Financial Capital

Sound Financial Management Amid Business Disruption

EDC is a global diversified renewable power company. As the world’s largest vertically integrated geothermal producer and the country’s premier renewable energy company, we maintain our leadership in the Philippine renewable energy industry with our portfolio of geothermal, hydropower, solar, and wind power assets.

Our growth agenda is anchored on a) the acquisition of key government geothermal privatization projects; b) development of existing geothermal capacity; c) diversification of our renewable energy portfolio; and d) the establishment of viable operations in Asia, Latin America, and Africa.

Economic Performance

Prudent financial management is key to EDC’s operations. Our strong financial position is maintained through healthy cash flows from long-term contract agreements. This allows us to finance the expansion of our portfolio, improve the profitability of energy projects in the pipeline, and provide regular returns to shareholders. We continuously evaluate and improve our treasury, financial, accounting and budgeting systems to tighten fiscal control, and promote corporate governance, and better risk management.

EDC implements an extensive capital expenditure program to maintain optimum availability and reliability of all our power generating assets. This includes upgrading activities, as well as investments in climate-proofing and resiliency.

We comply with corporate governance rules and regulations and submit regular reports as required by the Securities and Exchange Commission and to our shareholders.

To uphold our commitment to responsible business, EDC assesses its risks through its Enterprise Risk Management Program. This is also aligned with ISO 31000 on risk management. EDC conducts an annual review of operational risks as part of its planning and budgeting process. Should the risks be assessed as high, EDC will formulate corresponding risk treatment plans in response and escalate it to the appropriate Management or Board Committee. This will be continuously monitored to ensure that it is properly addressed.

Market Presence

EDC has a nationwide presence, with facilities located in Luzon, Visayas, and Mindanao that have a combined current installed capacity of 1,476.6 MW. Our headquarters are located in Manila, but we hire from the areas where we operate. Where possible, we prioritize qualified applicants from our host provinces for employment. EDC complies with current wage orders and minimum wage standards, and benchmarks its offers against the industry average.

Apart from employment, EDC also contributes to the local economies where we operate by engaging with locally-based suppliers. We also work closely with our community organizations and cooperatives and implement programs to build their capacity for economic participation.

We have a diverse customer base that includes commercial and institutional clients, as well as directly connected customers. We provide power to electric cooperatives and distribution utilities, who in turn supply to commercial, residential, and industrial customers. EDC also provides electricity to businesses through its subsidiaries that are licensed retail electricity suppliers.

EDC builds strong and healthy relationships with its customers. We seek to provide them with flexible contract terms, value-added services, and guidance, as they make the transition to renewable energy. We assess and evaluate our performance in delivering energy to our customers and use this to further strengthen and improve our services to them. This helps promote customer satisfaction and retention.

Indirect Economic Impacts

Providing clean and reliable energy to our customers boosts their productivity and enables them to engage in economic activities. Aside from this benefit, EDC also implements programs to engage and empower our community stakeholders to become agents of their own development.

We elevate our communities and the environment through initiatives and direct investments in education, enterprise development, biodiversity conservation, watershed management, and environmental management. We also provide royalty payments for host communities where our power projects are located. As our services are dependent on the health and stability of the environment, we also invest in ecosystem services for the management of the watersheds in our project sites.

EDC conducts bi-annual social acceptability surveys to evaluate our performance. We also monitor key Corporate Social Responsibility (CSR) performance indicators. This allows us to assess the effectiveness of our initiatives and helps us refine our activities to contribute to lasting inclusive growth and self-reliance for our partner communities.



EDC works with a network of suppliers and contractors who enable us to run our operations and conduct our activities. The quality of the vendors we engage has implications on our success.

EDC’s approach to Supply Chain Management involves strategic sourcing and optimized inventory levels to ensure reliable and uninterrupted supply of goods and services necessary for our operations. Vendor accreditation, spend analysis and market studies, and warehousing and logistics are all components of EDC’s supply chain management.

