ACEN, GenZero, and Keppel Collaborate to Accelerate Coal Plant Retirement in Southeast Asia

ACEN, GenZero, and Keppel Ltd. (Keppel) have officially signed a Memorandum of Understanding (MOU) to jointly explore the development and utilization of Transition Credits (TCs) aimed at accelerating the retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, Philippines. The project aims to replace the coal-fired facility with a clean energy dispatch facility, positioning it as one of the first coal plants in the world to generate TCs upon completion. This groundbreaking initiative underscores the partners’ collective commitment to facilitating a just and orderly transition to clean energy across Southeast Asia.

Coal-fired power plants (CFPPs) are the single largest source of carbon emissions globally, and Southeast Asia houses the world’s fourth-largest CFPP fleet, with an average age of under 15 years. Early retirement of these plants, including SLTEC, is considered a crucial step for the region to meet the Paris Agreement goals and achieve global net-zero targets by 2050.

The MOU signing was witnessed by prominent figures including Ms. Grace Fu, Singapore’s Minister for Sustainability and the Environment, and Ms. Maria Antonia Yulo Loyzaga, Secretary of the Department of Environment and Natural Resources of the Philippines. The agreement was signed 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. Also present were key leaders such as Mr. Jaime Augusto Zobel de Ayala, Chairman of Ayala Corporation, Mr. Fernando Zobel de Ayala, Board Director of Ayala Corporation, and Mr. Jaime Alfonso Zobel de Ayala, Board Director of ACEN.

As part of the MOU, the partners will conduct a development study to explore the use of TCs to fast-track the decommissioning of the 246 MW SLTEC CFPP in Calaca, Batangas, potentially by 10 years to 2030, while supporting just transition initiatives.

Ms. Cindy Lim emphasized the importance of this collaboration, stating, “Keppel is delighted to work with ACEN and GenZero in pioneering the use of high-quality transition credits to accelerate the clean energy transition, particularly in the challenging power generation sector. This project is a pathfinder that could set a precedent for retiring more coal plants and replacing them with cleaner energy facilities in Southeast Asia.”

Mr. Frederick Teo added, “Cross-border collaboration is crucial for achieving a just energy transition in Southeast Asia and meeting our decarbonization goals. Transition credits can catalyze financing for coal-to-clean energy initiatives, and we are excited to partner with ACEN and Keppel to develop a scalable model that can expedite decarbonization efforts globally.”

Mr. Cezar Consing highlighted the importance of partnerships, stating, “Ayala’s strategy and culture are deeply rooted in collaboration. We look forward to this potential partnership with regional energy transition leaders.”

Mr. Eric Francia expressed appreciation for the collaboration, stating, “We value the strong support from Keppel and GenZero for this pioneering initiative. The Philippines is leading energy transition efforts, and this collaboration could unlock further opportunities both domestically and globally.”

The project will also explore the development of an Integrated Renewables and Energy Storage System (IRESS) to replace the 246 MW baseload of the CFPP, incorporating a solar plant and battery storage. Additionally, the partners will prioritize environmental, social, and governance (ESG) considerations, including worker training, community engagement, and minimizing environmental impact during the decommissioning process.

This initiative 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). The project could also align with Article 6 of the Paris Agreement, allowing the transfer of carbon credits to help countries meet their climate targets. The Singapore Government has indicated its willingness to offtake TCs, provided they meet the country’s high standards for environmental integrity.

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.