SPC eyes renewable energy projects
With stiffer competition on the power generation business, the SPC Power Corp. is looking at niche markets to keep abreast with other players from Luzon that have started coming into the Visayas region.
The reserve and peaking markets can be pursued by SPC Power Corp., according to the listed-firm’s chairman Alfredo Henares in an interview yesterday.
“We have to tailor our products to fit the market. We’re looking for niches instead of going head on against these low-cost competitors. We’re looking for markets where we can still get a good return and provide a good service to our customers,” he said at the sidelines of SPC’s annual stockholders’ meeting yesterday morning at the City Sports Club.
Henares explained that Luzon-based power corporations have found it easier to penetrate the Visayas area due to interconnectivity of the region’s islands, which has placed them under one power grid.
As these firms have more capacity, he said they can offer cheaper power rates and may hurt other local power corporations.
Henares said they are looking into the peaking market to be able to answer demands and fill in the gap in demand during peak hours by establishing peaking plants.
Another coping mechanism being looked into by SPC is to go into renewable energy sources like hydro power.
“We’re in the process. We have several projects we’re looking into. First, we have to vet the projects, then build. For hydro, it will take five years to construct. So from the start, to build the hydro takes a very long time,” he said.
The firm has also looked at solar and wind sources for power but is not as interested as they are now in hydro power.
Solar power is already “over contracted,” according to SPC Power Corp. vice president for business development and commercial operations Cesar Villegas.
While the Department of Energy has only set the capacity allocation for solar power to 500 megawatts, Villegas said there are already projects of at least 800 megawatts that are already in the pipeline.
“The reason why we are going for hydro is it’s the only remaining (supply) which still has space for capacity. But still, there’s a lot of rush already going on. Already, so many projects are on the pipeline and it’s a race,” he said.
Henares explained though that there is a danger with more Luzon-based power corporations going into the markets in the Visayas region.
The National Grid Corporation of the Philippines (NGCP) lines connecting the Luzon grid to the Visyas grid can only accommodate up to 300 megawatts of load.
“But the way the markets are structured, the corporations can even, on a financial basis, sell more of that capacity than the lines can accommodate,” he said.
“The risk there though is that, if the result of that is to incapacitate those players in the Visayas, if they go offline, the whole system may actually become problematic,” Henares added.
What these Luzon-based firms do, he said, is buy capacity from local power sellers and be the ones to resell it in the Visayas area.
But even with these challenges, SPC officials remained upbeat yesterday as they addressed the corporation’s stockholders.
SPC’s chief financial officer Rey del Rosario reported that the firm closed 2016 with a consolidated comprehensive income of P1.78 billion compared to 2015 when they posted an income of P1.51 billion.
SPC’s subsidiaries include SPC Island Power Corp., SPC Malaya Power Corp., SPC Electric Company, Inc., and the Bohol Light Company. On the other hand, their associates are KEPCO SPC Power Corp. and the Mactan Electric Company, Inc.
“Moving forward, the group will continue to focus on further improving efficiencies and leveraging existing business assets to sustain or improve profitability,” del Rosario said.
“The group will likewise continue to vigorously look for new investment opportunities. The end goal is to create long-term value for all our stakeholders,” he added.
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