November 13, 2014

EDC secures COE for Burgos wind project

Energy Development Corp (EDC) yesterday announced that its 150-MW Burgos Wind project received the Department of Energy’s (DOE) Certificate of Endorsement (COE) for feed-in-tariff (FIT) eligibility, after validation of the project’s successful commissioning.

Our take: As we reported in our recent note on EDC (11 Nov), the COE forms part of the final milestone that must be achieved for the project to be deemed FIT eligible. The COE serves as an endorsement of the project to the Energy Regulatory Commission (ERC) for the purpose of qualifying the wind farm to charge rates based on the FIT system. Once approved by the ERC, Burgos will be the first wind project qualified to charge FIT rates, which is currently set at P8.53/kWh for wind.

We assumed EDC would start recognizing profits for the entire 150-MW by January 2015 to coincide with the start of the implementation of the FIT allowance, which the ERC approved last month. The Burgos wind project has been delivering power to the grid since 30 October, offering power at an average of 41 MW. According to EDC, the project’s capacity factor should range between 28% and 30%. We maintain our Buy rating on EDC with a target price of P9.10/sh, which implies a 12% upside in addition to a 3% dividend yield. – WealthSec