Maintaining our Strong Financial Position
In 2020, with regard to the financial and commercial aspects of our business, our revenues were down across the majority of our project sites, with the exception of our operations in Negros Island and Ilocos Norte. We ended the year with PHP37.62 billion in revenues, down 10% versus the PHP41.87 billion revenue in 2019. Thanks to our conscious efforts to manage our spend, however, we were able to offset some of our revenue losses with lower cash operating expenses (OPEX) of PHP15.96 billion, a reduction of 19% from last year’s PHP19.77 billion.
Revenue from our geothermal assets decreased by 15% from the previous year, primarily due to lower prices and the decline in energy sales volume, which declined by 309 gigawatt-hours (GWh).
The low energy demand due to the nationwide enhanced community quarantine (ECQ) brought the prices in the Wholesale Electricity Spot Market (WESM) down by almost half compared to 2019. In addition to the decrease in prices, the revenues of our Leyte and Mt. Apo energy projects also declined due to lower power generation caused by steam issues. On the other hand, the volume produced by our Negros and BacMan facilities decreased primarily due to outages, including shutdowns as precautionary measures against Typhoons Quinta, Rolly, and Ulysses.
OPEX of geothermal assets also declined compared to 2019. Cash operating expenses went down by 23%, primarily driven by lower WESM replacement power costs, personnel costs, consultancy fees, and taxes. However, for all our geothermal assets except for Mt. Apo, the decline in revenue is greater than the decrease in operating expenses. Additionally, operating income and net income in 2020 were lower by 15% and 21%, respectively, in comparison to 2019.
For our Burgos Wind Project, on the other hand, two main factors supported its improved revenues and net income in 2020. The first one is the outperformance in wind generation during the second half of the year, thanks to a strong high wind (Amihan) season. The second one is the approval of the Energy Regulatory Commission (ERC) of the Feed-in-Tariff (FIT) rate adjustment starting December 2020, increasing it from PHP8.53 per kilowatt-hour (kWh) to PHP9.8976/kWh.
As such, the Burgos Wind Project’s net income increased by 191% versus 2019, mainly as a result of its significant increase in revenue. Revenue grew by 48%, primarily brought about by the ERC’s approval of the increase in Burgos Wind’s FIT rate. This increased the price per Retained kilowatt-hour for its generation since 2016, which was recognized in full in 2020. Further, the better wind regime increased power generation by 26GWh, contributing to the overall increase in revenue.
Our Burgos Solar Project was also helped slightly by the ERC approval of the FIT rate adjustment, increasing the rate from PHP9.68/kWh to PHP11.2758/kWh for Burgos Solar 1, and from PHP 8.69/kWh to PHP9.8248/kWh for Burgos Solar 2.
As such, the Burgos Solar Project’s net income 10.92 grew by 167%, primarily due to the significant 38.2% boost to its revenue. Revenue increased 2.66 by 44%, primarily due to the significant boost to its revenue. Revenue increased by 44% primarily due to the retroactive recognition of the FIT rate adjustment for its generation from 2016, as approved by the ERC. Power generation also increased compared to last year with its lower downtime in 2020. In January 2019, our solar farms were shut down to facilitate transmission line upgrades.
As for our Solar Rooftop Project, net income went down by 20%, mainly from the decline in revenue. Due to the prolonged community quarantine, energy demand from the Gaisano malls, one of the Solar Rooftop Project’s main customers, decreased by 15% compared to 2019.
In 2020, about 72% of our total direct economic value generated was returned and distributed to the local economy in our areas of operation in the form of employee wages and benefits, taxes paid to the government, payment to capital providers, operating costs, and community investments.
As such, our financial capital gets distributed and transformed into our five other capitals. This includes our significant investments for our operational, intellectual, and natural capitals, as well as our annual allocated expenses for natural, human resource, and social and relationship capitals.
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.