ACEN, GenZero and Keppel join hands to catalyse retirement of coal-fired plants in Southeast Asia

The three companies have signed a Memorandum of Understanding (MOU) to jointly explore the origination and utilization of Transition Credits (TCs) to accelerate the retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, Philippines.

The closure of the CFPP is planned to be replaced with a clean energy dispatch facility. When completed, the project is expected to be one of the first converted CFPPs in the world to generate TCs. This would  pioneer the shared commitment of the partners to accelerate an 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.

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.

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

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.