Energy Development Corporation (EDC) has a $300 million full-turnkey deal with Danish firm Vestas for its planned 87-megawatt wind power project in Burgos, Ilocos Norte.
In an announcement, the Lopez-run firm noted that the deal with Vestas will finally move the project into construction following years of getting stalled at its investment drawing board.
For the wind farm project’s financing, EDC chief finance officer Nestor Vasay noted that they will issue a combination of 10-year peso-denominated bonds and foreign-denominated bilateral loan targeted for closing by the end this month.
The peso component is set at P5 to 7 billion; and the foreign is at $75 to $100 million; while the balance will be from equity.
EDC chairman and chief executive officer Federico R. Lopez noted that the wind project financing will have recourse to parent, adding that “we are already putting the strength of the EDC balance sheet to the project on time.”
EDC director Jon Rossell said the project will have a potential for expansion up to 150 megawatts along the Burgos site or adjacent areas; and this can be easily set on stream by 2015.
The targeted commissioning of the 87-MW facility is 2014, one year ahead than the timeline set by the Department of Energy (DOE) for project completion of renewable energy (RE) ventures that may be incentivized with feed-in-tariff.
Once set on commercial operation, the Burgos project will be the country’s biggest wind power facility, trouncing the spot long-held by the first wind farm of 33 megawatts, also in Ilocos Norte. The facility is expected to generate 233 gigawatt hours (GWh) annually that translates into powering the homes of more than a million households.
EDC explained that it tapped Vestas because it already has proven and well-established track record when it comes to wind power developments. The Danish firm is the largest wind turbine manufacturer globally, with it offering primarily the 29 V90-3.0 megawatt wind turbines.
Lopez said the company has so far “long-prepared for this project and we are determined to achieve commerciality at the soonest possible time so we can supply the Luzon grid with clean, sustainable wind energy.”
Commerciality is, by far, the operative word for proposed FIT-underpinned RE projects because this will be the government’s gauge as to which ventures will eventually corner the consumer-sanctioned subsidies. The approved FIT for wind technology is at P8.53 per kilowatt hour.
Lopez added that the project “is aligned with the long-term strategic direction of First Gen (EDC’s parent company) to be the country’s leading diversified renewable energy company.”
The total cost of the project, according to the EDC, will be $300 million and the bulk of it will be for capital outlay on equipment procurement and construction which will also cover substation and transmission line.
The Lopez firm though has qualified that “both contracts contain certain conditions that must be satisfied or waived, including the issuance of a notice to proceed by EDC and are thus conditional.”
The company specified that it picked the Danish firm “after an exhaustive tendering process after confirming that Vestas had the technical and commercial abilities to meet the stringent requirements of EDC.”
The facility will add up to the capacity needs of Luzon grid upon its on-line operation. Aside from helping shore up the grid’s supply, it is also a beneficial factor for the environment.