First Gen expects a profit boost with the addition of new geothermal assets

First Gen Corporation (Philippines) is anticipating a significant boost in overall profits this 2024, driven by additional revenues from its geothermal assets that are now coming online.

In a report by Manila Bulletin, First Gen president and COO Francis Giles B. Puno said that the company’s generation portfolio would be strengthened by the addition of at least 83 megawatts (MW) of geothermal capacity.

One of the drivers of this expansion is the 28.9MW Palayan binary geothermal facility in the Bicol region, a project of First Gen’s subsidiary, Energy Development Corporation (EDC), which began commercial operations in July.

Puno acknowledged that while tariffs for geothermal energy have been on a downward trend this year, First Gen is bullish about strong cash flow, which will positively impact its overall financial performance.

Although the company is currently “in the green,” Puno cautioned that the impact of declining geothermal prices is being closely monitored, and there is no concrete projection yet for full-year income results.

During the first half of this year, one of the key income drivers was the availability of the 414 MW San Gabriel power facility, particularly during the supply-strained summer months.

However, the First Gen president said that for the remaining months of the year, particularly in December when demand typically declines, the company cannot guarantee the same level of income.

Looking ahead, the firm is expecting revenue from deferred charges related to its use of gas for electricity generation. These cost recoveries, which have been approved by the Energy Regulatory Commission (ERC), involve more than Php 2.0 billion in deferred charges, to be spread at Php 0.32 to Php 0.33 per kilowatt hour (kWh). The impact on First Gen’s revenues and income will begin in October and extend through 2025.