Manufactured Capital
Performance
First Gen uses clean and low-carbon sources to consistently deliver reliable power with minimum negative impact. The Company’s manufactured capital comprises 31 power projects with a combined installed capacity of 3,501.4 MW distributed across the Philippines. In 2022, First Gen generated a total of 22,352.4 GWh of electricity.
Operational Highlights
Natural Gas
Our natural gas plants continued to provide reliable power to the grid in 2022, in spite of several challenges. Since there were no major maintenance outages scheduled for 2022, Santa Rita generated more energy than in 2021. While the electricity generated by San Lorenzo in 2022 also increased, major maintenance inspections during the first quarter tempered the surge. Due to improvements in the gas supply situation for FGCEC in the second half of 2022, San Gabriel also generated significantly more energy.
We are maintaining our Santa Rita and San Lorenzo power plant assets in reliable condition through collaborations with our Operations & Maintenance team for critical maintenance tasks. In spite of operating for about 20 years now, these plants still operate in tip top condition due to how we have been managing and operating these assets.
Malampaya’s natural gas supply continued to be constrained as a result of the gas field’s depletion. We experienced several gas restrictions in 2022, until supply to the First Gen Clean Energy Complex (FGCEC) improved towards the latter part of the year. In spite of this, the gas power plants continued to supply electricity to the customers and the grid, with Santa Rita, San Lorenzo, and Avion operating using liquid fuel to ensure consistent operations, contributing significantly to First Gen’s revenue. In addition, our contracts helped preserve financial stability in spite of significant market and industry volatility.
*2020 Actual Energy Generation for San Lorenzo and 2020-2021 generation efficiency for Santa Rita and San Lorenzo were corrected to reflect calendar year data
*2020 and 2021 unplanned outages were corrected due to revised scope including other outages
Geothermal
All of our geothermal power plants in Leyte and Negros tripped as a result of Super Typhoon Odette’s impact on the Visayas region in 2021. The storm significantly impacted the transmission lines, which NGCP operates and maintains, which impacted our ability to provide electricity to our consumers. The Visayas Market suspension had an impact on the Leyte Facilities (Unified Leyte + Tongonan), although the Negros Facility only experienced little restriction. The greater steam availability in Leyte was caused by reduced well decline rates and unscheduled well outage rates.
Meanwhile, EDC met its contractual requirements through generation from its units in 2021 and 2022. These contracts’ maintenance allowances were used during downtime. EDC fulfills contracts with fully utilized maintenance allowances or those without any maintenance allowances via purchases made on the WESM.
Hydroelectric
First Gen Hydro Power Corporation (FGHPC)
The low water elevation of the Pantabangan Hydroelectric Power Plant (PHEP) reservoir effectively impacted our operations. This was brought about by the high water releases of National Irrigation Authority (NIA) for irrigation purposes, but significantly lower water inflow to the reservoir. Once the water level elevation at the Pantabangan reservoir declines below 207 meters above sea level (masl), the dependable capacity of our Pantabangan Hydro Plant also starts to decline.
We briefly benefited from Pantabangan’s 120 MW capacity in January of 2022. By the end of December 2022, the Pantabangan reservoir’s water level rose to only 200.6 masl, which is equivalent to 105MW of reliable capacity. At the beginning of 2022, this was one of the lowest water elevations observed. It is projected that this low height may impact the 2023 generation.
As a hydropower plant, our complex’s electricity production costs are generally lower or more economical as water is used as its fuel. Additionally, we benefit from zero-rated VAT sales as a renewable energy plant. Compared to non-RE plants, this instantly results in a 12% lower generation fee. We already offer costs that are significantly more affordable than those of WESM and utility generation.
Although our initiatives and projects entailed costs (health protocols, sheltered-in-place work scheme, remote plant operations, etc.) to the organization, we believed that these significantly improved the bottomline of FGHPC as we attained zero-business disruption attributable to natural or man-made causes.
Due to the geopolitical situation between Ukraine and Russia, coal prices worldwide significantly increased, which impacted electricity costs, particularly those from the spot market. This resulted in high electricity rates at the WESM. When the plant complex is producing electricity, this has a favorable impact on our revenue from electricity sales to the WESM. However, since a portion of our capacity is contracted out to power customers under Power Supply Agreements, the WESM is our customers’ default replacement power source when the units are on reserve shutdown. As a result, the high replacement power given to our power consumers countered the revenue received from the energy sales to the spot market.
