First Gen Integrated Report 2023 - First Gen Business Model

First Gen Business Model

First Gen invests in our various forms of capital, develops conscious leadership, cultivates our capabilities, and innovates on our systems to support our power plant projects, operations, and customers. Aligned with the value creation process of FPH, these initiatives sustain our Mission of “to forge collaborative pathways to a decarbonized and regenerative future.”

By fostering collaboration and trust, we aim to influence our various stakeholders in our Mission through:
a) generating low-carbon and renewable power;
b) providing decarbonized and regenerative energy solutions to our customers; and
c) enhancing the ecosystem of talent and partners in our value chain.

First Gen is in the power generation sector with a portfolio that is focused on clean and renewable energy. The Company markets its power to various customers, including Distribution Utilities, Cooperatives, and Retail or Contestable Customers. Throughout this process, the electricity generated by the Company traverses other sections of the power industry, including the transmission and distribution sectors, which ultimately deliver power to our end users.

Power Generation

First Gen produces low-carbon and renewable power for our customers using five different sources:

Natural Gas Power

First Gen’s gas power plants use natural gas sourced from the Malampaya gas field, imported LNG and liquid fuel. The gas from Malampaya is delivered via an undersea pipeline to the First Gen Clean Energy Complex in Batangas. The imported LNG, on the other hand, is delivered via the LNG terminal. In our power plants, natural gas is combusted to spin turbines that generate electricity.

Using natural gas, which is much cleaner than other fossil fuels, our gas fleet is able to provide low-carbon, reliable, and competitive power to the grid. Moreover, power from natural gas helps provide energy security, supporting other power sources that may be intermittent depending on natural conditions.

Geothermal Power

The Company’s geothermal power plants generate energy using the earth’s natural heat. When water seeps three kilometers below the ground and is heated in the hot reservoir, it rises back up as steam to power the turbines to produce electricity. After the heat extraction process, the condensed water is reinjected into its source to replenish the geothermal reservoir. Geothermal power is both a renewable and predictably priced source of energy.

Hydroelectric Power

Hydroelectric power generation follows the hydrological cycle. Reservoirs store potential energy gathered during the rainy season. First Gen’s hydro plants harness this stored energy through their intake towers and convert it to kinetic energy through the force of flowing water. This kinetic energy spins the plant’s turbines, which generates electricity. After this process, the water flows back to its source. Hydro is a renewable energy source that provides various types of power services to the grid, including reserve and ancillary services.

Wind Power

The Company’s large wind turbines are used to create renewable energy from wind. The natural wind would cause the wind turbine’s blades to spin, which are connected to a generator to harness energy. The mechanical and kinetic energy are therefore transformed into stored electricity. Wind is a renewable energy source with zero emissions associated with its power generation.

Solar Power

Solar energy is produced when photovoltaic cells in solar panels absorb sunlight particles called photons. Photons energize the electrons in the silicon, which go through copper wirings in the solar panels. The solar panels then generate direct current (DC) power which passes through an inverter to convert electricity into usable alternating current (AC) power. Solar power is a renewable and zero- carbon energy source that can be deployed on large-scale installations as well as small-scale systems to power specific facilities.

A detailed description of our power plants can be accessed in the First Gen website’s “Our business” section.

Transmission

The NGCP manages the electricity flow from generation companies to distribution utilities through the state- owned power grid. The NGCP also ensures the energy supply of the power grid always meets the energy demand and system frequency by managing the reserves.

First Gen supplies energy to the NGCP by entering into ASPA that permit energy provision to the NGCP’s reserves. These reserves adjust the energy supply in the power grid and manage the system’s frequency to match the energy demand and maintain grid health.

Distribution

Distribution utilities manage the physical energy flow from Transmission to the end consumers, including Contestable Customers (large end-users with at least 500kW monthly average electricity consumption at peak demand) and the Captive Market customers (customers with a monthly average electricity consumption below 500kW at peak demand, such as residential energy users).

First Gen enters provides power to both the Contestable and Captive Markets. Through First Gen Energy Solutions (FGES), First Gen is able to enter into agreements with Contestable Customers to manage the supply of power, although the physical flow of electricity will still pass through Transmission and Distribution. First Gen also supplies the Captive Market through Power Supply Agreements with Distribution Utilities and Electric Cooperatives, who then subsequently deliver the power supply to Captive Customers. As the power market progresses, the threshold for Contestable Customers will lower, making it a larger market.