AC Energy Inc. has formalized its entry inti Myanmar’s renewable energy (RE) market by forging ties with a Singapore-based company.
In a disclosure on Monday, Ayala Corp. said Yoma Strategic Holdings Ltd. (Yoma Strategic) will form a strategic partnership with its power arm AC Energy.
“Yoma Strategic and AC Energy are looking to establish a 50:50 joint venture that will see AC Energy and Yoma Strategic working together to drive the growth of Yoma Micro Power (S) Pte. Ltd.,” according to the listed conglomerate.
Both entities plan to explore developing about 200 megawatts (MW) of additional RE projects within Myanmar, including participation in large utility scale renewable projects.
As part of the deal, AC Energy and Yoma Strategic signed a binding term sheet that include investing at least $30 million (P1.5 billion) into Yoma Micro Power.
Following the investment and restructuring, planned for 2020, the joint venture is expected to hold at least 50 percent of Yoma Micro Power.
At present, Yoma Strategic holds a 35-percent stake while Norfund and the International Finance Corp. hold 30 percent each in Yoma Micro Power.
Yoma Micro Power develops micro power plants and mini-grids that provide electricity to off-grid rural communities and telecommunications towers in Myanmar.
After the successful implementation of the 10-site pilot project in 2018, Yoma Micro Power is currently rolling out 250 micro power plants by the end of the year and is expected to scale up to more than 2,000 sites by 2023.
“Supply of electricity is one of the largest opportunities in Myanmar and also one of the biggest bottlenecks for economic development,” Yoma Strategic Chief Executive Officer Melvyn Pun said.
“AC Energy’s international expertise in the renewable energy sector and the access to funding will be invaluable as we work together to service this huge, underserved market in Myanmar,” he added.
“This is a very meaningful investment for AC Energy, as we intend to participate in Myanmar’s renewables sector in a significant way,” AC Energy Renewables Chief Operating Officer Patrice Clausse said.
“Our combined expertise, strong financing capabilities and AC Energy’s commitment to shore up presence in the fast-growing region will provide a critical platform for growth in the country,” he added.
The Myanmar government is envisioning its solar industry to contribute up to 5 percent of the nation’s electricity as the country shifts away from hydropower and natural gas sources.
In addition, the Myanmar government’s recent hike in electricity tariffs has also enhanced the attractiveness of solar energy solutions to the commercial and industrial segments.
“There is a need to significantly increase generation capacity and build out last mile distribution infrastructure, which Yoma Micro Power has embarked upon,” Pun stated, adding Myanmar has one of the lowest electrification rates in Asia.
Citing World Bank’s estimates, AC Energy said electricity consumption in Myanmar will grow at an average annual rate of 11 percent until 2030 to achieve complete electrification in all households with an expected investment of about $2 billion per year required.
The latest partnership is aligned with AC Energy’s aspiration of exceeding 5,000 MW of RE capacity and generate at least 50 percent of energy output from renewables by 2025.
AC Energy has over $1 billion of invested and committed equity in renewable and thermal energy in the Philippines and around the region.
On the other hand, Yoma Strategic, listed on the Main Board of the Singapore Securities
Exchange Trading Ltd., has a diversified portfolio of businesses in real estate, consumer, automotive and heavy equipment, financial services, and investments in Myanmar.
Ayala shares gained P7.50 or 0.86 percent to close at P877.50 apiece on Monday.