
  • Renewable energy growth in key markets with attractive ratings and ambitious climate policies.
  • The Philippines will continue to be the company’s core market.
  • Aim to be the largest listed renewables platform in Southeast Asia
  • Established ~1,400 MW of attributable capacity offshore
    • Construction of > 340 MW of solar and wind projects in Vietnam
    • Commencement of 521 MW of solar capacity in Australia and 170 MW of solar capacity in India
  • Philippine projects ramp up:
    • 120 MW Alaminos and 60 MW Palauig solar farms to be operational by mid-2021
    • 150 MW Ingrid power plant in Rizal to be operational within the year
    • 2 x 20MWh Alaminos battery energy storage system targeted for completion within the year
    • Renewable energy laboratory in Bataan to be operational by June 2021
  • Philippines, Vietnam, and Australia remain as key markets
  • Establish a meaningful presence in India
  • Continue to search for markets aligned with our strategy
Leverage strategic partnerships to complement internal development capabilities
Established network of strong industry partners and banking relationships
  • Expanded the UPC Renewables partnership with two wind projects in Vietnam, two solar projects India, and a new project in Australia
  • Started the Quang Binh wind project with AMI Renewables in Vietnam
  • Expanded the Ninh Thuan solar project in partnership with the BIM Group.
  • Expanded the Mui Ne wind farm in partnership with The Blue Circle
  • ACEN entered into a JV with Axia Power Holdings Philippines for the 150 MW Ingrid power plant project in Rizal
  • Continue to grow local partners and local talents
  • Continue to grow banking relationships
THE VALUE WE CREATE
Investors and Shareholders
  • Net income contribution of ₱6.2 billion1 in 2020 reflects the company’s strong performance despite the pandemic.
  • ACEN’s stock price tripled in 2020 with market capitalization growing more than sixfold to ₱110.5 billion.
Customers
  • Serves the power requirements of 310 MW wholesale customer contracts and 270 MW of retail customers in the Philippines and provides energy solution products that allow customers to offset their carbon footprint while maintaining affordability and reliability.
  • International plants also power the requirements of distribution utilities in Indonesia and Vietnam.
  • Generated 4,847 GWh of energy to supply the grid and its customers
The Environment
  • ~490 MW of renewables capacity under ACEN (47% of portfolio)
  • ~1,400 MW of renewables capacity in International (100% of portfolio)
  • 1,666,885.23 MT CO2e of attributable greenhouse emissions avoided
  • 910 hectares of forestlands protected or restored
  • AC Energy aims to divest all meaningful exposure to coal by 2030
Communities Invested over ₱127.8 million towards its partner host communities, uplifting close to 35,994 individuals, 40,609 households, and 437 organizations through its community initiatives

4F 6750 Ayala Avenue Building
Ayala Avenue Makati City 1226, Philippines
  +63 2 7 730 6300
www.acenergy.com.ph

Investor Relations
 investorrelations@acenergy.com.ph
Sustainability
 maranan.is@acenergy.com.ph

Learn more about AC Energy’s
SDG initiatives

Learn more about AC Energy
in our 2020 Integrated Report

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