ACEN Corp., Keppel Corp., and GenZero have signed a Memorandum of Understanding (MOU) to explore the use of Transition Credits (TCs) in accelerating the early retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, Philippines.
The project aims to replace the 246 MW coal facility with a clean energy dispatch center, marking a significant step in Southeast Asia’s energy transition.
The MOU outlines plans for a development study that will assess the viability of using TCs to fast-track the decommissioning of SLTEC by a decade, targeting a closure by 2030.
This initiative positions SLTEC as one of the world’s first coal plants to generate TCs, a move that underscores the partners’ commitment to facilitating a just and orderly transition to renewable energy in the region.
CFPPs remain the largest source of carbon emissions globally, and Southeast Asia is home to the world’s fourth-largest fleet of these plants, many of which are relatively young, with an average age of under 15 years.
The early retirement of facilities like SLTEC is crucial for the region to meet the goals of the Paris Agreement and achieve global net-zero targets by 2050.
“This collaboration provides an opportunity to harness both technological and financial solutions to accelerate the shift towards low-carbon and renewable energy sources in Southeast Asia,” said Cindy Lim, CEO of Keppel’s Infrastructure Division. She highlighted that the project could serve as a model for retiring other coal-fired plants across the region.
Frederick Teo, CEO of GenZero, emphasized the importance of cross-border collaboration in achieving a just energy transition. “Transition credits can help mobilize catalytic financing for coal-to-clean energy initiatives. We are excited to partner with ACEN and Keppel to pilot a scalable model that can drive decarbonization efforts globally,” Teo said.
The partnership also includes exploring the development of an Integrated Renewables and Energy Storage System (IRESS) to replace the coal plant’s baseload with a combination of solar power and battery storage.
The project will take into account environmental, social, and governance (ESG) factors, including worker retraining, community impact mitigation, and asset repurposing.
The initiative is being undertaken in collaboration with the Rockefeller Foundation’s Coal to Clean Credit Initiative (CCCI) and the Monetary Authority of Singapore’s Transition Credits Coalition (TRACTION).
The project could also be part of Article 6 of the Paris Agreement, allowing countries to transfer carbon credits to meet climate targets. The Singapore government has indicated its willingness to offtake TCs, provided they meet stringent environmental standards.
ACEN Chairman and Ayala Corp. CEO Cezar Consing expressed optimism about the partnership, stating, “Partnership is an integral part of Ayala’s strategy and culture. We look forward to this collaboration among regional champions in energy transition.”
Eric Francia, President and CEO of ACEN, noted that the initiative could unlock further opportunities in the Philippines and potentially scale across the region and globally.
The collaboration is not expected to have a material impact on Keppel’s earnings per share or net tangible assets per share for the current financial year.
Business News Asia
