Temasek’s decarbonisation-focused investment arm, GenZero, is collaborating with Philippines based Ayala Corp.’s renewable energy business, ACEN, and Singapore-based Keppel to develop an economic model to expedite the transition of coal-fired power plants to clean energy.
The three companies have signed a Memorandum of Understanding (MOU) to jointly explore the origination and use of Transition Credits (TCs) to facilitate the early retirement of the South Luzon Thermal Energy Corporation (SLTEC) coal-fired power plant (CFPP) in Batangas, Philippines, and replace it with a clean energy dispatch facility. Upon completion, this project is expected to become one of the first coal-fired power plants globally to generate TCs, showcasing the partners’ shared commitment to advancing the transition to clean energy in Southeast Asia in a responsible and equitable manner.
CFPPs are the largest single source of carbon emissions worldwide, and Southeast Asia hosts the fourth-largest CFPP fleet globally, with an average age of less than 15 years. The early retirement of plants like SLTEC is a crucial step for the region to achieve the goals of the Paris Agreement and meet global net-zero targets by 2050.
As part of the MOU, the parties will conduct a development study to explore the use of TCs in facilitating the project’s implementation and meeting the early retirement objective. The origination and sale of TCs are expected to help accelerate the decommissioning of the 246 MW SLTEC CFPP by 10 years, aiming for retirement by 2030, while supporting just transition initiatives.
The project will also investigate the creation of end-to-end technological solutions and an economic model for the coal-to-clean energy transition, focusing on replacing the 246 MW baseload of the SLTEC CFPP with a mid-merit Integrated Renewables and Energy Storage System (IRESS) that combines a solar power plant and battery storage.
This project will be conducted 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).
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”
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, “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.”
