First Gen Corporation has finalized a landmark deal to enter the pumped storage hydroelectric sector, signing definitive agreements on March 6, 2026 that will give its subsidiary a 33% equity stake in Prime Hydropower Energy, Inc. (PHEI) — the holding company behind two of the Philippines’ most ambitious renewable energy projects.

The transaction, disclosed to the Securities and Exchange Commission on Monday, marks a significant pivot for First Gen as it deepens its bet on large-scale energy storage and hydroelectric power to complement its existing portfolio of natural gas and geothermal assets.

The final terms represent a scaled-back position from what was originally envisioned. When First Gen and Prime Infra announced their binding heads-of-terms agreement on February 13, 2026, the plan called for First Gen to acquire a 40% equity interest in Prime Infra’s pumped storage portfolio. 

Under the Agreement to Subscribe to and Purchase Shares executed by FGEN Aqua Power Holdings, Inc. — First Gen’s designated acquisition vehicle — the company will pay a total consideration of PHP 61.875 billion in exchange for its 33% share of PHEI. This is a revision from the 40% stake originally announced in a February 13 binding heads-of-terms agreement.

The two projects at the heart of the deal are the 1,400MW Pakil Pumped Storage Hydroelectric Power Project in Laguna, owned and developed by Ahunan Power, Inc., and the 600MW Wawa Pumped Storage Hydroelectric Power Project in Rizal, owned by Olympia Violago Water & Power, Inc. (OVWPI). Upon completion of PHEI’s corporate restructuring, the holding entity will own 100% of the Pakil project and 87% of the Wawa project through its subsidiaries. 

Together, the two projects represent 2,000 megawatts of potential storage capacity for the Philippine power system.

Pumped storage facilities work by storing energy and releasing it when electricity demand rises, functioning similarly to large batteries that help balance supply and demand on the grid.

Payment will be structured in tranches. An initial PHP 16.5 billion will be paid to the sellers upon signing, with a portion held in escrow pending the completion of PHEI’s SEC-supervised corporate restructuring. Two Standby Letters of Credit — worth PHP 9.9 billion and PHP 14.85 billion — will cover payments due in April 2027 and April 2029, respectively. The remaining PHP 20.625 billion will be released in portions as determined by PHEI’s board of directors based on project needs.

In a parallel agreement also signed March 6, the parties — including Prime Infra, PII, First Gen, FGEN Aqua, and PHEI — executed a Shareholders’ Agreement to govern the management of PHEI once the restructuring is complete.

Pending the completion of PHEI’s restructuring, Prime Infrastructure Inc. will issue irrevocable proxies representing 33% of its shares in PHEI to FGEN Aqua. PHEI will also grant proxies covering 33% of its shares in Ahunan Power and PMJVCo to the First Gen subsidiary. 

Pumped storage hydroelectric technology — which stores energy by pumping water uphill and releasing it to generate power on demand — is considered a critical enabler of grid reliability as intermittent solar and wind capacity expands. The Philippine government has identified pumped storage as a priority technology under its renewable energy roadmap.

How important will large-scale energy storage projects be in helping stabilize the Philippines’ power grid in the years ahead?

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