Philippines’ Oldest Conglomerate to Get Out of Coal by 2030

(Bloomberg) -- Ayala Corp., the Philippines’ oldest conglomerate, aims to fully divest from coal by 2030, a rare rebuke of the fuel in a region where its use is expected to grow.

Ayala’s power-generation unit, AC Energy Philippines Inc., will also boost investments in renewable generation as it transitions to a low-carbon portfolio, President Eric Francia said in a live-streamed annual stockholders meeting in Manila on Monday.

The company will “now focus on renewable investments and we will not be making additional investments in coal plants,” Francia said. However, it remains open to natural gas- or diesel-fired power “that complement our renewable assets and developments.”

The company joins a growing chorus of commitments by conglomerates, banks and governments to move away from coal, the most widely used and most-polluting fossil fuel for power generation. Southeast Asia is one of the last remaining growth markets for the fuel, as it’s seen as a cheap and reliable electricity source for rapidly developing economies.

Ayala owns shares in two coal-fired power plants and a third that’s under construction. It plans to accelerate its transition away from coal as fast as possible, but needs to continue to serve its customers with reliable power as it builds up renewable capacity, an outside spokeswoman said by email.

The company last year sold its stake in a 552-megawatt coal power plant in Kauswagan in the province of Lanao del Norte. In 2018 it sold a 60% stake of its thermal power unit, which owns a 632-megawatt plant in Bataan, and is building a 1.3-gigawatt plant, also in Bataan. It also owns a 35% stake in a 244-megawatt plant in South Luzon.

AC Energy plans to grow its attributable capacity to about 1,500 megawatts this year, from 1,100 megawatts in the first quarter, Chairman Fernando Zobel de Ayala said during the event Monday. Within that portfolio, the company aims to expand the share of renewables this year to 50%, from 44% in the first quarter, he said.

A lockdown across the Philippines’ main island of Luzon from mid-March has caused power demand to decline by as much as 40% as most industries and businesses are put on hold, reducing uptake volumes for AC Energy, Francia said. So far, the company’s renewable projects have been mostly unaffected by coronavirus-related lockdowns as most of them are in the engineering, design and procurement phase, according to the spokeswoman.

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