After nearly two years of operating under a Provisional Authority to Operate, we finally obtained the COCs of PHEP and Masiway Hydroelectric Power Plant (MHEP) from the Energy Regulatory Commission (ERC) in 2022. A power plant must obtain the COCs in order to get the crucial authorization to operate. The COCs were awarded following deliberations and site technical inspections by ERC, ensuring that our PHEP and MHEP duly comply with the 2016 Philippine Grid Code, WESM Rules, DENR, and other laws and regulations. This is a significant achievement considering that our units are already considered “legacy” plants or power plants built before these regulatory regimes were established.
With our focused asset management system and conformity with the requirements of ISO 55001:2014, as well as the implementation of energy efficiency and conservation management in compliance with RA 11285, we consistently ensure that we optimize our physical assets throughout their operational life.
Despite substantially higher rates in the WESM, we met our contracted PSAs for 2022 and upheld our agreed PSA price. Our contracted capacity as of September 26, 2022, was 43.0 MWs. However, we aim to cut our contracted capacity to about 20 MWs in 2023 due to the difficulties in sourcing replacement electricity. This can be accomplished by transferring and renewing expired PSAs through EDC or refusing to renew some short-term expiring PSAs.
FG Bukidnon Power Corporation (FG Bukidnon)
Being a run-off river plant, the FG Bukidnon generation’s profits and availability of water input are both immediately impacted. The plant’s input was low in 2022, particularly in the first half, which led to a 15.7% drop in net generation from 2021.
The forced outages brought on by the plant’s generating unit 1 equipment failure affected the plant’s output in 2022. These mainly were caused by the thrust guide bearing overheating in May 2022 and the permanent magnet generator cover damage in July 2022. Local service providers carried out repairs right away.
FG Bukidnon fulfilled its obligations under PSA with its lone customer, CEPALCO, which takes all available generated energy from the plant.
Wind & Solar
While solar resources are able to produce between 6:00AM until 6:00PM and peaking during noon on a regular day, the Burgos plant generation is strongly dependent on the sufficient quantity of wind speed required to run wind plants. Prompt maintenance work was ensured to prevent unanticipated interruptions.
The weak La Niña events in 2022 caused the low winds in January, March, and May to August, with an ENSO index of -0.7 in Jan and -0.6 in March, -0.6-0.8 levels in May-August. Easterly Pacific trade winds also dropped significantly in January 2022, affecting wind power generation.
As of November 2022, the supply and installation of the UL/FM Approved Orient227 (FM200) Fire Suppression System in the Basement Cable Spreading Room was completed at 30%. Additionally, the cylinder tanks with complete accessories, clean agents, and discharge nozzles are projected to arrive by January 2023.
By April 2022, the accelerograph installation was also completed. Additionally, the stone masonry wall canal construction beside the substation perimeter fence to mitigate the risk of soil erosion was completed in November 2022.
* Energy-based availability
**Performance ratio (PR). Ratio of measured output to expected output for a given period and based on the system name-plate rating.
COVID-19 Adjustments
Work-from-home arrangements persisted in 2022, and we maintained efforts to incorporate different COVID prevention and management measures. For corresponding Operations & Maintenance (O&M) teams, Shelter-In-Place (SIP) arrangements started in 2020 and continued throughout 2022. Despite pandemic restrictions, the power stations operated promptly due to the tight adherence to protocols and the elevated immunization and booster efforts for staff and contractors. We also continued to conduct important Corporate Social Responsibility (CSR) initiatives.
We continuously modify methods for testing, case management, disinfection, ventilation, and PPE requirements in light of the local pandemic scenario and modifications to the regulatory standards. To boost protection, effective COVID immunization campaigns and Carbon Dioxide Level Assessment ventilation studies were conducted in our work sites. Moreover, we developed online booking and payment options for disinfection fees. Carbon dioxide sensors were procured to evaluate the ventilation in all meeting rooms as part of the ongoing endeavor to improve infection prevention procedures in the workplace. This initiative complies with DOLE 224-21, “Guidelines on Ventilation for the Workplaces and Public Transport to Prevent and Control the Spread of COVID-19,” which establishes a maximum threshold of 1000 parts per million (ppm) of carbon dioxide as the limit for a room to be deemed safe and adequately ventilated.
