Considered “the cleanest fossil fuel,” natural gas is seen as an immediate solution to the urgent demand for cleaner energy, as the world can no longer afford the atmospheric temperature increasing beyond 1.5 degrees Celsius. Natural gas emits 50.0 to 60.0 percent less carbon dioxide when combusted in a gas-fired power plant, compared with emissions from a typical coal-fired power plant*.
*Based on findings by the Union of Concerned Scientists, a nonprofit organization advocating for scientific solutions for a sustainable future.

Our natural gas plants delivered 12.6% of the Philippines’ gross generation in 2017.

What began with the 1,000-MW Santa Rita and the 500-MW San Lorenzo combined cycle natural gas-fired power plants in the early 2000s, the assets located in the First Gen Clean Energy Complex in Batangas City have since grown to include the 420-MW San Gabriel combined cycle and the 97-MW Avion open cycle natural gas-fired power plants in 2016. In 2017, First Gen’s 2,017-MW natural gas portfolio delivered 12.6 percent of the country’s gross generation in 2017.

Today, the flexibility and cost-competitiveness of natural gas-fired plants enable them to service the baseload, mid-merit, and peaking demands of the grid. The flexibility of gas plants makes them crucial and complementary to the growing intermittent sources of energy as the world transitions to a full renewable energy future.

Revenues from the natural gas portfolio increased by 24.1 percent due to: (1) higher average gas prices for the Santa Rita and San Lorenzo power plants, or an average of USD 7.5/MMBtu (million thermal British units) in 2017 compared to an average of USD 6.5/MMBtu in the same period last year; (2) Santa Rita and San Lorenzo’s higher combined Net Dependable Capacity (NDC) of 1,616.7 MW in 2017 compared to 1,581.9 MW in 2016; and (3) San Gabriel’s and Avion’s first full year of operations.

The increase in the natural gas plant revenues was tempered by soft spot market prices, and the 20-day Malampaya Outage in February. In April 2017, magnitude 5.6 and 6.0 earthquakes and aftershocks hit Batangas, which affected the San Lorenzo switchyard. This resulted in a 10-day curtailment on the dispatch of the San Lorenzo, Avion, and San Gabriel plants, which are connected to the said switchyard.

The operating income of the gas plants likewise improved following the higher combined NDC of Santa Rita and San Lorenzo, as well as the first full year of operations of the two new gas plants. This was partially offset by an increase in operating expenses following the start of San Gabriel’s and Avion’s operations in the latter part of 2016. However, the platform’s net income contribution declined by 21.2 percent to USD 119.6 million in 2017 as a result of a one-time breakfunding cost incurred from FGPC’s USD 500.0 million refinancing of its long-term debt last May 2017. Moreover, the decline was due to the absence of FNPC’s USD 47.8 million liquidated damages, which was booked in 2016.

The NDC of San Lorenzo decreased to an average of 538 MW in 2017 from 541 MW in 2016 due to normal degradation.

San Lorenzo’s 2017 net capacity factor slightly declined following the April 2017 earthquake, which prevented dispatch for 10 days following the damage in the San Lorenzo switchyard, and the plant’s scheduled major outages in the second half of the year. Despite the decline in dispatch, San Lorenzo met its contractual obligations to Meralco for power delivery.

San Gabriel

San Gabriel’s dispatch showed much improvement in 2017 after running for a full year. This is in contrast to the previous year where San Gabriel commenced commercial operations only in November 2016.

In the first quarter of 2017, San Gabriel suffered from low dispatch as a result of soft spot market prices in January, the Malampaya Outage in February, some equipment issues, and the Batangas earthquake in April. Although the Batangas earthquake did not damage the gas plant, it did affect the switchyard used to export electricity to the grid. As a result of these incidents, San Gabriel had low dispatch during the period, missing opportunities to sell when demand was seasonally higher.

Following San Gabriel’s resumption of operations, it was able to resume exporting power and even run at baseload in certain months.


With the gas facility’s dual-fuel capability (i.e. ability to run using both gas and liquid fuels), Avion was able to run during the Malampaya Outage in February 2017. This capability enabled the plant to continue generating electricity during peak periods, providing much-needed energy to the grid even without available gas.

