First Gen backs hydropower development in off-grid areas

MANILA, Philippines -  The Philippine government should entice investors to develop hydropower projects and ensure supporting policies are in place to achieve its sustainable development goals, especially in the remote areas.

Hydropower projects will not only augment power supply but also bring development in remote areas, where most of these projects are located, First Gen Corp. president and COO Francis Giles Puno said.

“In the case of hydro, because they are located in remote areas, we think that the government should be promoting that because from an inclusive growth perspective, that’s a very inclusive growth program to support development in remote areas,” he said.

In one of its prospective projects in Mindanao, First Gen has completed road developments in the northern part of the region leading to its project.

“You can see that the community was very appreciative of the fact that what was once [an unpaved] road is now very flat road that they can pass through very easily. That’s progress and opportunities like that, do not happen because of uncertainty in the policy,” Puno said.

The Lopez-led firm continues to look how it can boost its hydropower portfolio amid unclear direction from government on the feed-in tariff (FIT) scheme.

“We’ve been very focused on looking at how we can enable hydro development in the country. But the pronouncement of DOE (Department of Energy) is unclear to us,” Puno said.

The DOE has said it will scrap the expansion of the FIT. But in the case of FIT for hydropower, the 250-megawatt (MW) allocation has not yet been fully taken up but the rate has already been digressed from P5.90 per kilowatt-hour (kwh) to P5.8705 per kwh.

Under the FIT rules, all rates will be digressed two years from the January 2015 implementation.

“They have to realize that hydro development is actually very long gestation but at the same time, in order for us to go ahead, we have to be assured that there is a market,” Puno said.

First Gen is looking to develop three run-of-river hydroelectric power plants with combined generation capacity of 95 MW in Mindanao. These are the 32-MW Bubunawan and the 33-MW Tagoloan plants in Bukidnon, and the 30-MW Puyo plant in Agusan del Norte.

It has also acquired three new hydro concessions in 2016, namely 175-MW Binongan-Tineg in Abra, 160-MW Cagayan 1N in Bukidnon, and 17.5-MW Cateel in Davao Oriental.