Armstrong to fund solar power in the Philippines

Singapore-based Armstrong Asset Management has launched a $29m fund to finance Philippines solar projects undertaken with developer nv vogt Singapore.

Singapore-based Armstrong Asset Management (AAM) will be funding a pipeline of solar power projects in the Philippines to be developed by nv govt Singapore, a joint venture between India’s APCA and Germany’s ib vogt GmbH.

The first project, set to become the world's largest diesel replacement power plant at completion, is a 6.25 megawatt ground-mounted and grid-connected solar power plant in South Cotabato in the southern region of Mindanao. It is scheduled to begin construction this month and will commence commercial operations by December this year.

The project is backed by off-taker South Cotabato I Electric Cooperative (“SOCOTECO I”), a cooperative rated A+ by major agencies which signed a bilateral power purchase agreement in June last year.

Andrew Affleck, a Singapore-based managing partner of AAM, said this investment – the first by the Fund in the Philippines and the first with nv vogt – represents a benchmark for the development of diesel-offset projects globally and one which does not rely on subsidies by way of feed-in-tariffs.

“With the projected power deficit forecast for 2015 in the Philippines, this project can serve as a benchmark for clean and quick decentralized energy solutions without the need for government subsidies,” Affleck said.

Anton Milner, managing director of the solar power plant business for the Berlin-based owner ib vogt and chairman of nv vogt Singapore, said that the Fund obviously “shares our bullish view” of South East Asia as the ideal region to develop economically viable renewable energy projects.

“We believe solar power is a compelling need as well as attractive opportunity in the developing markets of Asia. Our first project in the Philippines is doubly important because it will provide clean and unsubsidized solar photo voltaic (PV) electricity benefitting the wider community and it is one of the largest diesel-offset projects in the world to date, which is an important future market,” Milner said.

The partnership dates back to 2010 when the two companies started scouring Southeast Asia for photovoltaic project opportunities. Having built up a presence and developed a pipeline in the Philippines over the last three years the partners initiated ‘Project 1’ in October 2012.

Based in Singapore, AAM is an independent asset manager focused on the clean energy sector in Southeast Asia's emerging markets. It achieved a final close on its debut clean energy fund of US$164m in November 2013, with institutional investors such as IFC, DEG, FMO, Proparco, SIFEM, GEEREF and Unigestion. Armstrong has made five investment commitments covering a range of utility-scale renewable energy infrastructure projects in Thailand, Indonesia, Philippines, Vietnam and Cambodia.

nv vogt Singapore Pte Ltd is focusing on developing, designing, financing, constructing and operating solar power plants in Asia, with experience in Europe and Asia. It aims to provide for energy-intensive industry that is being underserved by the grid and is heavily reliant on diesel power. It invests in its own projects and offers a flexible model for co-investors. Its projects are structured to ensure bankability and investment-grade returns.