EDC and Envent Strengthen Philippines' Geothermal Power Sector

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Researched by Industrial Info Resources (Sugar Land, Texas)--In a recent development, the largest geothermal energy company of the Philippines, Energy Development Corporation (PSE:EDC) (EDC) (Manila), obtained full ownership and began operating the 52-megawatt (MW) Mindanao-1 and 54-MW Mindanao-2 geothermal power plants. The transfer of ownership followed the completion of an energy conversion agreement with an overseas partner that set up the plants under a build-operate-transfer (BOT) agreement.

The two plants were set up in Kidapawan in the province of Kotabato by a consortium comprising Marubeni Corporation (TYO:8002) (Tokyo, Japan) and Oxbow Corporation (West Palm Beach, Florida) under the Mindanao-1 Geothermal Partnership. Mindanao-1 and Mindanao-2 started operations in March 1997 and June 1999, respectively, and since then the plants have operated at average respective capacities of 91.3% and 92.5%. In 2006, the parties agreed to extend the BOT contract period of Mindanao-1 until the time when Mindanao-2 was ready. The two plants were being operated by Marubeni Corporation and contributed an average of 10.56% of Mindanao's power supply. With the transfer of the plants, EDC's President Paul A. Aquino expects the company to successfully address and benefit from the increasing demand for electricity in the Mindanao grid.

Under other BOT contracts, EDC took over operations of the United Leyte geothermal power plants from California Energy Commission (Sacramento, California) and Ormat Industries Limited (TLV:ORMT) (Yavne, Israel) in 2006 and 2007. The United Leyte power plants include the 232-MW Malitbog, the 180-MW Mahanagdong, the 132-MW Upper Mahiao and the 51-MW Optimization geothermal power plants. The plants supply energy to the provinces of Biliran, Bohol, Cebu, Leyte, Negros, Panay, Samar, Siquijor and parts of southern Luzon.

EDC has a total installed capacity of 1,150 MW of geothermal power and operates 12 geothermal steamfields under five geothermal service contracts covering the Bacon-Manito Geothermal Production Field, Leyte Geothermal Production Field, Mindanao Geothermal Production Field, Northern Negros Geothermal Production Field and Southern Negros Geothermal Production Field. The company aims to become the Philippines' largest purely renewable energy company and in an effort to reach that target, acquired a 60% equity in the Pantabangan-Masiway hydroelectric project in Nueva Ecija.

Among other developments in the geothermal sector of the Philippines, major geothermal developer Envent (Pasig City, Philippines) recently signed a 10-year power purchase agreement with the Biliran Electric Cooperative (BILECO) (Naval, Philippines) for approximately 8,600 megawatt-hours (MWh) per year of clean, renewable energy at a flat rate of $94 per MWh. The total value of the PPA is about $47 million. Envent is currently setting up the 50 MW-Biliran Unit 1 geothermal power plant on the island of Biliran in the Eastern Visayas region. The upstream part of the project is being executed jointly with Biliran Geothermal Incorporated (Naval) and other local companies. The plant is scheduled to be commissioned in 2012 and will supply the baseload electricity required under the PPA.

The PPA commits about 10% of the power generated by the plant to BILECO. During the next few months, Envent expects to sign additional PPAs for the sale of the remaining 45 MW for a total commercial value of $515 million.

Envent is owned by Geysir Green Energy (Reykjanesbaer, Iceland) and Reykjavik Energy Invest (Reykjavik, Iceland), which have an 80% and 20% stake in Envent, respectively.

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