With respect to vendor selection, our decisions are based on price, technical capability, safety practices, and industry expertise. EDC has accreditation requirements with which potential vendors must comply. They must also demonstrate their financial capacity to provide the goods and services needed and their long-term business sustainability. In line with our priority of creating Shared Economic Value, EDC promotes economic inclusion by practicing local purchasing to qualified locally based suppliers and contractors.

We maintain open and regular lines of communication with our vendors’ assemblies at each of our business units,, including at our Head Office. We manage and evaluate our performance in this area through regular monitoring and benchmarking, as well as through the practice of internal and external audits.

New customers underscore the need for renewable energy options for businesses 


For more than 40 years, the Energy Development Corporation (EDC) has been powering infinite possibilities for businesses through renewable energy. Through our industry leadership, we are proving that not only is clean energy good for business, but that affordable clean energy is also within reach for businesses.

Retail Competition and Open Access (RCOA), which was mandated by the Electric Power Industry Reform Act (EPIRA) of 2001 (EPIRA), empowers businesses and other commercial and industrial customers to make their own choices when it comes to their electricity suppliers. This means that businesses and organizations that have at least 500kW of average monthly electricity consumption now have the freedom to choose which licensed retail electricity  supplier (RES) to transact with, depending on their budget and electricity supply requirements.

Through the years, EDC has proven to be a trusted partner in this shift through its customized value-added services, flexible contract terms, and comprehensive guidance in the transition to renewable energy. As such, more and more organizations are unlocking the possibilities when they use clean energy. To date, 85 customers are already reaping the benefits of a partnership with EDC. In 2020 alone, EDC had 162 new customers who made the shift to renewable energy. 


Powering sustainability ambitions 

One of our newest customers is Bounty Fresh Foods, Inc., one of the leading poultry integrators in the country. Through BacMan Geothermal, Inc. (BGI), EDC provides 6.5 megawatts (MW) of power to four facilities of Bounty Fresh. In the pursuit of its long-term sustainability goals, Bounty Fresh sought the expertise of EDC to forward its transition to renewable energy.

“We believe that our country is rich in its own natural resources, which should be used for the benefit of our fellow Filipinos,” says Carl Benedick C. Chung, Senior Vice President of the Breeder Group at Bounty Fresh. “Switching to renewable energy not only helps create a greener future, but it also realizes the ambition of a developed and a self-sustainable Philippines.” 

Similarly, Hocheng Philippines Corporation (HPC), which manufactures bathroom fixtures under the HCG brand, also sought the expertise of EDC to support its low-carbon ambitions. The HCG brand is one of the leading bathroom solutions providers in the Philippines. Through BGI as well, EDC provides 1.00MW of power to HPC’s 10-hectare manufacturing plant located in First Cavite Industrial Estate (FCIE).  

“As a company, our ultimate goal is to pursue excellence in LEED-compliant products, build better designs to reduce the overall impact on the environment, and support government projects geared towards sustainable development,” says Alex Dennis Abenes, Senior Manager at the Supply Chain Division of HPC. “We believe that EDC, through BGI, can help us meet these goals by providing efficient electricity through its low-carbon energy resources.”

On top of forging new partnerships, EDC also continues to strengthen its guidance and service delivery to existing customers such as Arthaland; Coca-Cola Beverages Philippines, Inc.; Knowles Electronics (Philippines) Corporation; and Silliman University, just to name a few. 

Finance gets an upgrade with the use of robotic automation 


In the context of our new business reality, we want our workforce to increase their productivity despite the challenges of longer-term work-from-home arrangements. Specific to our Finance group, we want them to be more proactive in their roles and engage in more challenging projects, instead of heavily focusing on routine and predictable accounting work. Through Robotic Process Automation (RPA), we were able to reduce the manual work that our Finance-Comptrollership team handles. In 2020, 20 bots were developed and rolled-out, saving a total of 66 man-hours per month.  We are still expecting an additional 102 man-hours per month to be saved by May 2021 as we complete the development of six more bots.

RPA is a business process automation technology that makes use of software robots to execute manual and repetitive business tasks. By doing less monotonous tasks with the help of RPA, our Finance team can focus on activities that have greater business value. RPA also allows us to increase capacity in driving business impact as we enhance our core finance functions and produce more accurate and less-error-prone financial reports.  

