MANILA, Philippines—The Ayala group is venturing into hydroelectric power generation in partnership with Sta. Clara Power Corp., an independent power producer specializing in run-of-the-river hydroelectric plants.
In a disclosure to the Philippine Stock Exchange on Wednesday, Ayala Corp. managing director John Eric Francia said the conglomerate, through its wholly owned subsidiary Michigan Power Inc. (MPI), had created a joint-venture platform with Sta. Clara for the development of run-of-the-river (ROR) hydroelectric power projects across the Philippines.
MPI will take a 70 percent stake in the venture and has committed an initial equity infusion of about P600 million.
Run-of-the-river hydroelectric power plant operation involves “borrowing” some river water to turn its kinetic energy into electricity and returning the same unpolluted water back into the river. It is considered as “green” because it does not produce harmful emissions. Like other renewable power technologies, it is economical as it depends on the “free” energy of nature as fuel.
Ayala president and COO Fernando Zobel de Ayala said, “This venture builds on our current portfolio of renewable energy assets, which focuses on solar, wind and hydro-power technologies.This is an important component of our plan to create a portfolio of power assets over the medium term that blends conventional and sustainable energy sources and contribute to the country’s energy requirements.”
The group – which has previously shied away from businesses where pricing is laden with regulatory risks – has identified power generation as a key platform for future growth. This is especially as demand for power is expected to rise in the years ahead given the Philippines’ economic and population growth trends. But because the Ayala group is still building expertise in this business, forging partnerships is part of its strategy.
Ayala plans to build a portfolio of power generation assets, which shall include both renewable and conventional power-generation businesses, with a capacity of 1,000 megawatts over the next five years. This new hydroelectric-power venture follows the company’s recent partnership with Mitsubishi Corp. for solar power and its acquisition of half of the wind farm project of Northwind Power Development Corp. in Ilocos Norte.
Francia said these are all in line with Ayala’s campaign to augment the country’s power supply primarily through renewable and clean energy,.
Sta. Clara Power is a power-generation company that focuses on run-of-the-river hydropower. Among its power assets, which shall not be part of the joint venture with Ayala, are interests in Loboc hydro, Amlan hydro and Bakun IPP administrator contract. It is majority-owned by Sta. Clara International Corp., a construction company with local and overseas projects.