We initiated the RBC Online Office Entry (desk, meeting room, and parking reservations) through the Jumpree App available on the EDC portal for laptops and computers, it currently only works with iOS 12 or Android 11 smartphones.
We completed significant maintenance tasks for both units of the San Lorenzo Power Plant despite continuing COVID restrictions. These ensure that the San Lorenzo Units stay dependable, operate reliably, and prevent unexpected component failure during routine operations. Additionally, we continuously work closely with our O&M Contractor to schedule the correction of equipment or system problems connected to performance with the Grid Operator.
We also conceptualized and implemented a project to operate our hydroelectric plants in 2022 remotely. It was determined that our plants must run whether or not the required personnel physically report to the plant sites to assure company continuity and resilience. In order to install WESM in Mindanao before its commercial operation begins in January 2023, FG Bukidnon began purchasing real-time monitoring equipment in 2022. The equipment installation is planned for the first quarter of 2023.
Future-Proofing Measures
The US economy experienced severe inflation in 2022, and the Federal Reserve immediately raised interest rates to counter it, which caused the peso to depreciate against the US dollar. We successfully managed both the foreign exchange risk and the interest rate risk in 2022 because of EDC’s responsible financial risk management procedures, even with additional loan facilities of PHP23.9 billion signed in 2022. Additionally, we managed to control the interest rates on our new loans by asking our relationship banks for a floating-rate term loan structure.
In November 2022, the stone masonry construction along the access road going to Wind Farm East drive was completed. Through this construction, we mitigated soil erosion and saved PHP1.5 million in costs and 588 hours in manpower.
Although the building of the stone masonry wall is not covered under the Civil Works Contract, we collaborated with the W&S Civil Works Contractor (FBI) to arrange for them to supply labor for the stone masonry wall construction as part of their 2022 activity. EBWPC supplied and delivered all of the materials required for the construction.
Gas supply remained inadequate during the first half of 2022. As a result, many deliveries of condensate fuel and diesel were made to ensure the continuous operation of Santa Rita, San Lorenzo, and Avion. The second half of 2022 saw an improvement in FGCEC’s gas supply. As a result, the FGCEC power plants ran more consistently in the second part of the year.
Due to the increased frequency of gas constraints and its incapability to run on liquid fuel, San Gabriel operated at a reduced capacity in 2021. However, due to the use of banked gas from the Philippine National Oil Company (PNOC), San Gabriel’s capacity factor increased in 2022, which decreased outages. San Gabriel also profited from an increased gas supply in the second half of 2022.
Resiliency Plans
In 2018, FGPC, FGP, FNPC, and PMPC presented the Resiliency Compliance Plan to the DOE. The plan included emergency response measures in the areas of system, stockpile, response and recovery, and strengthening infrastructure. Under systems, an emergency response team, plan, drills, and maintenance of fire and protection systems and firefighting tools were covered. Programs that checked inventory were outlined under stockpiling, and action plans before, during, and after emergencies were provided for response and recovery.
The latest emergency response programs and measures were reported to enhance infrastructure, and the power plants continue to carry out all the reported projects and programs. In addition, the Company implemented various emergency response management initiatives at its headquarters, geothermal plants, and other locations. These initiatives involved emergency response drills and training, stocking up supplies in case of disasters, and revising relevant protocols.
The company also invested in research to improve risk analyses and pinpoint the best possible risk-reduction strategies. They created the Head Office Business Recovery Plan for Energy Development Corporation to cover the Big One scenario, in line with the National Energy Contingency Plan. Desktop simulation exercises were conducted to improve the facility crisis management teams’ readiness and capabilities under given scenarios, and various emergency response management initiatives were implemented.
As part of the company’s Burgos W&S Natural Catastrophe Resiliency Projects, we completed the Burgos Earthquake recording instrument installation and the stone masonry wall canal construction beside the substation perimeter fence as a permanent mitigation strategy against soil erosion. The company also continued with engineering controls like building retrofitting projects and Leyte cooling tower replacements, examining the structural problems of buildings constructed in the 1990s.
