PERC to expand energy portfolio
BY LENIE LECTURA – FEBRUARY 24, 2022
from Business Mirror
PetroEnergy Resources Corp. (PERC) is adding as much as 500 megawatts (MW) in its portfolio in the next few years while it prepares to embark on offshore wind projects in the future.
During an online forum on sustainable energy hosted by Yuchengco-led RCBC, PERC Vice President Francisco Delfin said the power firm intends to expand its capacity by 100MW more from the current 138MW in two years, and by as much as 400MW more in four years.
“Right now, because everybody is just coming out of the pandemic, we are tampering the expansion target near term within one or two years of adding 100 MW of new solar projects then about 300 to 400 MW in the next 3 to 4 years,” said Delfin.
PERC, a member of the Yuchengco Group of Companies (YGC), is engaged in petroleum exploration and production in Gabon, West Africa and renewable energy (RE) development in the Philippines.
PERC’s RE holding unit, PetroGreen Energy Corp. (PGEC), operates five power stations in the country through three operating companies – the 32MW Maibarara geothermal project by Maibarara Geothermal Inc., the 70MW Tarlac solar project by PetroSolar Corp., and the 36 MW Nabas-1 wind project by PetroWind Energy Inc. For long-term projects, PERC is betting on offshore wind “because of the advantages that offshore wind brings to scaling up renewable energy generation,” said Delfin.
This is because offshore wind power projects don’t have limitations on size and accessibility compared to large-scale solar power. Also, there are more areas available for development of offshore wind unlike for geothermal projects.
“So, we believe as and we support the DOE’s [Department of Energy] action to promote large-scale offshore wind development. And that is where we are bet our long-term expansion,” he said.
PERC has recently sought the green light of the DOE to proceed with the conduct of a system impact study for its planned offshore wind power projects. Based on its filing, PEGC is planning to establish the following: 2,000MW in Ilocos Norte, 1,000MW in Occidental Mindoro and Batangas, and 500-1000MW in Iloilo and Guimaras.
Delfin said PERC will scout for partners to implement these capital-intensive power projects, which are currently priced at about $3 to $4 million per MW.
“These are large scale, very expensive project. Not only that, you need partners who have the corporate experience and the technical know-how to contribute to this enterprise.
Right now, no capital cost yet since no one is doing it yet. Bloomberg Finance predicts that (cost) will be reduced over the next five to ten years. We await these technological improvements to lower the cost as they are relevant to the Philippine setting,” said Delfin.
The pre-feasibility stage for offshore wind power projects could take five years. This is when the technical and commercial studies are undertaken before embarking on a decision on whether to go full-scale construction and development.
“This is a long-term process. You have that five-year window in which you do your project. Secondly, it’s also necessary to wait for advances in technology on offshore wind that will make the capital cost of offshore wind much more competitive in the Philippines.
Certainly offshore wind is competitive now in Europe, in the US and parts of Asia but they are not yet competitive at this point in the Philippines,” said Delfin.
Rules for wind projects
PERC is one of the members of the steering committee that will craft rules to address challenges in the development of offshore wind projects. One concern raised by Delfin is that the rules have yet to be put in place.
“We are a member and DOE Undersecretary Fuentebella actually sits as the chair of the steering committee for fashioning the rules for this emerging industry,” he said.
“Now, are we worried betting big while the rules are still in place? Well, of course, that’s it’s always a risk, but both the private sector and the government, through the DOE, are working with the World Bank and other international donors to capture or rather to fashion rules to govern this emerging market. It’s very important to get the institutions right to make sure that private investments will be attracted.”
While the rules have yet to be crafted, Delfin considers this as a window of opportunity because PERC would have the time to undertake the pre-feasibility stage, as well as the time for technology improvement to make the capital cost wind turbines, among others, much more competitive in the Philippines.
More importantly, he said PERC is “uniquely positioned” for future offshore wind industry because of its involvement in a similar project overseas. It can also rely on the expertise of YGC members.
“The entire YGC Group is, in fact, well suited for this opportunity. We have EEI who is fairly well known for large-scale construction and, when you do offshore wind, you need technical skills and manpower, so we have Mapua University as part of our team. You need of course to mitigate the risk, we have Malayan Insurance to cover that
We think we have the resources and the opportunities not just within Petro Energy, but within the wider YGC Group to profit from these long-term investments,” said Delfin.
