While the company’s net income steadied last year, Aboitiz Power Corp. (AboitizPower) is expecting its new projects to help drive up earnings and offset the slowdown in the Wholesale Electricity Spot Market (WESM) prices.
In an ambush interview with Danel Aboitiz, president and chief executive officer of the energy firm, he shared that power supply is increasing during the first quarter of this year, which, in turn, slowed demand and caused prices to drop.
“[It] essentially means supply additions are outstripping demand growth. Demand growth has been slower than expected in the first quarter. But on the flip side, we have a number of new projects coming in,” he said.
“That’s new capacity, new megawatts (MW), right? We’ve been able to contract a good portion of our portfolio to shield us down from those low WESM prices, so AboitizPower should be okay.”
According to the Independent Electricity Market Operator of the Philippines (IEMOP), the latest WESM prices as of February were down by 7.8 percent to ₱2.73 per kilowatt-hour (kWh).
This reflected the system’s supply that month of 20,512 MW, while demand inched up by three percent to 12,904 MW.
Furthermore, the AboitizPower chief is hopeful that their new and existing projects will help offset the spot market price challenges.
“A lot of the projects are long gestation. Beyond 2025, you should see those capacities come in… You may have noticed we have an expansion of Davao Light; that’s another 100 MW of franchise area, [but] I don’t know if that will be completed this year,” he said.
He’s also anticipating the movements with the company’s recent partnership with Ramon Ang-led San Miguel Global Power (SMGP) and Meralco PowerGen Corp. (MGen).
“We have our joint venture with San Miguel and Meralco that closed in January, so that’s already contributing income.”
Earlier this year, the three power firms completed their agreement for the liquefied natural gas (LNG) facility expansion, as Chromite Gas Holdings Inc., which is an MGen-Aboitiz venture, has invested in a 67 percent stake in San Miguel’s South Premiere Power Corp. (SPPC), Excellent Energy Resources Inc. (EERI), and Ilijan Primeline Industrial Estate Corp.
Additionally, Chromite and SMGP would buy out the LNG terminal operator, Linseed Field Corp. (LFC).
According to Aboitiz, he expects a positive growth in the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA), as 2024 brought in a 13 percent year-on-year growth to ₱73.3 billion due to higher generation portfolio and energy sales from its distribution utility (DU) business.
When asked if this firm’s financial performance would be better this year, he shared the effects on fuel, stating that, “A big portion of that is fuel. Don’t look at the top line. Because when the fuel goes down, your revenues go down, but your cost of goods sold goes down as well. Just look at the EBITDA line. If you want to see a proxy for growth, look at maybe EBITDA and then net income. Revenues [are] not the right for a power business.”