Pioneering Energy Transition to Replace Coal with Clean Energy Systems in Southeast Asia
This is a flagship effort that will accelerate coal retirement to clean energy transition in Southeast Asia further, as ACEN, GenZero, and Keppel Ltd. ink a memorandum of understanding to advance the early retirement of SLTEC’s CFPP in Batangas, Philippines. The strategic collaboration will replace the 246 MW CFPP with a clean energy system by 2030, powered by innovative financial mechanisms for the transition.
Innovative Financing with Transition Credits
Of the different elements of this initiative, perhaps most important will be to investigate and likely utilize Transition Credits as a means of funding early retirement and transition of the coal-fired facility into a renewable energy generation facility. Transition Credits are a new financial instrument to help catalyze energy transitions by creating credits linked to the avoidance of CO2 from retired coal plants. These credits can then be sold or used to leverage further investment, thus creating a financial incentive to retire coal assets early.
Keppel is pleased to partner with ACEN and GenZero on the innovative use of high-quality transition credits as an accelerator for the clean energy transition,” said Cindy Lim, CEO of Keppel’s Infrastructure Division. “It will serve as a pathfinder for future retirements of coal-fired power plants replaced with cleaner energy facilities.
This is in line with international climate goals, including the Paris Agreement, which endeavors to limit global temperature rise to well below 2 degrees Celsius. Part of the challenge that Southeast Asia-a region with one of the youngest coal power fleets in the world, at less than 15 years old per plant face is how to retire relatively new assets off coal while meeting rising energy demand.
Shifting Away from Coal towards Clean Energy
The coalition of ACEN, GenZero, and Keppel will not just provide financial solutions for coal plant retirements but also work out holistic technological and economic models that will underpin coal-to-clean energy transitions. The project will replace the baseload power being supplied today by the SLTEC coal plant with a mid-merit IRESS-a combination of solar power with battery energy storage. It aims to make sure there is grid stability with much reliability while profoundly decreasing carbon emissions in the atmosphere.
“Transition credits can help crowd in catalytic financing for such coal-to-clean energy initiatives,” said Frederick Teo, CEO of GenZero. “We are happy to cooperate with ACEN and Keppel in bringing complementary competencies from the Philippines and Singapore to pilot a scalable model that can accelerate such decarbonization efforts around the world.
The bigger scope of the project also encompasses all ESG considerations that will guarantee a well-ordered transition and one that will be just for all parties concerned. This also involves retraining workers that have been affected by the closure of the plant, asset repurposing, and mitigation of environmental impact in the process of decommissioning.
Setting a Regional and Global Precedent
In this regard, the early retirement of the SLTEC coal plant will likely set a precedent for similar projects across Southeast Asia, a feasible pathway the other countries and regions could follow. Already, the Philippines has emerged as a leader in energy transition initiatives, and this project opens up further opportunities to unlock investments in clean energy technologies both domestically and globally.
“We are thankful for the great support of Keppel and GenZero towards this game-changing project,” said ACEN President & CEO Eric Francia. “The Philippines is already in front in all these initiatives on energy transition, but this partnership might even further open more prospects in our home country. We also look forward to this model being replicable across the region or even worldwide.”.
International frameworks include the Coal to Clean Credit Initiative of the Rockefeller Foundation and the Transition Credits Coalition of the Monetary Authority of Singapore, among others. The project will also be able to tap into provisions under Article 6 of the Paris Agreement that enable the transfer of carbon credits derived from reduced GHG emissions between countries to help achieve their respective climate targets.
Outlook and Impact on the Future
The deal, while reaping minimal immediate financial impact for Keppel, represents very high strategic value and long-term implication for the partners. It therefore represents one of those few forward-looking strategies toward a sustainable energy future in Southeast Asia and hence an example to be replicated globally. By retiring the SLTEC coal plant ahead of schedule and replacing it with a cleaner renewable energy system, companies ACEN, GenZero, and Keppel take crucial steps towards carbon emission reduction and supporting a just energy transition.
As the whole world works toward their climate promises, initiatives such as this make it very clear that to achieve sustainable energy goals, innovative financing, collaborative partnership, and technological advancement go a long way. The partnership by ACEN-GenZero-Keppel will not only change the energy paradigm in the Philippines but also raise the bar for coal-to-clean transitions worldwide, showing that when the approach is right, the movement from fossil fuels to renewables is achievable and necessary.