This digital transformation of our Finance functions is only a subset of EDC’s overall digitization journey and their processes are the first to be automated through RPA.  The intent is to also use this tool to simplify other EDC work processes where RPA is applicable. To be deemed RPA-ready, processes must be rule-based, structured, standardized, and have low to no system changes. 

Our 2020 Integrated Report


Our Integrated Report tells the story of our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations.

One of the most powerful cartoons I’ve come across in a while is one by To New Yorker
Magazine which shows a man in a tattered business suit and around a campfire amidst a
future wasteland telling three children, “Yes they destroyed but for a beautiful moment in
time we created a lot of value for. Funny, but tragically so true of how the world works today.

We urgently need to overhaul how we relate with the Earth
if we want to keep it habitable for humans in the decades
to come. We don't have a choice.

The way we measure progress and success in our world is severely broken. Countries are
judged by how fast gross domestic product (GDP) grows, and corporate stocks are deemed
good investments also by how fast they can advance their net incomes regardless of how
it’s achieved. Most successful business models are racing to spur consumption of their
products beyond what consumers really need. As a result, carbon emission trajectories are
leading us toward a catastrophic world that’s 3-6 degrees warmer. Human activity is warming
the Earth 5,000 times faster than the most rapid natural warming occurrence in our planet’s
past, and species are going extinct faster than at any period in geologic history. Microplastics
are already being found in dwelling in the deepest reaches of the Marianas trench as well as
the pristine Pyrenees mountains of France and Spain. These are but a few examples of the
widescale destruction humans are wreaking on our only home. The international no
organization (NGO) Global Footprint Network estimates that we already use up 1.5 Earths
each year just feeding our current level of wants and needs; that’s 50% more than our planet’s
ability to replenish 3the resources used up!

Dear Stakeholders,

Message from the EDC
Chairman and CEO

With every passing year, it becomes increasingly tougher to deny that our climate
is changing faster than previously imagined due to human activity. A large and growing
number of the world’s largest corporations participating in the Carbon Disclosure Project,
more than 75% as opposed to only 10% in 2010, now incorporate climate change into
their business strategies. I believe that today, we are living through one of history's great
paradigm shifts. An age wherein we’re only just beginning to realize the immense impact
we’ve had on the planet and that we urgently need to overhaul how we relate with the
Earth if we want to keep it habitable for humans in the decades to come. We don't have
a choice. There is no Plan B or planet B, as some would say.

Real and lasting shareholder value can only be had when we place the
interests of all our stakeholders, our customers, the planet, and humanity
at the center of everything we do.

Of course paradigm shifts are never easy. They never have been throughout history. But
as the environmentalist and author Bill McKibben rightly puts it: “the math is hard to
argue with; business as usual and growth as usual spell an end to the world as usual.
This is the one overwhelming fact of our lifetimes.” PricewaterhouseCoopers or PWC
quantifies what the world needs to do to keep global temperature rise to less than 2
degrees Celsius. They emphasize that we must reduce the carbon intensity of the
economy—the amount of carbon emitted per dollar of GDP—by 6% each year until 2100.
Although this number looks modest, it is nine times the current rate of important
being experienced in the world today; this only underscores the magnitude of the
transformation needed. At Energy Development Corporation and parent company,
First Gen Corportion, we believe our platform of businesses and our way-to-play are all
geared toward this goal.

