Power Generation | First Philippine Holdings

First Gen Corporation (First Gen) is the country’s largest producer of clean, low-carbon energy with power plants that run on geothermal steam, water, wind, solar, and natural gas. This diversified and flexible portfolio of assets makes First Gen well-positioned to meet the country’s growing demand for clean and reliable electricity and, at the same time, adapt to a world transitioning to a fully renewable energy (RE) future.

Financial Performance

In 2023, First Gen recognized revenues of USD2.5 billion, a 7.2 percent decrease from the previous year’s USD2.7 billion, as a result of a decrease in revenues across all the platforms. The natural gas portfolio accounted for 65.3 percent of First Gen’s total consolidated revenues, while 32.1 percent came from EDC’s geothermal, wind, and solar power plants. The balance came from the Company’s hydro power plants and its retail electricity supplier, First Gen Energy Solutions.
Despite lower revenues, First Gen reported a 4.4 percent increase in attributable recurring net income for 2023 at USD277.0 million in comparison to USD265.4 million in 2022. This can be attributed to earnings from EDC, whose geothermal plants benefited from higher power prices and higher production margins

2023 Key Highlights

NATURAL GAS

First Gen, through its subsidiary FGEN LNG Corporation (FGEN LNG), accomplished significant milestones in 2023. It attained practical completion of the Interim Offshore Liquefied Natural Gas LNG Terminal (Project) in the first half of the year, in accordance with plans and specifications stipulated in its engineering, procurement, and construction (EPC) contract. The Project also proudly recorded six million man-hours without a lost time incident.
In the second half of 2023, FGEN LNG completed the commissioning of its floating storage regasification unit (FSRU), the BW Batangas, at the Multi-Purpose Jetty of First Gen’s LNG Terminal located within the First Gen Clean Energy Complex (FGCEC) in Batangas. In addition, under a Time Charter Party (TCP) agreement entered into with towage operator Svitzer, four tugboats arrived and provided towage services.
First Gen also procured its first and second LNG cargoes from Shell Eastern Trading and Trafigura, respectively, for delivery into the FSRU. These deliveries enabled additional gas supply for Santa Rita, San Lorenzo, San Gabriel, and Avion power plants.

First Gen expects the Project to play a crucial role in ensuring the availability of fuel for the country’s gas-fired plants in the midst of the impending depletion of gas supply from Malampaya and the search for new indigenous gas sources. The Project will accelerate the introduction to the country of LNG storage and regasification services for existing and future gas-fired power plants, owned either by FGEN LNG affiliates or by third parties. First Gen’s development of the Project also forms part of its strategic and long-term program of decarbonization that supports the entry of more variable renewable energy facilities (VREs) with gas plants capable of matching the sudden change in output of VREs.
In 2023, First Gen arranged several deliveries of condensate fuel and diesel to ensure the uninterrupted operations of the Santa Rita, San Lorenzo, and Avion power plants as Malampaya’s natural gas supply was below the requirements of the FGCEC plants due to the continuing depletion of the gas field.
First Gen continues to develop the Santa Maria Combined Cycle Gas Turbine Project. As part of the development, its subsidiary First Gen Ecopower Solutions Inc. is conducting permitting activities and contractor selection processes for the project. The site preparation works are being completed as part of the initial construction phase of the power plant.

GEOTHERMAL

Consistent with its goal to provide more decarbonized energy, EDC began a massive drilling campaign to improve the operations of its existing geothermal facilities and expand its energy output.
EDC’s 28.9-MW Palayan Bayan Binary Project is now synchronized to the grid and is undergoing commissioning and testing. The 20-MW Tanawon Geothermal Power Plant, the 28-MW Mahanagdong Geothermal Brine Optimization Plant and the 5.6MW Bago Binary Geothermal Power Plant projects are all progressing in their construction works. All critical equipment are already on-site and gearing up for commissioning in 2024.
In December 2023, EDC celebrated the landmark 40th anniversary of the 112.5MW Palinpinon-1 geothermal power facility located in the island of Negros. Palinpinon-1 continues to bring distinction to the country as one of the few existing geothermal fields in the world that have surpassed the usual 25-year life span of geothermal systems. It remains in operation, along with the 123-MW Tongonan-1 geothermal power plant, which likewise celebrated its 40th year in 2023.
Higher power production from its geothermal plants combined with higher WESM prices led EDC to a record setting year as it reported PHP14.3 billion in recurring net income, its best annual earnings so far.

HYDRO

On May 16, 2023, First Gen, acting through its wholly-owned subsidiary Fresh River Lakes Corp. (FRLC), offered the winning bid during an auction conducted by the Power Sector Assets and Liabilities Corporation (PSALM) for the 165-MW Casecnan Hydroelectric Power Plant (CHEPP) in Pantabangan, Nueva Ecija. On May 26, 2023, PSALM issued the Notice of Award declaring FRLC as the winning bidder.
First Gen continues to make progress with the pre-development activities for its run-of-river projects in Mindanao, namely, the 32-MW Bubunawan, 30-MW Puyo, 33-MW Tagoloan, and the 49-MW San Isidro plants. Once completed, these hydro projects will benefit from government programs, such as the Feed-in Tariff, and the Green Energy Auction Programs, which aim to encourage the development of more RE projects.

