Energy Development Corporation (EDC), the world’s largest integrated geothermal company, is making headway in its overseas expansion targets as it sealed a deal with Hot Rock Limited (HRL), an Australian based international renewable energy company holding one of the largest geothermal acreage in Australia. HRL, on November 28, 2011, signed a Heads of Terms Agreement (HOTA) with EDC, giving EDC a 70% equity stake in respect of HRL’s four geothermal projects located in Chile and Peru.
The HOTA sets the framework and main commercial principles for EDC’s acquisition of a 70% interest in the granted volcanic Calerias and Longavi geothermal projects in Chile, where EDC has a representative office, and Quellaapatcheta and Chocopata geothermal projects in Peru. Completion of the proposed transaction remains subject to the satisfaction of certain conditions, including fully termed documentation, confirmatory due diligence and necessary regulatory and governmental approvals.
HRL has already completed most of the surface exploration activities in respect of the subject geothermal projects. Within the next 6 months, both EDC and HRL intend to immediately finish the remaining surface exploration activities. Based on the HOTA, EDC and HRL will establish joint venture companies to hold each of the geothermal projects, with EDC owning a 70% interest and HRL maintaining a 30% stake.
“We are excited with the prospect of developing with Hot Rock Ltd. what we consider as some of the best geothermal concessions in both Chile and Peru. The ability to grow our business with full control over our steam fuel supply is the strategic rationale for the Lopez Group’s acquisition of the controlling stake in EDC. For EDC, our 35 year head start coupled with our word-class capabilities for geothermal exploration and development has once again given us precedence as we vie for markets overseas. We are well on our way to becoming a true national champion, where Filipino expertise will be used to bolster a position of leadership in a global industry,” EDC President and COO Richard Tantoco said.
Hot Rock Executive Chairman, Dr. Mark Elliott commented, “We are excited to have executed this HOTA, with the intention of establishing our first major partnership deal with EDC, the world’s largest integrated geothermal company with 35 years of experience in volcanic terrains and with a strong balance sheet.”
As part of its aggressive growth targets, EDC, on its own, has submitted direct applications for 13 sites and bids for 5 sites in Chile. EDC is also looking at opportunities to develop geothermal projects in Indonesia, Kenya and Peru.
EDC is the world’s largest integrated producer of geothermal power and the acknowledged global leader in wet steam technology. EDC is engaged in the exploration, development and optimization of geothermal fields, as well as the operation and maintenance of the geothermal power plants with an aggregate capacity of 1,130 MW.
Legazpi City, Albay. Energy Development Corporation (EDC), the largest producer of geothermal energy in the country and operator of the 130-MW Bacman geothermal plants in Sorsogon, has significantly contributed to the government’s climate change mitigation program by substantially reducing the Philippines carbon intensity. By operating its geothermal fields and maintaining the watersheds around its project sites which serve as carbon sinks, EDC avoids a total of 5.2 million tons of carbon equivalent per year.
EDC Senior Vice President for Environment and External Relations Agnes de Jesus discussed how EDC has been helping in the national effort to address climate change in the first Philippine Media Conference on Climate Change Adaptation in Bicol University in Legazpi City, Albay. The 3-day conference gathered select media practitioners and foreign correspondents to tackle climate vulnerabilities and discuss the impact of extreme natural disasters.
“As a major player in the global and national renewable energy stage, EDC has the inherent capacity to make profound contributions to mitigate the effects of climate change. Because of EDC’s geothermal projects, the country was able to reduce its carbon intensity by about 20%, thus, we rank 49th instead of 21st in the list o countries with high carbon intensity. Being “green” means being able to generate a multitude of benefits for the nation. For one, our geothermal operations have substantially reduced the country’s dependence on imported oil. Last year, EDC’s total generation of 6,201.74GWh displaced 10.34 million barrels of fuel oil which translates to a foreign exchange savings of $821.54 million,” de Jesus explained.
EDC’s carbon footprint of 0.10 tons CO2 equivalent is 4X lower than the country average of 0.48 tons CO2 equivalent. In further independent studies, it was found that EDC’s carbon emissions are between 85-92% less than the average in regions where the Company operates. EDC’s carbon intensity in Visayas and Mindanao is 0.03 tons/MWh and 0.02 tons/MWh, respectively, versus the Philippines carbon grid intensity of 0.27 tons/MWh in Visayas and 0.28 tons/MWh in Mindanao.
De Jesus also presented the climate change adaptation and mitigation initiatives that EDC has been implementing in its project sites. “The new business environment in the midst of climate change demands new approaches. EDC opted for ecosystem based management. In our analysis, we have to start with the value chain to see where we can best intervene to adapt or mitigate climate change impacts. We need to reduce carbon footprint in our operation, update our watershed database, enhance our forest habitat, and improve the capacity of communities to address disasters,” she added.