Message from the EDC
Chairman and CEO

Our Geothermal plants are today the only large scale 24/7 sources of renewable energy
The relatively fixed pricing we are able to offer our electricity customers is a massive
advantage and gives them certainty at a time when our coal-based competitors cannot. In
addition, the massive transformation taking place in the company is exciting and promises
to transform us into a leaner but more robust and resilient player and competitor.
Our Natural Gas plants at First Gen are key to bringing down the carbon intensity
of the economy as they emit less than half of the carbon and only a fraction of the other
pollutants per kilowatt-hour relative to an equivalent-sized coal plant. This is key to
keeping the economy humming and our lights on, even as we transition to a decarbonized
world. Today, these plants run on the country’s only indigenous gas field
Camago-Malampaya, but we are currently preparing for the day these fields no longer
have indigenous gas through the development of what could be the country's first
Liquefied Natural Gas (LNG) import terminal. In December 2018, First Gen signed a joint
Development Agreement (JDA) with Tokyo Gas Co., Ltd. to push this forward. It's an
exciting time to be doing this as LNG suppliers worldwide are only just beginning to
innovate and show flexibility on gas contracts never before seen in the world of LNG
contracting. Just this April 2019, Shell and Tokyo Gas signed the world’s first coal-indexed
LNG contract. This signals that gas producers are now willing to fight head against
coal plants in competitive power markets, if they aren’t cheaper already. Our decision
several years ago to slam the door on developing any coal-fired power for ourselves
was prescient. Even as more coal- fired capacity comes on line globally, their utilization
and capacity factors are falling. International Energy Agency (IEA) figures for 2017 show
the average capacity factor of coal plants globally has fallen even more to 52.8%, down
from 59.3% in 2013. This is alarming for a technology whose economics only makes sense
when run at baseload rates of 70-80%. The implication is that many coal plants today are
being run sub-optimally and expensively. The fact that they are required to ramp up and
down frequently causes thermal fatigue of components, of materials, and corrosion that
negatively impact efficiency and emissions even more. Aside from the fact that coal-fired
power no longer has a place in a world that needs to decarbonize rapidly, its economics
are being rendered uncompetitive in grids increasingly being penetrated by more
intermittent renewable energy sources. Its days are numbered.

Message from the EDC
Chairman and CEO

Our world today teems with change and disruption. At EDC, we’re all incessantly
and purposefully “sensing the wind” and “reading the tea leaves”. And in such a
world marked by so much complexity, we must also keep our organizations alert,
as well as agile. But let me just say that real and lasting shareholder value can only
be had when we place the interests of all our stakeholders, our customers, the
planet, and humanity at the center of everything we do. The world’s paradigms are
shifting yet again and, as a company, we intend to help that shift in the best way
we can. It is amongst these great challenges where we intend to build the many
great opportunities that will foster true shareholder value.

Thank you for your continued trust and unwavering support.

Federico R. Lopez
Chairman and CEO

Message from the EDC
Chairman and CEO

Due to climate change, only hell is hotter than summer.

We now live in a world that has increased its temperature by 1.5°C from pre-industrial times
and at these levels 14% of the world’s population will experience intense heat waves at least
once in five years. Should things deteriorate further by half a degree, at a 2°C increase from
pre-industrial times, the effect will be 2.7 times worse: 37% of the world’s population will
experience severe heat waves at least once in five years. In 2018, Australia revised their
temperature charts and increased the upper limit to 55 degrees Celsius, or over 135 degrees
Fahrenheit, given what was experienced for a sustained period in the south-central part of
the country in 2018.

Hotter temperatures mean hotter oceans, because water absorbs an estimated 90% of the
heat in the atmosphere and radiant heat from the sun. The “hydrogen bond" between water
molecules is what allows water to absorb a significant amount of energy in the form of heat
before turning to vapor. However, once in vapor form, water rises into the atmosphere, and
the very same life-sustaining water becomes fuel for deadly typhoons and hurricanes that
bring with them torrential rains.

If the earth did not have water and was dry like Mars, our average temperature would be
negative 16°C. Because of the presence of water, the year-round average temparature of
the Earth is now 14°C. Averages have a way of lulling us into complacency until we are shaken
or impacted by terrible horrors, like Typhoon Yolanda in the Philippines, Hurricane Sandy in
New York, Hurricane Maria in Puerto Rico, Harvey in Houston (the costliest hurricane on
earth at USD125B in damage). The common thread among these events? They are all the
worst in either the history of those areas or the worst in centuries. And they all occurred in the
last 6 years.

The diametric opposite of typhoons, drought, is the other side of the same coin. From
California to Cape Town in South Africa, to Greece and Australia, drought has affected millions
of people. Closer to home, Manila is experiencing drought in this summer of 2019.

