AYALA-LED ACEN Corp. has completed divesting its stake in a 246-megawatts (MW) coal-fired power plant subsidiary South Luzon Thermal Energy Corp. (SLTEC) through a mechanism that funds the transition from coal to renewables.
In a disclosure on Monday, ACEN said the move will allow the early retirement of the coal plant in Batangas, bringing the company closer to its target of 100% renewable energy generation by 2025 and its transition to cleaner technology by 2040.
“ACEN continues to blaze the trail for energy transition in the Asia-Pacific. As the company has successfully divested its coal asset, ACEN commits to a just energy transition. We have established mechanisms to ensure that stakeholder interests, especially those of the people and communities of SLTEC, are effectively addressed,” said Eric T. Francia, president and chief executive officer of ACEN.
The coal retirement was made through the energy transition mechanism (ETM), which was developed by the Asian Development Bank to “leverage low-cost and long-term funding geared towards early coal retirement and reinvestment of proceeds to enable renewable energy.”
ACEN’s divestment from SLTEC is said to be the world’s first ETM deal. Through the mechanism, the coal plant’s operating life of up to 50 years will be cut in half, which will help to reduce about 50 million metric tons of carbon emissions, the company said.
The energy company said it received P7.2 billion from the transaction for reinvestment in renewable energy projects, which it used for refinancing debt and transaction fees.
The ETM for the SLTEC plant involved P13.7 billion in debt financing provided by the Bank of the Philippines Islands and Rizal Commercial Banking Corp., and P3.7 billion in equity investments from the Philippines’ Government Service Insurance System (GSIS), The Insular Life Assurance Co., Ltd. (InLife), and ETM Philippines Holdings, Inc., for a total deal value of P17.4 billion. GSIS also invested P2.2 billion in redeemable preferred shares by SLTEC.
“Our priority is to find ways to grow and sustain our funds to ensure that we are able to provide our over two million members and pensioners their benefits. We also fully support investments that prioritize optimal environmental, social, and governance (ESG) factors or outcomes consistent with our corporate social responsibility,” said Jose Arnulfo A. Veloso, president and general manager of GSIS, in a media release.
In a separate disclosure, ACEN said its subsidiary in Australia has started construction works on its 400-MW Stubbo solar project.
Anton Rohner, chief executive officer of ACEN Australia, said the project is the company’s second 400 MW or 520-MW-direct current solar farm after the construction of its New England project, which is currently being commissioned.
The Stubbo solar project will connect to the existing 330-kilovolt (kV) network between Wollar and Wellington.
The solar farm is expected to produce enough clean energy to power more than 185,000 households. Its development includes the approval for a 200-MW-hour battery energy storage system, which will allow the project to be adapted to dispatch energy during peak hours and to provide stability to the grid.
ACEN Australia has more than 1.5 gigawatts of projects under construction or at an advanced stage of development.
Shares in the company closed 1.14% lower to finish at P6.05 apiece on Monday. — Ashley Erika O. Jose