The annual planned outage of the Avion power plant was successfully completed in September 2017, with the assistance of MTU Maintenance Berlin-Brandenburg GmBh (MTU-BB). This assistance is based on a three-year Maintenance Service Agreement (MSA) signed in August 2017 between Prime Meridian PowerGen Corporation (PMPC) and MTU-BB. MTU-BB is one of the leading GE-licensed maintenance providers for GE’s LMTM series of aeroderivative industrial gas turbines worldwide, which includes the LM6000TM being used in Avion.

International Standards

In 2017, the Santa Rita and San Lorenzo combined cycle natural gas-fired power plants maintained their international certifications for Quality (ISO 9001:2008), Environment (ISO 14001:2004), and Health and Safety Management Systems (OHSAS 18001:2007).

Risk Management

As is the case with most newly operational facilities, both the San Gabriel and Avion power plants dealt with initial operational issues, during the first quarter of 2017.

Malampaya experienced an outage for 20 days from January 28, 2017 to February 16, 2017, leaving no supply of natural gas for the plants. Due to their dual-fuel firing capability, Santa Rita, San Lorenzo, and Avion ran using liquid fuel for the duration, providing the grid with the needed electricity supply even during the outage. Thus, these three plants were able to provide reliable power supply even without natural gas.

On April 8, 2017, magnitude 5.6 and 6.0 earthquakes and aftershocks hit Mabini, Batangas, affecting the various components of the San Lorenzo switchyard, which connects the power plants to the transmission system of NGCP. Repairs to the switchyard were successfully undertaken within a very aggressive 10-day period, through jointly coordinated efforts with Siemens Power Operations, Inc. (SPOI), the Operations and Maintenance (O&M) contractor of San Lorenzo and San Gabriel.

Through strong collaboration and efficient execution, San Gabriel and Avion were able to overcome these issues and significantly improve their respective operations. San Gabriel was able to recover in the second half of the year as it sold 835 gigawatt-hours (GWh) during this period. Nonetheless, both plants still ended with a net loss due mostly to the aforementioned incidents in the first half of 2017.

Recent Developments

First NatGas Power Corp.(FNPC) submitted a competitive offer for the full capacity of San Gabriel to Meralco, which was accepted and awarded to FNPC in March 2018. This contract has undergone a competitive selection process (CSP), which validates the competitiveness of gas-fired electricity compared to other options, including coal, even at baseload dispatch levels. As of this writing, the Power Supply Agreement is being evaluated by the ERC for approval and finalization.

Future Developments

For Avion, PMPC is working on providing ancillary services to the grid. Avion passed the NGCP testing for regulating, dispatchable and contingency reserve services last February 2018, verifying its fast-start capability and enabling it to enter into potential agreements for these services, moving forward.

First Gen remains steadfast in its goal of advancing the natural gas industry in the Philippines. The company has been making progress in its development of an LNG import and regasification terminal in the First Gen Clean Energy Complex in Batangas as an LNG terminal in the country is critical in ensuring uninterrupted supply of natural gas with the expected depletion of the Malampaya gas field starting in 2024. The Company has completed the initial phase of planned site development of the LNG terminal and has progressed to the next phase of the tender process for the selection of the Engineering, Procurement, and Construction (EPC) contractor of the LNG terminal. This falls in neatly with the Department of Energy’s (DOE) Natural Gas Roadmap (2017-2040), with plans of making natural gas “the preferred fuel by all end-use sectors” by 2040.

15 MINUTES - the amount of time needed by our Avion plant to start up and supply its full capacity to the grid.

SECURE AND STABLE POWER: Gas Plants’ Flexibility Will Address Energy Variability

As solar and wind power become cheaper and installations increase, the grid will increasingly need more flexible sources of generation, such as natural gas—a platform that First Gen has invested in and championed for the past 20 years. The flexibility of natural gas-fired plants enables them to adjust to volatilities and intermittencies as the world transitions to a full renewable energy future. This is in contrast to other power plant technologies like coal-fired plants, which are not designed to address unplanned outages.

In September and November 2016, the Avion peaking plant and the San Gabriel flex plant started commercial operations, respectively. First Gen takes pride in the fast ramp-up times of its San Gabriel and Avion gas plants, to take advantage of sudden surges in power demand. Avion, in particular, can reach full load in just 15 minutes, while San Gabriel can be turned on and off daily to meet the demand when it is needed the most.