Dear Stakeholders,

Message from the EDC
President and COO

Our 2018 cover follows the expressive and visceral nature of the images we have chosen in
the past two years. It shows a striking image of what the future holds for us, if we do not
heed the call of the planet to pivot. The harsh reality of climate change is already felt, and
sadly, it is the most vulnerable members of society who bear the brunt of it.

We know the pivot will not be easy, especially in the face of significant vested interests.

The Intergovernmental Panel on Climate Change’s findings say that we may only have
until 2030 to avert “catastrophic climate change.” Despite the warnings however, action
has been slow. And in 2018, carbon emissions increased by another 2% from the previous
year. Scientists remain optimistic and cite the growth of renewable energy as a reason to
believe that the world can achieve the necessary reductions.

This continues to motivate us to do things better, to make a difference toward turning the
tide. Over the past five years, the Energy Development Corporation (EDC) and the rest of
the Lopez group of companies have decided to be the leaders in the business sector of
the Philippines in sounding the warning about the worsening effects of climate change
and the need for decisive action and enlightened choices. We know the pivot will not be
easy, especially in the face of significant vested interests.

Our Performance Report tells the story of EDC’s work-in-progress this year: our efforts to
achieve our business objectives, hand-in-hand with our sustainability aspirations. As
always, we keep track of the metrics that matter most to our stakeholders in alignment
with the framework of the Global Reporting Initiative (GRI) Standards.

Message from the EDC
President and COO

Bouncing back from a tough year

We tempered our expectations for 2018, given that we began the year with damage to
our facilities as a result of Typhoon Urduja, in December of 2017. Despite this setback, the
concerted efforts of our operational units, and inspired action from our employees,
helped us return our assets to service ahead of schedule. As a result of this, we ended
the year with a recurring income attributable (RNIA) of PhP9 billion, slightly ahead of our
2017 numbers.

We continued to execute our strategy with excellent results. We ended the year above our
target for generation. Our Nasulo and Palinpinon II power plants were also re-certified
for the 40 megawatt (MW) (+10MW) Ancillary Services Procurement Agreement (ASPA),
while our BacMan geothermal facility was fully contracted.

We adopted new ways of working and better practices in our operations with promising
results. For instance, majority of our planned maintenance activities were completed in
60% of the time, versus the previous 5-year averages. Fundamental changes have taken
place, such as the safety and medical clearances of contractors prepared a full month
ahead of the start of the activities, versus the old practice of doing this just prior to day
zero. We have also enhanced our reinjection management strategies to support our
efforts to reduce wasted heat and to ensure the recharge of our geothermal reservoirs.

Message from the EDC
President and COO

Taking the long view on sustainability and profitability

We are aware that challenges to the business will arise from time to time, such as natural
calamities or extreme weather. In response to these threats, we made smart investments
in resilience projects. Rather than implement risk reduction and resilience in potentially
hazardous areas, such as the steepest slopes most prone to landslides, we looked instead
at this through the necessary lens of high hazard against the potential value at risk from
the infrastructure in the area. From there, we have now prioritized those works which
mitigate the value at risk (VAR) of our assets relative to the hazard present. This way, we
are sure that we are investing in the right places where we can have the greatest risk
reduction. Using this VAR strategy, we completed 31 landslide mitigation projects in
BacMan, Negros, and Leyte in 2018. This crucial investment in resiliency is being
accelerated in 2019.

We are also investing in the growth and development of our people. People seek
opportunities to work for us because they appreciate EDC’s strategy. We have found that
EDC’s renewable energy focus has made us an employer of choice. Improvements in our
ways of working have given our employees greater flexibility to participate in and
contribute to over 100 simultaneous special projects, resulting in disperse decision-making
and improved accountability.

Our business also faces systemic and market-driven challenges. For example, the energy
sector will have to confront regulatory shifts and changes in tax regimes. This is par for
the course. We will also experience market shifts, which can be disruptive, both from
operational and pricing standpoints. An example would be the influx of non-
conventional, non-base load (intermittent) energy, like solor and wind. These energy
sources have significant impact on the grid, but do not have to shoulder the cost of
ancillary services.

