The new partners formalized their commitment by signing a deed of accession to a 2024 memorandum of understanding between ACEN, GenZero, and Keppel. This collaboration aims to explore the feasibility of leveraging transition credits—high-integrity carbon credits awarded for projects that retire coal plants early and transition to clean energy—to accelerate the retirement of the South Luzon Thermal Energy Corp. (SLTEC) coal plant.
ACEN pioneered the world’s first market-based Energy Transition Mechanism, achieving financial close in November 2022. This involved divesting the 246 MW SLTEC coal plant with a commitment to retire it by 2040, halving its typical 50-year operational life, and shifting to renewable energy technologies. The company now targets an earlier retirement date of 2030, supported by transition credits to fund the transition to sustainable alternatives.
ACEN stated: “This potential partnership aims to evaluate the feasibility of leveraging Transition Credits through a pioneering initiative that demonstrates how innovative financial mechanisms can accelerate the early retirement of coal-fired power plants in favour of sustainable, clean alternatives.”
The initiative reflects a growing commitment to sustainable energy in the Philippines, where coal plants have historically played a significant role in power generation. By retiring the SLTEC plant ahead of schedule, ACEN and its partners aim to reduce carbon emissions and promote cleaner energy sources, aligning with global efforts to transition to renewable energy systems.
Mitsubishi Corporation’s involvement, alongside DGA, GenZero, and Keppel, strengthens the project’s financial and technical foundation. The collaboration leverages innovative financing to make early coal plant retirement economically viable, setting a model for other regions. The use of transition credits ensures that the project delivers measurable environmental benefits while supporting the Philippines’ energy needs with renewable alternatives.
This partnership marks a significant step in advancing the Philippines’ renewable energy goals, fostering job creation in clean energy sectors, and enhancing energy security. By replacing coal with sustainable sources, the initiative contributes to a cleaner environment and supports the country’s long-term sustainability objectives, demonstrating the potential of collaborative financial mechanisms in the global energy transition.
