ACEN rolls out $1.6B investment for new projects

Ayala-led ACEN Corporation will be rolling out $1.6 billion worth of capital for 1,600 megawatts (1.6 gigawatts) of greenfield renewable energy (RE) projects that it will be advancing at its home base in the Philippines, as well as in India and Australia.

In a media briefing, ACEN President and CEO Eric T. Francia indicated that bulk of the new installations will be for the Philippine market for at least 700 megawatts; then India will corner 400MW and 500MW in the pie will be for the Australian market.

He explained that capital formation for the new RE developments had been anchored on $1.0 million per megawatt rule of thumb project cost, hence, the scale of investments will reach as much as $1.6 billion.

The ACEN executive similarly noted that for Vietnam, there will be temporary pause on capital injection for this year because there’s still no framework on forward developments for new RE ventures in that market.

The capital expenditures (capex) of the company for this year, Francia said, will be P72 billion – and the lion’s share of P43 billion will be funneled for programmed Philippine projects.

“We ended last year with cash in our balance sheet of just under P40 billion. So that's obviously going to go to fund a lot of these capex, plus additional financing from mostly bilateral loans - whether it's mostly at the project level - project finance from banks basically. So that's the plan for this year,” the ACEN executive stressed.

On the company’s mammoth portfolio growth to 20GW by 2030, Francia emphasized that additional investments of $15 billion will bring ACEN to a successful finish of that project development race.

“We're now roughly at 5.0 gigawatts. So to get to 20GW, we need 15GW. It's around 1.0 million per megawatt - so that's $15 billion. We expect roughly 60% of the funding to come from debt, whether it's by collateral, from banks or the debt capital markets,” he stated.

Francia added “40% or roughly $6.0 billion for the balance of the decade will come from equity sources - a good chunk of that will come from just reinvestments of cash flows from our projects.”

Also part of the company’s strategy will be divestment of some targeted assets, with him hinting that these are not necessarily the projects they have in the Philippines or in Australia – because their strategy for these key markets will be to hold their assets to maturity.

“From time to time, we do some asset sales or capital recycling. You've seen us do that with some sell-down, especially if the partner wants to augment their position. For example, they could buy some of these assets from us,” Francia expounded.

He further said “our primary approach or strategy is to build and hold to maturity, but there are some projects that are really designed to be sold at a certain point in time, because sometimes it's also a requirement of our partner to recycle capital. So that would be the other source of funding.”

Francia asserted the Ayala energy firm may also opt for “hybrid securities like the preferred shares that we issued before, it forms part of that equity capital. And then finally, common equity issuance is also a possibility.”