TRIS Rating assigns BCPG at A- with a stable outlook from a reliable revenue stream and well-diversified portfolio
BCPG, a leading renewable energy company in Asia-Pacific, was assigned an A- company rating by TRIS Rating, reflecting stable revenue reliability from the Company’s power-generating assets and well-diversified power portfolio.
According to Bundit Sapianchai, BCPG president, the Company is currently investing in more than 30 power projects with a range of energy sources; solar power, wind power, geothermal power, and hydropower in five countries; Thailand, Japan, the Philippines, Indonesia, and Laos. The diversification strategy helps avert reliance on the performance of only one or a few projects, as well as mitigating risks related to the invested countries and reliability of energy sources.
The rating resulted from a reliable revenue stream from multi-year power purchase agreements (PPAs) with state-owned power utilities or regional utilities. The solar power plants represent 70-80% of BCPG’s revenue with a predictable output due to less varied energy sources, relatively low operation risks, and high operating performance. Other power projects, such as wind and hydropower plants, have managed operational risks through the operation and maintenance agreements with suppliers or experienced contractors. As for the geothermal power plants, the operator of the projects has a proven track record of maintaining its capacity factor of above 90% since the Company’s investment in 2017.
The assigned rating also reflected BCPG’s readiness to the impact of adder expiry in 2025. The Company has acquired two hydropower plants in Laos, with a total production capacity of 114 MW. Moreover, the Company is currently constructing several solar farms in Japan with a contracted capacity of about 75 MW, of which 65 MW is expected to commence operation by 2021. The rest 10 MW is targeted to start the process in 2023. The expanded capacities in Japan and Laos are expected to bring in THB1.6-THB1.9 billion in EBITDA per year.
Besides, BCPG is committed to several project developments in the years ahead. To reduce the risk of delayed payments from Electricite du Laos (EDL), the Company has entered into Power Purchase Agreement with Vietnam Electricity (EVN) to sell electricity generated from hydropower plants in Laos, Nam San 3A, and Nam San 3B, to Vietnam. The Company will co-invest with its partner to construct a 230-kV transmission line from the project sites to connect with EVN’s grid such that the hydropower plants will start selling electricity to EVN in 2022. The Company also plans to develop the first-ever wind farm in Laos, with a total production capacity of 600 MW, to sell electricity to EVN under a cross-border power trading arrangement between Laos and Vietnam. BCPG’s 45% stake in such a project will add about 230 MW to the Company’s power portfolio. The project is anticipated to start construction in 2022 and commence operation by the end of 2023.
“TRIS Rating expects that we will acquire more operating projects worth about THB 20 billion in 2021. Such sizable acquisition will accelerate BCPG’s growth strategy as the targeted projects will promptly generate cash flows”, said Bundit.
The A- company rating also represents BCPG as a core subsidiary of Bangchak Corporation Public Company Limited (BCP), led by its strategically important role and meaningful earnings contribution. BCPG is the power business arm of BCP, supporting the Group’s strategies in strengthening its non-oil business as an eco-friendly conglomerate. The Company currently contributes about 30%-40% of the Group’s earnings before interest, taxes, depreciation, and amortization (EBITDA). With its stable cash flow, the Company considerably helps offset the high volatility in BCP’s refining business.