ACEN, GenZero & Keppel Set To Retire Coal Plants In S.Asia

ACEN, GenZero and Keppel Ltd. (Keppel) have signed a Memorandum of Understanding (MOU) to jointly explore the origination and utilisation of Transition Credits (TCs) to accelerate the retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, the Philippines, and replace it with a clean energy despatch facility. When completed, this project is expected to be one of the first converted CFPPs in the world to generate TCs. This pioneering initiative reflects the shared commitment of the partners to accelerate the orderly and just transition to clean energy in Southeast Asia.

CFPPs are the single largest source of carbon emissions globally. Southeast Asia is home to the fourth largest CFPP fleet in the world, which is also among the youngest with an average age of less than 15 years. The early retirement of CFPPs, such as SLTEC, is therefore a critical step for the region towards achieving the Paris Agreement goals and global net zero targets by 2050.

Guests of Honour, Grace Fu, Minister for Sustainability and the Environment of Singapore and Maria Antonia Yulo-Loyzaga, Secretary for the Department of Environment and Natural Resources of the Philippines, witnessed the signing of the MOU by Cindy Lim, CEO of Keppel’s Infrastructure Division, Frederick Teo, CEO of GenZero, Cezar Consing, Chairman of ACEN, and Eric Francia, President and CEO of ACEN. Other leaders who were present at the signing ceremony include Jaime Augusto Zobel de Ayala, Chairman of Ayala Corporation and Board Director of Temasek, Fernando Zobel de Ayala, Board Director of Ayala Corporation, and Jaime Alfonso Zobel de Ayala, Board Director of ACEN.

Under the MOU, the parties will jointly undertake a development study to explore utilising TCs to facilitate the project’s implementation and achievement of the early retirement goal. The origination and sale of TCs will help to accelerate the decommissioning of the 246 MW SLTEC CFPP located in Calaca, Batangas by 10 years (i.e. 2030), and also support just transition initiatives.

Cindy Lim, CEO of Keppel’s Infrastructure Division, said, “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. 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 partnership provides us the opportunity harness both technological and financing solutions to accelerate the shift towards low-carbon and renewable energy sources in the Southeast Asia region.”

Frederick Teo, CEO of GenZero, said, “Cross-border collaboration is critical to achieve a just energy transition in Southeast Asia and help our economies achieve our decarbonisation objectives. 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 bring complementary expertise from the Philippines and Singapore to pilot a scalable model that can accelerate such decarbonisation efforts globally.”

Cezar Consing, Ayala Corporation CEO and ACEN Chairman, said, “Partnership is an integral part of Ayala’s strategy and culture. We look forward to this potential partnership among regional champions in energy transition.”

Eric Francia, President & CEO of ACEN, said, “We appreciate the strong support of Keppel and GenZero for this pioneering initiative. The Philippines is at the forefront of energy transition initiatives, and this collaboration potentially unlocks further opportunities in the country. We also believe that this model can scale across the region, and even globally.”

The project will also explore the development of end-to-end technological solutions and economic model of the coal-to-clean transition focused on the replacement of the 246 MW baseload of the CFPP with a mid-merit Integrated Renewables and Energy Storage System (IRESS) consisting of solar plant and battery storage.

In retiring the SLTEC CFPP, the partners will also take into account environmental, social and governance considerations and best practices. This includes the training of workers and communities, asset repurposing, and the decommissioning of the plant in a manner that minimises the impact on communities and the local environment.

The project will be carried out in collaboration with the Rockefeller Foundation’s Coal to Clean Credit Initiative (CCCI) and the Monetary Authority of Singapore’s (MAS) Transition Credits Coalition (TRACTION), this project could also come under Article 6 of the Paris Agreement collaboration between the Philippines and Singapore. Under Article 6, countries are able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate target. The Singapore Government has further conveyed at COP28 that it is prepared to offtake TCs provided they meet Singapore’s standards for high environmental integrity.

The abovementioned collaboration is not expected to have any material impact on the earnings per share and net tangible assets per share of Keppel for the Company’s current financial year.