This is the reason why one cannot go wrong by betting on energy stocks like AP, AEV (which is 80% composed of AP), SCC (The only large-scale Coal producer in the country), EDC and FGEN. AP is more favorable in times of power crisis since they have a much higher exposure on the WESM compared to EDC which is involved in long-term. fixed-price supply contracts. Here are some of the important points in the $155 “Philippines Power Report 2010” from Business Monitor International.
Philippine Energy Demand
§ The country’s power consumption is expected to increase by 23% from 2010 to 2014.
§ Population is expected to expand from 91.4 Million to 100.1 Million over the period
§ GDP per capita and electricity consumption per capita to increase by 46% and 10% respectively by 2014
§ Projections suggest 5.0% average annual growth in overall power generation between 2010 and 2014
§ Philippine Energy Demand is forecasted to grow by 45.6% from 2012 to 2019
§ Between 2010 and 2019, Philippine electricity generation is forecasted to increase 59.9%, which is around the middle of the range for the Asia Pacific Region. (30.3% in 2014-2019, and 22.7% in 2010-2014)
§ An increase of 25% in hydro-power use during 2010-2019 is a key element of generation growth
§ Thermal Power generation is forecasted to rise by 66% between 2010 and 2019
§ Coal accounts for 24% of energy demand in 2010
§ The country relies on imports for much of its coal consumption, primarily from
§ In 2008, the country consumed 9.3mn tones, (up more than 50% since 2000), while producing only 3.3 mn tonnes.
§ Emerald Energy Corporation, the Philippine subsidiary of French utilities player GdF Suez announced it is backing down from a multi-million dollar agreement for the acquisition of the Calaca coal-fired power plant citing a deterioration in the physical condition of the plant since it won the bid 16 months ago.
§ Projections suggest that by 2014, the share of usage of renewable energy will increase from 6% to 10%. A very good improvement compared to the negative growth of Oil, Flat growth of Coal, and a slight increase of hydro-electric.
§ The Renewable Energy Act provides fiscal incentives for potential investors in renewable energy such as tax credits, lower taxes on machinery, and tax exemption of carbon credits, and other non-fiscal incentives
§ The BOI is proposing a package of tax incentives for the power generation sector in an effort to reduce shortages in some provinces suffering form power blackouts due to droughts.
§ RE Law also includes a Renewable Portfolio Standard requiring the country’s electric utilities to obtain a certain portion of their electricity from clean, indigenous renewable energy sources.
The information contained in this blog are my own opinions and analyses, provided for information purposes only and should not be construed as an offer to buy or sell securities.