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Watch out for these energy transition movers

Renewable energy is the future. But to get there, we need liquefied natural gas (LNG). There are a few companies leading the way toward this bright future of renewables.

July 13, 2023By Renzo Tan and Marco Siy

Soon there will be no more natural gas to extract from the Malampaya gas field. While some may lament this news, it has opened doors for opportunities to transform the Philippine energy sector for the better, shifting focus to elevate renewables in the near future.

We can see that in the Philippine Energy Plan for 2040, which outlines a huge push to elevate renewables in the country’s energy’s mix to 50% by 2050.

Other countries are shifting to renewables, too. Spain has reduced the contribution of coal as an energy source to 5% in 2021. In Brazil, renewables make up an impressive 84% of its total energy needs.

To facilitate our own transition, at the start of 2023, we saw the opening of the Philippines’ first liquefied natural gas (LNG) terminal — the Atlantic Gulf and Pacific Co.’s (AG&P) Batangas LNG terminal. Companies such as First Gen Corporation (FGEN) and Shell will open up their own terminals within the year as well.

Local energy transition movers

With all this excitement about LNG and its role in our shift to renewables, we have come up with what we think are the most promising players.

Among the energy companies based in the Philippines, AG&P as well as FGEN show incredible promise in the LNG field, with the AG&P plant having opened in Batangas earlier this year and the Batangas FGEN plant slated to open in early October 2023.

Currently, AG&P’s LNG terminal is the first of its kind in the Philippines. With a capacity of five million tons of LNG per annum (MTPA), AG&P is the primary supplier to San Miguel’s Ilijan power plant, the largest natural gas plant in the Philippines.

However, this market dominance won’t stay for long after FGEN opens its own LNG terminal in Batangas later this year. Compared to AG&P’s facility, FGEN’s will be marginally larger, with a capacity of 5.26 MTPA. More important, FGEN is listed on the Philippine Stock Exchange (PSE) while AG&P is not.

Additionally, Aboitiz Power (AP) and JERA Co. Inc. of Japan are both looking to open their own LNG projects. However, as of June 2023, neither company has concrete plans.

On the renewable energy front, ACEN Corporation leads the charge as 87% of ACEN energy already comes from renewable sources. While the company may not benefit as greatly from this potential shift towards LNG, ACEN’s early investment into renewables is something to watch out for.

And with 4,000-megawatt (MW) of capacity mostly in the Philippines and around Southeast Asia and Australia, ACEN promises to be a big player in a future dominated by renewable energy. (Edited by Ina Calabio)

RENZO TAN AND MARCO SIY are interns under the Institutional Investors Coverage Division (IICD) of Metrobank. Renzo is currently studying at the University of Massachusetts Amherst, while Marco is studying at Georgetown University’s McDonough School of Business. Both are avid foodies and somewhat entomophobes.

INA JUDITH CALABIO is a Research & Business Analytics Officer at Metrobank in charge of the bank’s research on industries. She loves OPM and you’ll occasionally find her at the front row at the gigs of her favorite bands.

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