Raslag to benefit from push  to develop clean energy projects

Danessa Rivera - The Philippine Star

MANILA, Philippines — Raslag Corp. is seen benefiting largely from the push to develop clean energy projects as well as the projected supply crunch in the grid, brokerage firm Regina Capital Development Corp. (RCDC) said in a report.

Regina Capital said a supply crunch is seen amid looming depletion of Malampaya and the moratorium on new coal power plants, which will further be exacerbated by the recovery in power demand boosted by the election season and economic recovery.

“Based on the Department of Energy’s peak demand and dependable capacity projections, the Philippines’ power supply will dive below the critical 25 percent mark next year,” Regina Capital said.

Likewise, there is also this strong shift to develop alternative sources of energy amid the global pressure to take a hard shift to renewables to ease the effects of climate change.

“This bodes well for Raslag from all angles because on the one hand, clean energy projects have been generally well-received both from a market and a regulatory standpoint. On the other, the near-term lack of supply will allow for more leverage in terms of pricing,” the brokerage firm said.

Raslag, the renewable energy developer of the Nepomuceno Group of Companies, is set to debut on the Philippine Stock Exchange (PSE) on June 6. It is raising P647.50 million from the sale of 350 million common shares at P2 per piece via an initial public offering (IPO).

The proceeds of the fund raising activity would partly fund the construction of the 32.5-megawatt peak (MWp) Raslag-4 Solar Power Plant, and the pre-development of the 60-MWp Raslag-5 Solar Power Plant.

“All things considered, Raslag has a very aggressive spending plan. The robust project pipeline is largely in line with the local solar industry’s quick-paced growth in line with growing power demand and the power players’ collective push to shift to clean energy,” Regina Capital said.

Meanwhile, Regina Capital cited grid parity for solar energy as one headwind to watch out for.

The brokerage firm noted that industry players expect the cost of solar to reach grid parity within the short to medium-term while there are no further rounds of solar Feed-in Tariff (FIT) programs expected.

A mechanism also under the RE Act of 2008, the FIT system details perks for power developers for a period of 20 years to invest in the more expensive renewable sector. It was scrapped by the DOE for adding burden to consumers in terms of additional rates.

Under the law, Renewable Portfolio Standards (RPS) is a mechanism where distribution utilities, electric cooperatives and retail electricity suppliers are prescribed to source a percentage of electricity requirements from RE sources.

The RPS level is currently set at one percent until 2022.

“Raslag nonetheless will likely benefit from cost efficiencies on economies of scale should grid parity indeed be achieved—while the DOE’s RPS…ensures that future available capacities will be given priority,” Regina Capital said.


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