MGEN Renewables targets 2026 profit with PHP 4.98B asset swap

MANILA, Philippines — MGEN Renewables Inc., the listed renewable energy arm of Meralco PowerGen Corp. (MGEN), expects to return to profitability in 2026 as its massive MTerra Solar project begins generating earnings, alongside plans to expand its portfolio through a PHP 4.98-billion share swap.

The company, formerly SP New Energy Corp. (SPNEC), is consolidating renewable energy assets and securing additional funding for its solar and battery storage operations as it positions itself for a possible new public offering.

The expansion could strengthen private investment in the country’s renewable energy sector while supporting efforts to increase electricity supply and improve grid reliability.

For electricity consumers, the significance lies in the additional power and battery storage capacity that projects such as MTerra Solar can provide, particularly as the Philippines faces growing electricity demand and the challenge of integrating more renewable energy into the grid.

However, the benefits to consumers will depend on how efficiently these facilities operate, the cost of electricity they produce, and the capacity of transmission infrastructure to deliver power to customers.

In a disclosure to the Philippine Stock Exchange (PSE) on Oct. 28, MGEN Renewables said its board approved a proposed transaction involving the issuance of approximately 3.1125 billion new common shares to MGEN Renewable Energy Inc. in exchange for ownership stakes in five energy companies.

The companies are Greenergy for Global Inc., Greentech Solar Energy Inc., CACI Power Corp., Nuevo Solar Energy Corp., and PowerSource First Bulacan Solar Inc.

The transaction, approved by the board on Oct. 27 following endorsement by its Risk Oversight and Related Party Transactions Committee, values the assets at PHP 4.98 billion.

MGEN Renewables’ shares were valued at PHP 1.60 each for the proposed exchange, representing a 30.08% premium over their PHP 1.23 closing price on Oct. 23.

The company said an independent valuation specialist found the proposed asset and share valuations within acceptable valuation ranges.

Unlike a cash acquisition, the share swap would allow MGEN Renewables to acquire the five companies’ assets by issuing additional shares to the transferring shareholder.

The arrangement would consolidate more renewable energy investments within the listed company while potentially expanding its earnings base through additional operating assets.

MGEN Renewables said the consolidation would reinforce its position as MGEN’s principal publicly listed renewable energy investment platform.

The company also expects the enlarged portfolio to make it more attractive to institutional investors as it considers future fundraising activities, including a possible re-initial public offering (IPO).

A potential new share offering could provide additional capital for renewable energy development, although issuing more shares may also dilute the percentage ownership of existing shareholders.

The proposed share swap remains subject to completion and applicable requirements.

Separately, the company’s board authorized its wholly owned subsidiary, Terra Nueva Inc., to subscribe to additional shares in Terra Solar Philippines Inc. (TSPI), the majority-owned company behind the MTerra Solar project.

The proposed equity subscription could reach PHP 7.815 billion and would cover common shares priced at PHP 50 each and Class A preferred shares at PHP 75 each.

The investment remains subject to the consent of Terra Solar’s lenders and Actis, the company’s investment partner in the project.

Pending those approvals, MGEN Renewables may directly subscribe to additional Terra Solar shares and inject up to PHP 1.8825 billion into the company if necessary.

The board also approved waiving MGEN Renewables’ pre-emptive rights in connection with Terra Nueva’s proposed subscription.

These financing arrangements are intended to support the continued development and operations of MTerra Solar, one of the country’s largest integrated solar and battery energy storage developments.

Located in Central Luzon, the project combines large-scale solar generation with battery storage technology designed to make renewable electricity available beyond periods of peak sunlight.

Battery storage systems can store excess solar power during the day and release electricity when needed, helping address the intermittent nature of renewable energy generation.

This capability is particularly important for improving the reliability of solar power and providing additional flexibility to the electricity grid.

MTerra Solar’s growing contribution to electricity supply has also begun translating into improved financial performance for its developers.

According to the company’s disclosure, the project began delivering commissioning power in March before starting commercial operations for its first phase in August.

By the end of September, MTerra Solar had sold 623 gigawatt-hours (GWh) of electricity generated through its combined solar photovoltaic and battery energy storage facilities.

The company reported 1,701 megawatts of alternating current (MWac) of installed solar capacity for Phase 1 and another 101 MWac for Phase 2 as of September.

The development also had 825 MW of installed battery energy storage capacity, equivalent to 3,300 megawatt-hours (MWh).

However, electricity exports to the Luzon grid remain limited to 950 MW while transmission-related works are being completed.

MGEN Renewables said the existing export capacity is sufficient to meet Manila Electric Co.’s Phase 1 requirement of 600 MW from 8 a.m. to 9 p.m.

The project’s battery storage facilities are also supplying electricity through the Wholesale Electricity Spot Market when grid conditions and market prices make dispatch commercially viable.

The arrangement creates additional revenue opportunities beyond contracted electricity sales while allowing stored power to help address fluctuations in electricity supply.

Despite the transmission constraint, MTerra Solar’s early operations have provided a substantial boost to the company’s financial position.

Terra Solar recorded PHP 1.1 billion in core net income during the first nine months of 2026.

The company expects another PHP 500 million in earnings during the fourth quarter, bringing its projected full-year net income to PHP 1.6 billion.

The improved performance helped MGEN Renewables reduce its net loss by 96% year on year to PHP 24 million during the January-to-September period.

For the fourth quarter, MGEN Renewables expects approximately PHP 800 million in net income.

This would bring its projected full-year earnings to PHP 774 million in 2026, reversing the PHP 4.1-billion net loss recorded in 2025.

The anticipated turnaround reflects the transition of MTerra Solar from a development-stage investment into an operating power facility capable of generating electricity sales and earnings.