DOE targets P27bn microgrid rollout

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From AB Capital's The Opening Bell: Three Moves

Event

DOE expects its microgrid auction to attract up to P27 billion and electrify 101,500 households across 369 remote areas. This would expand coverage roughly 11x from today's 11 operating systems serving 9,000 households, where generation remains heavily reliant on diesel.

View

We see no immediate earnings impact on listed power companies. Potential participation through solar-plus-storage development or microgrid operations bears watching, but fragmented sites and low household demand make returns challenging without viable tariffs or subsidies.

Catalyst

Auction terms, ERC tariff-setting and subsidy mechanisms will determine whether projects can earn adequate returns. Actual awards and financial close will indicate whether the P27 billion target translates into bankable investments and meaningful private-sector participation.

Action

We make no changes to our coverage or estimates as the auction is a longer-term sector development. We would revisit if listed players secure material projects on commercially viable terms.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.