Foremost of these initiatives is BINHI, a four-pronged reforestation program that has created new value for indigenous tree species. BINHI which was launched in December 2008 is the first reforestation program to address the problem of vanishing premium native tree species by ensuring that the diversity of our Philippine forests and the gene pool of our premium tree species are restored. It aims to reforest 1,000 hectares every year for 10 years.
EDC has already planted 1.5 million trees and are propagating and restoring the gene pool of premium and endangered Philippine species under the BINHI program. It has selected 96 rare and premium species to rescue and as of last quarter, the company has rescued 46 species for propagation or 50% of its target.
Aside from BINHI, EDC is initiating an ecosystem-based management of project areas, influencing supply chain and people’s behavior through sustainability management, improving risk awareness and preparedness of communities through the establishment of Barangay Emergency Response Teams (BERT), and measuring and reporting triple bottomline through the internationally accepted Global Reporting Initiative (GRI).
EDC’s 2010 Integrated Annual and Sustainability Report is the first report by a Philippine company to be validated by the Amsterdam-based Global Reporting Initiative. It exceeded the minimum requirement of reporting for a B+ level report following the GRI’s G3 Protocols. In fact, the company reported on exactly 70 KPIs following the GRI’s electric utilities sector supplement, which is another first for any energy company in the Philippines. “We recognize that integrated reporting is an emerging global trend that allows us to give our shareholders and stakeholders a holistic view of our triple bottomline performance and enables us to pass the social and environmental screening of global investors,” de Jesus added.
Energy Development Corporation (EDC) is the world’s largest pure play geothermal company, with a total of 1,130 MW of fully integrated geothermal plants representing 61% of the installed power generation capacity in the Philippines. This installed capacity is spread across seven operational steam fields located on five distinct contract areas in Leyte, Negros Oriental, Negros Occidental, Bicol and North Cotabato. EDC’s efforts to develop geothermal as a clean, renewable and indigenous source of energy have helped propel the Philippines to become the world’s second largest producer of geothermal power.
In keeping with its objective to develop more indigenous power that would not only be benign but also protective of the environment, EDC has equity in two hydropower projects: 60% equity in the 120MW Pantabangan and 12MW Masiway hydropower plants located in Northern Luzon. EDC is also developing an 86MW Wind Power Project in North Luzon.
With 35 years of experience in geothermal exploration, development and operation, EDC’s technical expertise spans the entire length of the geothermal value chain. A multi-awarded company, EDC is an acknowledged champion of environmental management, social responsibility and good corporate governance. EDC’s efforts in water sustainability were selected among the country’s 10 best practices and showcased at the Philippine Pavilion of the 2008 World Expo, serving to highlight the expertise of EDC in the science of both geothermal energy and the environment. In September 2011, the International Finance Corporation (IFC) bestowed on EDC the highly prestigious Client Leadership Award for its excellent sustainability record, topping 129 companies and organizations across 70 countries. For the past three years, EDC’s excellent corporate governance record has also been recognized by the Institute of Corporate Directors (ICD).
EDC President & COO Richard Tantoco (right) receives the IFC Client Leadership award from IFC Executive Vice President & CEO Lars Thunell at a ceremony in Washington, D.C. during the Annual Meetings of the World Bank Group and the International Monetary Fund. The award recognizes IFC clients that share IFC’s commitment to socially and environmentally sustainable development and demonstrate innovation, operational excellence, and strong corporate governance. IFC gave recognition to EDC’s pioneering role in developing and commercializing geothermal energy in the country and outstanding initiatives in sustainable development. The award is a solid testament to EDC’s groundbreaking and sustainable efforts to achieve development in its host sites where it serves 43 villages and 18,000 households.
The International Finance Corporation (IFC) selected Energy Development Corporation as this year’s recipient of the prestigious Client Leadership award citing the geothermal leader’s exemplary accomplishments in operational excellence, sustainability, environmental management, social responsibility and corporate governance.
IFC gave recognition to EDC’s pioneering role in developing and commercializing geothermal energy in the country and outstanding initiatives in sustainable development. While pursuing geothermal leadership, EDC builds model communities, promotes sustainable reforestation and biodiversity preservation through its greening program BINHI, molds world-class builders through its technical-vocational school KEITECH, and enhances the living conditions and well-being of its host communities through its various CSR projects on health, education and livelihood.
“This is indeed a solid testament to our groundbreaking and sustainable efforts to achieve development in our host sites where we serve 43 villages and 18,000 households. By integrating our business with the development needs of our project areas, we have prospered with our local stakeholders – resulting in smooth and enhanced operations. We are of the firm belief that as the company grows, the communities should also prosper and the environment continuously preserved and enhanced. Support for the development of the locality promotes trust, which in turn gives the company its social license to operate,” EDC President and COO Richard Tantoco said.