Moreover, the measures detailed in the Resiliency Compliance Plan are part of the ongoing operations at the various sites under the company’s Business Continuity Management Program. The company’s resiliency strategy highlights best practices implemented throughout the pandemic, such as Shelter-in- Place, Social Distancing Tags, and the Hybrid Schedule that successfully prevented the local spread of COVID-19 in the workplace.
Project Updates
Natural Gas
Interim Offshore LNG Receiving Terminal Project
Our LNG IOT is progressing substantially according to schedule. Offshore, the structural components for the jetty have been constructed, and all the major equipment has been installed on the Loading Platform and the Utility Platform. All the quick-release hooks and fenders have been erected, along with the equipment for the berthing and mooring dolphins. Onshore, the Facility Control Room (FCR) and the Jetty Monitoring Building (JMB) are structurally complete and ready for outfitting with equipment.
The hydro test and gauge pigging of the 24-inch onshore HP Gas pipeline have also been completed. Gas metering skids have been installed at the Gas Metering Area, the Santa Rita, San Lorenzo, San Gabriel, and Avion.
Meanwhile, cable pulling is progressing throughout the site, both onshore and on the jetty. The next stage of the project is mechanical completion, followed by commissioning. The tugboats supplied by Svitzer, which will be used to manage the safe arrivals and departures of the FSRU and LNG carriers, are in Batangas Bay and are scheduled to undergo acceptance tests in the second quarter of 2023.
Santa Maria Power Plant
In 2022, First Gen Ecopower Solutions, Inc. started the selection process of various contractors related to the development of the Santa Maria Combined Cycle Gas Turbine (CCGT) Project.
Innovations & Sustaining Programs
In 2022, we installed an EV fast charging station in the First Gen Clean Energy Complex. This charging station sources energy from the solar panels installed in the San Gabriel warehouse and provides the power requirements of the EV used by the employees on our site for official business trips. Compared to driving a diesel or gas-powered vehicle, the Company avoided about 1 ton of carbon emissions each year by utilizing the EV.
First Gen Clean Energy Complex (FGCEC) continues to implement the Methane Fugitive Emission Management Program which was launched in July 2020. The program seeks to identify gas leaks early using an optical gas imaging camera, leading to the correction of gas leaks and a decrease in fugitive methane gas emissions from gas leakage.
According to this program, the flow rate of recorded CH4 gas leaks in 2022 was considerably less than the 6 cu. ft./hr standard based on the US Methane Standards of 2016. The overall amount of fugitive methane emissions at the FGCEC was 132 tons CO2eq, which was 98.09% less than the baseline for 2019. The complex’s first natural gas leak survey, which will be done twice a year, was completed in December 2022.
FGCEC installed solar PV panels on its properties to significantly reduce the GHG emissions caused by houseload power demand. The solar PV panels fall under the category of “change in fuel or power technology” and have been installed at the FGCEC Admin Building and the San Gabriel Warehouse.
The solar PV panels installed at the FGCEC Admin Building were installed in 2017 and generate electricity for the building. In 2022, they generated 48.3 MWh of electricity with an equivalent GHG reduction of 17.4 tons. This has had a positive impact on the environment, and the company is proud of its efforts to reduce its carbon footprint.
Similarly, the solar PV panels installed at the San Gabriel Warehouse were installed in 2021 and supply the electricity requirement of the warehouse. These panels generated 280.3 MWh of electricity in 2022 with an equivalent GHG reduction of 100.9 tons.
FGCEC is maintaining its 10-hectare mangrove area at the complex, which has a carbon sequestration potential of approximately 88.4 tons/Ha. We also conducted a pilot project on using seashells as raw materials to produce pavers for the Forest Tree Nursery Driveway in December 2022.
Geothermal
Palayan Binary Project (28.9MW)
For FCRS, the brine piping supply to the binary plant and Fluid Collection & Reinjection System (FCRS) Construction were completed, while the Connection Asset (CA) Construction and Balance of Plant (BOP) Construction were completed at 98% and 88% respectively. In addition, the fencing for the control building was installed for the CA. Overall, the project logged 4.9 million safe working hours without a lost time incident as of December 2022.
