Development of an 86-MW wind farm in Ilocos Norte (Philippines)

The offering is to P2 billion more than originally planned, due to substantial demand from both retail and institutional investors. LOPEZ-LED Energy Development Corp. (EDC) said it would commission the first phase of its 86-megawatt (MW) wind farm in Burgos, Ilocos Norte by the third quarter of next year.

"We have to commission the first phase by 2010, hopefully… in the third quarter," Paul A. Aquino, EDC vice-chairman, president and chief executive officer, told reporters last week.  Mr. Aquino, however, said the commissioning of the first unit would depend on the terms of the winning contractor for the facility.

Mr. Aquino added that the commissioning would also "depend on the weather, and plenty of logistics. And the winning contractor will say how much he can put up based on the logistics." Wind and tide patterns will also be factored in, Mr. Aquino added. Once operational, the 86-MW wind facility in Ilocos Norte will make the country the biggest developer of commercial wind energy.

At present, the only wind power facility in the country is Northwind Development Corp.’s 33-MW wind farm in Bangui Bay, Ilocos Norte. While the wind farm supplies about 40% of Ilocos Norte’s needs, it only accounts for 0.33% and 0.25% of the Luzon and national grids, respectively.

The Department of Energy (DoE) recently awarded EDC a service contract for the 86-MW wind project covering 1,296 hectares in Burgos.  The government is aiming to ensure energy security by encouraging investments in indigenous energy sources, especially with the passage of the Renewable Energy Law. The DoE is looking at doubling the country’s renewable energy capacity to 9,000 MW in the next 10 years.

Mr. Aquino, however, said EDC’s focus remains on developing its geothermal capacity. EDC is buying the Palinpinon and Tongonan geothermal complex, with capacities of 92.5 MW and 112.5 MW, respectively.

EDC is the country’s leading developer of geothermal energy, accounting for over 62% or 1,199 MW of total installed capacity prior to the Palinpinon-Tongonan purchase.

EDC had said the Palinpinon-Tongonan acquisition would turn the company into the world’s top geothermal producer, overtaking American energy firm Chevron Corp.’s yearly output of 1,273 MW. EDC won the Palinpinon-Tongonan geothermal facilities on Sept. 2 in bidding conducted by the state-led Power Sector Assets and Liabilities Management Corp.

With the overwhelming market reception to EDCs bond issuance, the bonds have been fully taken up ahead of the original closing date of November 26. The SEC had approved the Lopez-led geothermal energy firms registration application to issue up to P10 billion in retail bonds, with an oversubscription option of up to P2 billion in case of strong investor demand.

The retail bonds carry a yield of 8.6418 per cent per annum for a tenor of five and a half years and 9.3327 per cent for the seven year tenor. This marked the first retail bond issuance of EDC, the Philippines largest producer of geothermal energy, the company said in a statement.

The EDC bonds, which were offered to the public starting November 18, will be issued on December 4. "Proceeds from the issuance shall be used to (i) partially refinance and/or re-denominate EDCs outstanding foreign currency denominated loans, and (ii) for general corporate purposes," the company added.

EDC earlier issued P9 billion fixed rate corporate notes which elicited strong investor take-up. In fact, EDCs maiden debt issue in the domestic capital markets was 2.5 times oversubscribed and was upsized from its original issue size of P3 billion.

The EDC bonds was rated PRS Aaa by the Philippine Ratings Services Corporation, the highest credit rating, which reflects the issuing companys very strong capacity to meet its financial commitments.

BDO Capital & Investment Corp. acted as the Issue Manager and Sole Bookrunner for the bond issue. The Joint Lead Underwriters are BDO Capital, RCBC Capital Corporation, BPI Capital Corporation and SB Capital Investment Corporation.

EDC remains the countrys leading producer of geothermal energy accounting for 62 per cent or 1,199 MW of the 1,980 MW total installed capacity. It is now positioning itself as the premier pure renewable energy player in the Philippines with its acquisition of 60 per cent equity in the Pantabangan-Masiway hydroelectric project and the development of an 86-MW wind farm in Burgos, Ilocos Norte.

Alternergy Philippines is to develop six wind power projects in the Southeast Asian nation according to the Department of Energy. Based on documents submitted to the agency, Alternergy’s wind farms will be located in Kalayaan, Laguna; Pilillia, Rizal; Aparri, Cagayan; Santa Ana, Cagayan; Pagudpod, Ilocos Norte; and Abra de Ilog, Occidental Mindoro.

The facilities will entail investments of $14.1m each for a total of $84.6m. Two of the company’s proposed wind farms will carry a 40 MW capacity each while the capacities of the other four have yet to be determined. The Energy department has already given Alternergy the green light to pursue the projects as part of more than $300m worth of wind service contracts the government approved recently. The government is banking on the development of indigenous renewable energy sources such as wind power to secure the country’s supply.

Energy Secretary Angelo Reyes earlier said that "studies by the US National Renewable Energy Laboratory shows that the Philippines has a total wind resource of 76 600 MW." Alternergy is a renewable energy firm headed by former Secretary Vince Perez. The company has investments in the 33-megawatt Bangui Bay wind farm in Ilocos, along with NorthWind Power Development Corp.

In September, Alternergy tied up with Eurus Energy Japan Corp. and Korea East West Power Co. (EWP) for a $100m investment to develop renewable energy projects in the Philippines. EWP is a subsidiary of Korea Electric Power Corp. (Kepco) while Eurus Energy Japan is a subsidiary of Eurus Energy Holdings Corp. of Japan. The latter is a joint venture between by Tokyo Electric Power Co. Inc. and Toyota Tsusho Corp.