ACEN divests 246MW Philippine coal plant

This is the first-ever transaction completed through the Energy Transition Mechanism. 

Philippine’s ACEN has fully divested the 246-megawatt South Luzon Thermal Energy Corporation coal plant which will cut its operating life of up to 50 years in half and help reduce up to 50 million metric tonnes of carbon emissions.

In a statement, the company said this is the first transaction globally through the energy transition mechanism (ETM) developed by the Asian Development Bank. The mechanism aims to achieve early retirement of coal plants through low-cost and long-term funding, proceeds of which will be reinvested into renewable energy projects.

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The Bank of the Philippines Islands and the Rizal Commercial Banking Corporation provided debt financing of P13.7b for the ETM of the coal plant, whilst the Philippine Government Service Insurance System, The Insular Life Assurance Company, Ltd., and ETM Philippines Holdings, Inc provided P3.7b in equity investments for a total of P17.4b.

ACEN said it received P7.2b from the transaction for reinvestment in its renewable energy projects and the balance of the proceeds will be used to refinance debt and transaction fees.

The company has pledged to reach 100% renewables generation by 2025 and 20 gigawatts of renewables capacity by 2030.

Through this transaction, ACEN moves closer toward its commitment to 100% renewables generation by 2025, as well as its ambitious goal of reaching 20 GW of renewables capacity by 2030.