Tantoco personally received the award from IFC Executive Vice President and CEO Lars Thunell in a ceremony in Washington, D.C. He also addressed the delegates of the IFC Workshop on the Institutional Development Goals (IDG) and shared EDC’s experience in linking strategies and targets to incentives, and using these business tools to impact development. Tantoco elaborated on EDC’s sustainability projects that are relevant to IFC’s own development goals and can be modeled by IFC for its other private sector partners.
Thunell said: “EDC was selected for its leadership and good environmental and social practices. We are proud to call EDC a client and partner, and we look forward to exploring new opportunities to bring renewable energy solutions to other emerging markets.”
IFC has been a key investor in the company ever since privatization in 2006 and continues to maintain a stake in EDC. It continues to support EDC, most recently in the form of a US$75-million loan, to fund EDC’s capital expense in the medium term. This was the third such investment in EDC by IFC, and was largely due to EDC’s operational focus in producing renewable and clean energy. Throughout the development of its business, the company consistently meets all of IFC’s Performance Standards in managing the environmental and social impacts of its projects.
“We are putting extra effort in measuring and aligning our overall sustainability performance with global standards and practices. We institutionalized the Global Reporting Initiative framework in our operating system to make sustainability a corporate culture where measurements are done to help improve operational efficiency and protection of the environment and people,” Tantoco explained.
Last quarter, EDC launched its GRI-checked B+ level integrated annual and sustainability report which holds the distinction of being the Philippines’ first sustainability report to be checked and validated by the GRI-Amsterdam with third-party assurance. A publicly-listed corporation for the past five years, EDC is one of the top companies in corporate governance as recognized by the Institute of Corporate Directors.
EDC is the world’s largest pure play geothermal company and the Philippines’ leading producer of geothermal energy accounting for 61 percent of the country’s total installed geothermal capacity. As a fully-integrated geothermal company, EDC’s primary business spans from geothermal steam production to power generation. EDC is actively pursuing 280 MW of domestic expansion opportunities and international concessions in Indonesia and Chile.
EDC Chairman Federico R. Lopez (left) proudly shows off to Chairman Emeritus Oscar M. Lopez (center) and President and COO Richard B. Tantoco (right) the pages narrating the company’s environmental performance in VALUES @work: EDC’s 2010 integrated annual and sustainability report. Tantoco is seen holding his copy of their report.
Geothermal leader Energy Development Corporation (EDC) has officially put the Philippines on the global sustainability map with the launch of VALUES @ work, its 2010 integrated annual and sustainability report (IASR) that is also the first report of a Philippine company to be validated by the Global Reporting Initiative (GRI) organization in Amsterdam.
“Beyond the usual annual report, VALUES @ work describes how we can profit and still create a spectrum of difference in the lives of our stakeholders and the environment,” EDC President and COO Richard B. Tantoco said. “We are very proud of this integrated report that our sustainability team has painstakingly put together. It is a milestone not only for EDC but for any Philippine company because this is the first one that was checked by the GRI.”
The GRI is at the forefront of the mostly widely used sustainability reporting framework that companies around the world apply to measure and report not only its economic achievements but also its environmental, social and governance performance. Companies can report on a certain number of key performance indicators (KPIs) that correspond to an application level. Level C requires a report on 10 KPIs, level B on 20 KPIs and finally, level A for all relevant core KPIs. A plus (+) is added to a report that was externally assured by a panel of experts on the framework’s protocols.
Though this is already the 2nd year for EDC to release an integrated report, VALUES @ work is truly a breakthrough project for any Philippine company. It exceeded the minimum requirement of reporting for a B+ level report following the GRI’s G3 Protocols. In fact, the company is reporting on exactly 70 KPIs following the GRI’s electric utilities sector supplement, which is another first for any energy company in the Philippines. This is a big leap from the 13 G3 KPIs in EDC’s 2009 IASR, not to mention that this report integrates EDC’s annual and sustainability performance.
“We recognize that integrated reporting is an emerging global trend that allows us to give our shareholders and stakeholders a holistic view of our performance,” Tantoco explained.
EDC also subjected its report to an External Review Committee (ERC) to ensure its accuracy, balance, comparability, timeliness and clarity. The University of Asia and the Pacific’s Center for Social Responsibility (UAP-CSR) hosted and formed EDC’s panel of experts on economics, social and environment for its ERC. “We boldly went ahead and allowed our ERC to look into our sustainability framework. Being externally assured allowed us to get an objective assessment of our triple bottom line performance, which could help improve not only our manner of reporting but also our internal system,” added Tantoco. The ERC’s assurance statement is included in the report.
“The next challenge is for us to further synergize it with our risk management and balanced scorecards as we align our performance with more global standards. This we hope to accomplish on our way to producing our A + report,” Tantoco concluded.
Click link to Download a copy of VALUES @ work. EDC_IASR2010