Mindanao 3 Binary Project (3.6MW)
The Mindanao 3 (M3) Binary Power Plant Project started in March 2021. Completion of Testing & Commissioning was achieved on March 25, 2022 with the successful accomplishment of the Grid Compliance Tests as witnessed by the NGCP. Inauguration ceremony of the new M3 Power Plant was held on April 27, 2022 with representatives from DOE as guest of honor and speaker.
20-MW Tanawon Geothermal Power Plant
The Operations Committee has approved the awarding of OEM and BOP contracts to Toshiba and First Balfour, Inc. (FBI), respectively, last July 2022, while CA and FCRS contracts were awarded to FBI last September 2022. The project team started the first round of tree cutting operations last December 2022.
28-MW Mahanagdong Geothermal Brine Optimization Plant
The Board of Directors gave its project approval and authorized the awarding of OEM and BOP contracts to contractors last November 2022. The OEM Contract’s Limited Notice to Proceed (NTP) was signed in December 2022.
Innovations & Sustaining Programs
To reduce carbon emissions from geothermal operations, EDC developed a program for innovations. A multidisciplinary team at EDC conducts feasibility studies on technologies like carbon capture and storage and carbon recycling.
Additionally, EDC launched its first Geo 24/7-powered vehicle. EDC is piloting the use of EVs fueled by steam energy from the charging station it built at its Tongonan Geothermal Power Plant in Kananga, Leyte.
Hydroelectric
First Gen Hydro Power Corporation (FGHPC)
We formalized our Key Result Area (KRA) for energy efficiency and conservation initiatives for 2022 in compliance with RA 11285 and its implementing rules and regulations according to the DOE DC 2019-11-0014. Our initial target is to reduce our energy consumption by four percent from our baseline data (PHEP, MHEP, and Housing Compound) or about 52,381.3 kWhs. We exceeded our target with an actual reduction of energy consumption of 73,194.46 kWhs.
FG Bukidnon Power Corporation (FG Bukidnon)
In 2022, the plant completed the installation of water meters in each building in its Administration facility for the plant’s Water Management Program. The program aims to ensure that water usage is within the average based on industry practice and to ensure the availability of water for daily and future use. The water usage initially measured in 2022 will be used as a baseline starting in 2023, which should be at +/- 5%.
FG Bukidnon has been conducting its plant assessment internally since the fourth quarter of 2021. These include a condition-based assessment and hydrology. It aims to verify the plant’s maximum potential capacity to determine the necessary steps in upgrading or uprating the plant considering its current status (66 years this year). This is also in preparation for the end of contact with PSALM and CEPALCO in 2025. The internal assessment is scheduled to be completed in 2023.
Other Project Developments
The 100-MW to 120-MW Aya Pumped-Storage Hydro Power Project is targeted for implementation by the third quarter of 2023. The detailed engineering designs of the civil, hydromechanical, and electromechanical elements are in progress, while most of the permits and endorsements have already been secured.
In 2022, we continued with the pre-development activities of our run-of-river projects: 32 MW Bubunawan, 33 MW Tagoloan, 30 MW Puyo, and the 49 MW San Isidro project. These hydro projects in Mindanao are expected to benefit from renewable energy markets such as Feed-in Tariff and the Green Energy Auction Program.
Wind & Solar
First Gen aims to maximize the solar and wind opportunities through EDC. Before 2030, EDC aims to begin the construction of 1GW of existing on-shore wind concessions, after the completion of planned grid developments. Additionally, the 3GW of off-shore wind concessions in the Guimaras-Iloilo-Negros Occidental area is targeted to be done by 2030. Moreover, EDC is analyzing the potential for a 100-MW solar farm in the Leyte geothermal sites and 30-MW wind farm in the Burgos wind sites.
Streamlining Strategies
Natural Gas
As a Company, we are committed to constantly improving our operations and advocating for clean energy. We strive for solutions-based engagement and have been exploring methods to improve our gas and power plants’ flexibility and efficiency, as well as lower their carbon footprint. We are constantly monitoring developments in potential decarbonizing technologies for our gas plants, such as Energy Efficiency Solutions, Nature Based Solutions, Carbon Capture technology, and the use of hydrogen. We recognize that it may take time for some of these to develop into viable solutions, but continue to keep abreast of potential strategies to lower our operating carbon footprint. We are also dedicated to agile multi-project development, as seen through our ongoing work on the Santa Maria Combined Cycle Gas Turbine Project.
