Philippine conglomerate Ayala Corporation has teamed up with global wind energy developer UPC Renewables Partners and the Macquarie Infrastructure and Real Assets (MIRA)-managed Philippine Investment Alliance for Infrastructure (PINAI) fund to form a joint venture for building wind farms in Ilocos Norte in north-west Philippines.
The joint venture already has a wind energy portfolio of 200 megawatts (MW) under development, which including debt could take up to $500 million to develop, according to Patrice Clausse, senior operations and development advisor at Ayala subsidiary AC Energy. Exactly how much debt the joint venture can raise, however, is not clear, Clausse told Infrastructure Investor.
Philippine regulations surrounding energy infrastructure projects make project financing difficult to secure before the project is mostly completed and supplying power to the grid. Clausse was not certain exactly how much debt the joint venture could raise altogether.
The joint venture has committed an initial $220 million of equity to developing an 81MW initial project, Clausse explained. Ayala provided 64 percent of that equity, PINAI provided 32 percent, and UPC provided the remaining 4 percent, according to an Ayala statement. The project’s initial phase is expected to be connected to the grid by June 2014, and then the joint venture can apply to banks for debt financing.
“We expect we will only be able to get typical project finance leverage levels when the project is close to completion,” Clausse said. “Any leverage raised can be used towards expansion projects of the JV.”
Although Ayala already has a 50 percent stake in NorthWind Power Development Corporation with a 33MW wind farm in Ilocos Norte, this will be the first wind energy project that Ayala has developed from the ground up, Clausse said. It is understood that this is the first investment the $625 million Macquarie-managed infrastructure fund has made since its closing a year ago.
“We got talking [with PINAI] and realised that we have similar ways of thinking about the project, and they were able to get it through their processes quickly,” Clausse said. UPC, which has developed close to 2,000MW of wind farms across the US, Europe and Asia, was chosen as the developer because of the company’s extensive experience and expertise in the Philippines, he added.
The project site in Ilocos Norte is a “quality windy site throughout the year” with a high capacity factor, Clausse said – which means it will generate good returns and a large amount of energy. UPC has hired Siemens Wind Power to help with the wind farm’s installation.
Ayala Corporation has committed $1 billion of its balance sheet to infrastructure investment in the Philippines through its energy subsidiary AC Energy over the next five years. Macquarie’s PINAI fund closed on $625 million in June 2012, backed by investors such as Philippine pension funds, Dutch pension provider APG and the Asian Development Bank.