Geothermal unit pulls down profit of First Gen in H1
By Lenie Lectura – August 13, 2024
from Business Mirror
First Gen Corp. (First Gen) reported a 10-percent decline in net income for the first half of the year at $150 million from last year’s $167 million due to lower earnings from its geothermal unit.
The Lopez-led firm said Energy Development Corp.’s (EDC) geothermal portfolio continued to produce lower recurring net income this year mainly from the decline of its revenues due to lower power prices and volumes sold, combined with an increase in operating expenses. However, higher profits from the natural gas business were able to partially offset the decline from First Gen’s geothermal business.
Consolidated revenues hit $1.28 billion slightly lower from last year’s numbers due to lower volumes of electricity sold across all platforms except for the hydro platform. The natural gas portfolio accounted for 67 percent of First Gen’s total consolidated revenues, while 30 percent came from EDC’s geothermal, wind, and solar plants. The balance comes from the company’s hydro business unit.
The natural gas business unit reported a 26-percent increase in recurring earnings for the first half of 2024 to $115 million from $91 million. The 420 MW San Gabriel Power Plant (San Gabriel), 1,000 MW Santa Rita Power Plant (Santa Rita) and 500MW San Lorenzo Power Plant (San Lorenzo) all delivered higher operating income due to savings in operating expenses, and high spot market prices in the case of San Gabriel.
In addition, FGEN LNG Corp. generated commissioning revenues from its pre-commercial operations and terminal fees, though still uncollected to date. Only the 97MW Avion Power Plant had lower net income due to lower kilowatt hour sales and higher operating expenses.
EDC’s recurring earnings at $44 million was 42-percent lower than its recurring income of $77 million. The geothermal power plants under EDC generated lower sales and operating income due to a reduction in electricity prices and electricity sold, and higher operating expenses from steamfield maintenance and workover activities. The unit also incurred higher interest expenses from new debt.
The hydro platform’s contribution to First Gen’s recurring earnings stood at $5 million. The takeover of Casecnan resulted in $1 million of recurring net income for its four months of operations in the first semester. This offset the lower recurring income of the 132 MW Pantabangan-Masiway power plants (PMHC) of $4 million from $5 million last year.
PMHC had a reduction in the volume of electricity sold due to its low water reservoir levels. It was also affected by lower Wholesale Electricity Spot Market prices. The decline was buffered by its higher contract prices.
“Though First Gen started the year slow with the expiry of San Gabriel’s contract with Meralco, it is making some headway in recovery through WESM sales. The natural gas business unit also delivered higher net income via cost reduction. It cannot be denied that our new LNG terminal was able to offer gas supply to our power plants at a time when the grid needed it the most.
All of our natural gas plants were operating and providing vital power during the summer months when both yellow and red alerts were occurring. EDC likewise continues to produce 24/7 renewable energy and is currently working to reinforce its steam supply to ensure that it produces even more clean power with the completion of 83 MW of new geothermal plants by year end,” said First Gen President Francis Giles Puno.
First Gen has 3,668MW of installed capacity in its portfolio, which approximately accounts for 20 percent of the country’s gross generation. First Gen has set a target to grow to 13,000MW by 2030.
