LOPEZ-LED Energy Development Corp. (EDC) said on Thursday it may register flat earnings this year, mainly as a result of the unplanned outage of Unit 2 of the Tongonan geothermal plant.
Erwin Avante, EDC Vice President for corporate finance, said the largest geothermal producer in the country is poised to incur at the end this year the same net income—P8.8 billion—it posted in 2015.
EDC’s core profit in 2015 dropped by 4 percent, from P9.2 billion the previous year, due to higher operating expenditures. The company’s consolidated income, inclusive of nonrecurring items, stood at P7.6 billion, 35 percent lower than the P11.7 billion booked in 2014.
Bulk of EDC’s P14 billion in capital expenditure (capex) this year will be allocated for the upgrade of the plant in Leyte that went on emergency shutdown last year due to issues related to the facility’s age.
The 37.5-megawatt (MW) Tongonan Unit 2 went on shutdown from March to July last year, following blade failure in its steam turbine motor. This resulted in revenue opportunity losses. As a permanent solution, retrofit kits were ordered as early as January this year, as the company knew the 33-year-old plant was due for rehabilitation. The rehabilitation cost could go as high as P4.3 billion.
The rehabilitation program is expected to augment the plant’s output by 10 MW once completed in the second half of 2017. The Tongonan facility’s capacity is currently at 112.5 MW.
Avante said the company’s earnings also depended on the movement of the prices at the Wholesale Electricity Spot Matket (WESM).
EDC, he said, sources around 15 percent of its sales revenues from the WESM, where prices are currently very low.
The company operates 12 geothermal plants in the Bicol region, North Cotabato, Negros Oriental and West Leyte, with a combined capacity of 1,168.8 MW.
It operates the Burgos wind project, Nasulo geothermal-power plant, and the Bacon-Manito geothermal-power plant. The EDC wants the government to include geothermal-projects in its feed-in-tariff (FiT) scheme to harness the renewable energy’s potential.
The country’s geothermal potential can still grow from 1,900 MW to 3,000 MW once the FiT is put on place. “Geothermal development takes time, but a lot will develop geothermal if they give a FiT of P5.50 to P6 per-kilowatt hour,” EDC President Richard Tantoco said.
The other day, First Gen Corp. President and EDC Director Francis Giles Puno called for the reallocation of untapped FiT installation for biomass.
“Biomass is not fully taken up. We would be more than happy to meet that allocation,” Puno said, adding that among other renewable-energy sources, only geothermal can operate as a baseload plant which runs 24/7.
First Gen has a 50.6-percent stake in EDC.
“Geothermal energy is 24/7 producer of clean energy and does not require incremental costs because it is neither intermittent or seasonal. Future geothermal will require a modest FiT, nowhere near where wind and solar are today, but in reality, is significantly cheaper when the costs of intermittency are factored in,” Tantoco said.