WIND AND SOLAR

EDC’s 150-MW Burgos Wind Project in Burgos, Ilocos Norte, faced adverse weather conditions in 2023, such as destructive Typhoons Mawar and Egay. Typhoon Egay, which hit the country in August 2023, forced an outage in five of the wind turbine generators (WTGs) of Burgos Wind by damaging their transformers. The outage caused an estimated loss of 12.56 gigawatt-hours (GWh); but EDC immediately ordered replacement parts for the affected WTGs, allowing them to be fully operational and go back online again by the second week of November 2023.
EDC also completed the replacement of pin insulators of the solar facility transmitter line, effectively mitigating outages resulting from wear and tear, and installed a line recloser to protect the system outside the Burgos solar facility from outages. Moreover, EDC kept maintenance activities mostly on schedule, preventing unplanned outages.

Looking Forward

First Gen strives to maintain its role as the country’s leading renewable energy producer by pursuing a program to add 7.5 gigawatts of renewable power to the grid, as part of its goal to reach 13 gigawatts of capacity by 2030. In First Gen’s estimate, this pursuit will generate electricity sufficient to power 40 percent of the total Terawatt-hours (TWh) needed to achieve the country’s 2030 RE target, demonstrating its commitment to a decarbonized and regenerative future, at the same time helping the government achieve its own goals under the Philippine Energy Plan.
For geothermal energy, First Gen, through its subsidiary EDC, will invest a total of PHP60 billion in the next three years to drill 40 additional wells in Leyte, Davao del Sur, Cotabato, Albay, and Sorsogon in order to boost the capacity of EDC’s geothermal power plants. EDC will spend PHP30 billion to fund drilling operations in the four provinces and invest the other PHP30 billion on growth initiatives.
On top of the ongoing geothermal projects, EDC is also exploring the development of a 50-MW geothermal power plant at Amacan, Davao de Oro. EDC was granted exclusive rights for geothermal power at Amacan after being awarded a tender process in 2017. This project is also a recipient of a U.S. Trade and Development Agency (USTDA) grant to conduct feasibility studies.

For hydro, PSALM formally handed over CHEPP ownership and operation to FRLC on February 25, 2024, after the company secured all regulatory permits and remitted payment for the purchase of the power plant.
First Gen also expects to complete the Aya Pumped-Storage Hydro Power Project in the second half of 2027. Project Aya, with its 100- to 120-MW capacity, will play an instrumental role in regulating power by providing ancillary services to the grid. The detailed engineering design of the civil, hydromechanical, and electromechanical works for the project is ongoing, and most of its permits and endorsements have already been secured. As a pump storage facility, Project Aya is designed to pump water from a lower reservoir to an upper reservoir for storage when excess electricity is available and inexpensive. When demand for electricity goes up, Project Aya then releases back the water from the upper elevation to the lower reservoir to generate electricity.
For wind energy, First Gen and EDC are developing a pipeline of onshore and offshore wind projects in Luzon and Visayas that have the potential to go into commercial operations between 2030 and 2040. The Department of Energy has awarded the wind energy service contracts (WESCs) for these projects with 4.2GW of potential capacity. Twelve of the concessions are onshore WESCs with a potential capacity of 1GW, while four others are offshore WESCs with a potential capacity of 3.2GW. The viability of the wind farms depend mainly on the completion of planned grid upgrades to increase the available transmission capacity, a viable supply chain in the Philippines for the latest generation of wind turbines, a supportive regulatory environment especially for offshore wind, and competitive tariffs for offtake agreements.
For solar, EDC is considering building a 100-MW solar facility within its geothermal site in Leyte, aside from adding 30MW to its 4.6-MW solar facility at Burgos in Ilocos Norte. The plans highlight favorable investment opportunities in these sites. In the next two years, EDC also targets the completion of its battery energy storage systems (BESS) adjacent to its geothermal sites in Bacman, Tongonan, and Southern Negros, which have a combined capacity of 40MW. Once completed, these BESS projects will optimize the existing geothermal resources and provide ancillary services to the grid.
As the world shifts away from fossil fuels, particularly coal, the challenge for First Gen is to provide more of the reliable and affordable renewable energy that the market demands. In the meantime, the country’s energy security is the immediate priority and First Gen believes that its LNG plants offer flexibility to keep the lights on while providing the most practical solution because it is less harmful than coal. Natural gas offers the promise of being able to transition to cleaner fuels, like hydrogen, when this becomes commercially available.
As the local energy market becomes diversified through the implementation of Retail Competition and Open Access, consumers will increasingly have the ability to choose their energy suppliers. First Gen continues to gear up to be able to better serve contestable customers’ needs by developing an arsenal of value-added services.