EDC is prepared to face these changes by maximazing the cash generation of our assets.
We upgraded the capability of our plants in order to provide services that support grid
stability. These plans have been implemented, with investments in ancillary services
capability completed. Expanding our services offering has generated economic returns:
revenue from the sale of electricity as contingency and dispatchable reserves increased
143.5% from 2017, to P970 million in 2018.

Message from the EDC
President and COO

Making the shift to low carbon energy

While renewable energy is often seen as an alternative, EDC believes it is necessary and
timely to mainstream clean energy. Renewable energy is not only the environmentally-
responsible choice, but a wise business decision as well. EDC’s experience demonstrates
this, and we hope to convince even the doubters that the future of energy is in renewable
This commitment to clean energy is growing. In the United States, the mood on low-
carbon energy is changing. So much so, that one of the major US energy utilities has
pledged to go carbon free by 2050, and 80% carbon-free by 2030. This is only one utility,
in a wave of energy providers that have announced carbon-reduction goals.

A common theme across those committing to renewable energy is that their customers
are demanding low-carbon energy. And the energy providers, even mining companies are
listening. Renewable energy is not only the environmentally-responsible choice, but a
wise business decision as well. EDC’s experience demonstrates this, and we
hope to convince even the doubters that the future of energy is in

In the capital markets, many large financial institutions have announced they will no
longer finance coal fired power plants. It is their belief that the assets will neither have the
capability to compete nor “the right to operate” based on the preferences of their
customers and other stakeholders such as local communities. For this reason, providing
financing for such assets are seen to be a poor medium- to long-term risk.

Increasingly, our customers are looking for cleaner energy choices, and we are happy to
oblige. Our role is not only to advocate for, but to convert consumers to, renewable
energy. More customers are signing up with EDC, with some choosing us because they
want to be powered by a pure RE company. Companies that have chosen to make the
switch believe it is a critical advantage: in fact, one customer that makes industrial
building materials told us that they want to be known as the first company in their
industry to be 100% powered by RE. We are encouraged by the small, but growing,
population of enlightened consumers that are demanding that the businesses and brands
they support show greater climate responsibility.

Message from the EDC
President and COO

EDC is proud and happy to partner with businesses that want to make positive
environmental change. Together, we will be part of a virtuous cycle that will contribute to
positive climate action.

Staying committed to our sustainability journey

In the last quarter of 2018, EDC completed the process of its voluntary delisting from the
Philippine Stock Exchange. Our delisting was a considered decision and part of an overall
strategy to support EDC’s long-term growth. The move to delist allows us greater flexibilty
over factors like leverage and dividend policies, without the need to excessively focus on
short-term results.
Our shareholders share this long-term focus with us. There is less attention given to
quarterly earnings, in favor of deliberate growth. This gives us the latitude and support to
explore investments in new Capital Expenditure, to test new technologies that alter our future
prospects, without the expectation of immediate results or instant returns.

While the Philippine Stock Exchange and the SEC have established guidelines for
mandatory sustainability reporting beginning in 2020, EDC voluntarily reported on
sustainability for the past nine years. We will continue this practice because we believe
that this is how we can best create and share value with society, and care for the
environment upon which we depend, and the we all share.

Message from the EDC
President and COO

Our clear path ahead

The strong beam from a beacon serves to shine a light on the way ahead, and while we
made some gains in 2018, our journey is far from over. One the business side, we are
confident in the path we are taking to grow and develop our portfolio, invest in our
facilities and our PEOPLE, and continue to support our host communities.

Strategy is fundamentally a choice that is executed well. EDC is committed to our choice
for renewable enrgy and we intend to deliver on our plans to optimuze our assets,
mitigate our risks and grow the business and our talent pool. It is our hope that we can
serve as a role model for the energy sector, our host communities, the local government,
energy are bright, and by all indications, are getting better with each passing day.

Richard B. Tantoco
President and COO

Message from the EDC
President and COO