In addition to our commitment to growth and decarbonization, we prioritize resilient asset management through our gas portfolio operations. We have submitted Resiliency Compliance Plans for several power stations, which include emergency response plans and trainings, fire protection systems and firefighting equipment, and infrastructure projects to ensure the continuous operation of the power stations. We regularly evaluate and monitor these procedures to maintain their effectiveness.
Furthermore, we uphold stakeholder value by supporting our host communities. In 2022, we provided building supplies and resources for blended and modular learning to several host community schools in Batangas. We also maintained our support systems for our scholars and collaborated with our host towns in strengthening emergency resilience by providing them with emergency response vehicles.
Geothermal
EDC established the NZCA in September 2021 to encourage and support Philippine businesses in achieving carbon neutrality by 2050. By sharing best practices and providing capacity-building tools, NZCA gives its partners a framework to accomplish its aim. In 2022, six new partners joined the NZCA partner pool.
We also focused on setting up the foundations to scale up Agile practices in multi-project development in 2022. This involved several initiatives, such as creating the Council of Agile Champions and the Agile Knowledge Base, conducting coaching and mentoring sessions, and providing Agile trainings.
EDC continues to help slash-and-burn farmers transition to sustainable farming models that are profitable and environmentally friendly. Baslay Highland Agriculture Cooperative (BASHACO) in Dauin, Negros Oriental comprises 88 farmers who produce coffee using agroforestry. Tongonan Farmers Association (TOFA) of Leyte and Sondawa Coffee Farmers Association (SOCOFA) of Mt. Apo also reverted to environmentally-protective techniques in tilling the land and launched their own coffee and cacao processing facilities with the help of EDC.
EDC invested PHP 127.0 million in 2022 on its CSR programs across project sites, including initiatives that address the local needs of communities and stakeholders, improve the well-being and promote the culture of indigenous peoples, and improve disaster preparedness and emergency response systems.
Hydroelectric
FGHPC is dedicated to providing clean and cost-effective energy solutions to its customers, while also ensuring compliance with regulatory requirements. As part of the Renewable Portfolio Standards (RPS), we are required to supply a predetermined percentage of our energy demands from RE sources. We not only meet this requirement, but also help our contracted customers comply with it.
We also offer competitive energy prices and sell Renewable Energy Certificates (RECs) to help non-RE energy customers comply with the RPS rules. Our commitment to clean energy is further demonstrated through our funding of biodiversity initiatives, such as BINHI initiatives.
Through our dynamic adaptation of regenerative businesses, we aim to have a net zero carbon footprint and maximize the utilization of our assets while adhering to international standards. We are concurrently implementing numerous hydro projects that are at various stages of development and implementation.
Our goal is to achieve First Gen’s growth objectives through our financial and operational targets, while also progressing in the Aya project construction, which will transform our economic model and increase our overall capacity. We also aim to achieve decarbonization or regenerative partners and customers by partnering with affiliates to increase our BINHI programs’ budget.
Wind & Solar
In addition to achieving its growth objectives through EDC’s wind and solar opportunities, First Gen maintains its goal of upholding stakeholder value through CSR efforts that maximize the company’s overall impact on the community and stakeholders. To support education, we maintain the SIKAT Scholarship Program, Brigada Eskwela, and the distribution of school supplies and necessary financial aid. Moreover, the EBWPC conducted tree planting activities for our environmental advocacy with the 17 BINHI partner schools and local stakeholders. To support other local needs, various capability- building activities were conducted in collaboration with host barangays, the municipal office personnel, the Bureau of Fire Protection, and schools. Meanwhile, our environmental regulatory compliance focused on the Forest Land Use Agreement: Reinstatement Maintenance and Tree Cutting Permit Compliance and National Greening Program Adoption.
To know more how First Gen’s Manufactured Capital is contributing to the effort to forge collaborative pathways for a decarbonized and regenerative future, please see our Strategic Positioning section.