First Gen Corporation is calling on regulators to reform energy market mechanisms that executives say are discouraging investment in power generation—especially during times of high demand—just as the company accelerates capital expenditures across its renewable energy portfolio.
Speaking during a stakeholder engagement, Francis Giles B. Puno, President, and Chief Operating Officer of First Gen, emphasized that regulatory market interventions, such as price caps during peak demand periods, are distorting incentives and affecting financial predictability for generation firms.
“When San Gabriel expired in February last year, we were bidding in the spot market. The prices were good—except that, during a time of crisis, market intervention on pricing occurred,” said Puno. “So just when you’re supposed to generate revenue, you’re not being dispatched. That’s been challenging.”
Puno warned that this situation threatens the feasibility of operating major facilities such as the 1,000-MW Santa Rita plant, which plays a key role in supporting grid stability. “Without those contracts, the economic feasibility of Santa Rita will be jeopardized,” he added.
He called on government regulators to ensure fairness and predictability in market rules. “If you want more investments, you have to make sure there’s predictability in how you can earn a return,” Puno said, warning that the current environment is disincentivizing the construction and financing of merchant power plants.
“Merchant financing becomes very problematic because even the market mechanisms are not rewarding you for the risk that you are taking.”
Despite regulatory headwinds, First Gen is also pushing forward with substantial capital expenditures amounting to USD600 million or PHP35 billion, particularly in geothermal, solar, and wind energy.
Jerome H. Cainglet, Senior Vice President, confirmed that the company drilled 24 geothermal wells in the previous year and is in the midst of a three-year, 40-well program, with 19 more wells targeted for 2025. The drilling campaign is essential to increasing baseload renewable output, especially as demand rises.
“We’re aware of what we need to deliver,” Puno said, making sure to note that drilling must translate into actual steam production to support the company’s clean power targets.
Solar and wind projects are also ramping up. This year, First Gen will begin construction of its first large-scale solar project, initially at 50 MW with potential expansion to 150 MW. Wind feasibility studies are ongoing in Burgos, Ilocos Norte, and other sites where the company holds concessions.
First Gen is also pursuing hydroelectric projects, including plans to integrate the Kasiknan watershed with the Pantabangan-Masiway complex to boost power generation, irrigation, and flood control capacity. These infrastructure investments are part of a broader vision to align clean energy growth with climate resilience and national development
“We’re hoping to work with the government in being able to optimize the benefit of further investing in expanded flood management and irrigation,” Puno said.
The company is also exploring new acquisitions, including bids for the CBK hydro asset and awaiting regulatory approval for other greenfield developments.
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