ACEN, GenZero, and Keppel partner to Retire Coal Plant in the Philippines, Pioneering Carbon Credit Use

MANILA, August 19, 2024 – In a significant step towards accelerating Southeast Asia’s energy transition, ACEN, GenZero, and Keppel Ltd. have signed a Memorandum of Understanding (MOU) to explore the early retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant in Batangas, Philippines, by 2030. The collaboration aims to replace the 246 MW coal plant with a clean energy facility, integrating a solar plant and battery storage system.

The partnership will focus on the innovative use of Transition Credits (TCs), which are intended to finance the decommissioning of the coal-fired power plant (CFPP) and its conversion into a mid-merit Integrated Renewables and Energy Storage System (IRESS). This project could become one of the first in the world to generate TCs, marking a significant milestone in the global push towards cleaner energy.

“Keppel is delighted to collaborate with ACEN and GenZero in exploring the novel use of high-quality transition credits as a catalyst for the clean energy transition, especially in the hard-to-abate power generation sector,” said Ms. Cindy Lim, CEO of Keppel’s Infrastructure Division. “This project will serve as a pathfinder and pave the way for more coal-fired power plants to be retired and replaced with cleaner energy facilities.”

The initiative comes at a crucial time, as Southeast Asia is home to the world’s fourth-largest fleet of coal-fired power plants, with an average age of less than 15 years. The early retirement of these plants is vital for the region to meet the Paris Agreement goals and global net-zero targets by 2050.

“Cross-border collaboration is critical to achieving a just energy transition in Southeast Asia and helping our economies meet our decarbonisation objectives,” said Mr. Frederick Teo, CEO of GenZero. “Transition credits can help crowd in catalytic financing for such coal-to-clean energy initiatives. We are excited to partner with ACEN and Keppel to pilot a scalable model that can accelerate such decarbonisation efforts globally.”

ACEN Chairman Mr. Cezar Consing echoed this sentiment, highlighting the importance of partnerships in driving energy transition efforts. “Partnership is an integral part of Ayala’s strategy and culture. We look forward to this potential partnership among regional champions in energy transition.”

The project will also incorporate environmental, social, and governance (ESG) considerations, including the training of workers and communities, asset repurposing, and decommissioning practices that minimise the impact on local communities and the environment.

The collaboration, which involves the Rockefeller Foundation’s Coal to Clean Credit Initiative (CCCI) and the Monetary Authority of Singapore’s (MAS) Transition Credits Coalition (TRACTION), may also be aligned with Article 6 of the Paris Agreement. This international framework allows countries to transfer carbon credits earned from greenhouse gas reductions to help other nations meet their climate targets.

While the partnership is not expected to have an immediate impact on Keppel’s earnings, it represents a forward-looking approach to addressing the urgent need for sustainable energy solutions in Southeast Asia.