Stock Commentary

Citicore Renewables confirms interest in 796 MW hydro plant up for bid through PSALM

Merkado Barkada
Citicore Renewables confirms interest in 796 MW hydro plant up for bid through PSALM

Citicore Renewable Energy [CREC 2.69 unch; 29% avgVol] [link] confirmed a report that it was one of the companies that “secured bidding documents in relation to the bidding of the CBK hydroelectric power plant complex”, saying that it is “continuously seeking opportunities to further expand its renewable energy portfolio” and that it would “participate in the bidding of interesting renewable energy projects on tender” as part of that process. The CBK hydroelectric power plant complex has a generational capacity of 796.6 MW; the Power Sector Assets and Liabilities Management Corp (PSALM) is facilitating a bidding process to transfer ownership of this asset to the private sector. Department of Finance Secretary Ralph Recto said that he expects the CBK plant to sell for “up to P100 billion.”

MB bottom-line: Hydroelectric assets are incredibly valuable as they are both considered renewable and a source of baseload electricity supply. Hydroelectric plants are also interesting because their ability to act like a power grid battery makes them all the more critical as the percentage of electricity generated from solar and wind assets rises. While the grid is bathed in sun and wind energy, the hydroelectric plant can reduce the flow of water over its turbines and store up the potential energy of the water for later. When the grid is in need (or the market price for the electricity is greater) the water can then be passed over the turbines and converted to electricity. I’m not saying that the entire generational capacity of the CBK plant could (or will) be used in this way, only that it’s possible for the group owning the facility to use these features to smooth out the supply curve of electricity and to (potentially) earn higher returns on the electricity produced.


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