ACEN Carries Out World’s First ETM Transaction While Retiring Philippines Coal Plant

ACEN, the energy platform of the Ayala Group, has disclosed the full divestment of the South Luzon Thermal Energy Corporation (SLTEC) coal plant using the energy transition mechanism (ETM), the first ETM deal in the world.

The official statement by ACEN informs that the landmark transaction will enable the early retirement of the 246-MW coal plant in Batangas, the Philippines. As part of the ETM structure, the coal plant’s operating life of up to 50 years will be cut in half, as ACEN commits to retire and transition the plant to a cleaner technology by 2040.

The move is expected to avoid or reduce up to 50 million metric tons of carbon emissions.

Novel Energy Transition Mechanism

The ETM is a concept developed by the Asian Development Bank (ADB), which aims to leverage low-cost and long-term funding geared towards early coal retirement and the reinvestment of proceeds to enable renewable energy projects.

Ahmed Saeed, ADB vice president said, “We commend the Ayala Group and ACEN for the successful closing of this pioneering ETM transaction. We hope that this sets the tone for others to pursue the just transition of thermal plants to cleaner technologies.”

ACEN said that the ETM for the SLTEC coal plant involved ₱13.7 billion (value in Philippine Peso) in debt financing provided by the Bank of the Philippine Islands and Rizal Commercial Banking Corporation, as well as ₱3.7 billion in equity investments from the GSIS, InLife, and ETM Philippines Holdings for a total deal value of ₱17.4 billion. ACEN received ₱7.2 billion from the transaction for reinvestment in the company’s renewable energy projects. The balance of proceeds was used for refinancing debt and transaction fees.

ACEN also said that through this transaction, the company moves closer toward its commitment to 100% renewables generation by 2025.

Eric Francia, ACEN President and CEO said, “ACEN continues to blaze the trail for energy transition in the Asia Pacific. As the company has successfully divested its coal asset, ACEN commits to a just energy transition. We have established mechanisms to ensure that stakeholder interests, especially those of the people and communities of SLTEC, are effectively addressed.”

Today, ACEN has about 4,000 MW of attributable energy capacity in the Philippines, Vietnam, Indonesia, India, and Australia and the share of renewable is 87% which it claims to be among the highest in the region. It also aspires to be the largest listed renewables platform in Southeast Asia, with a goal of reaching 20 GW in renewables capacity by 2030.