Philippine Conglomerate Fully Divests From its Coal Power Plant

ACEN, the energy platform of the Ayala Group, has fully divested its stake in the South Luzon Thermal Energy Corporation (SLTEC) coal plant using the energy transition mechanism (ETM), the first ETM deal in the world.

As part of the ETM structure, the coal plant’s operating life of up to 50 years will be cut in half, as ACEN commits to retire and transition the plant to a cleaner technology by 2040. This early retirement will help avoid or reduce up to 50 million metric tons of carbon emissions.

The ETM is a concept developed by the Asian Development Bank (ADB), which aims to leverage low-cost and long-term funding geared towards early coal retirement and the reinvestment of proceeds to enable renewable energy projects.

Commenting on the move Ahmed Saeed, ADB vice president said: “We commend the Ayala Group and ACEN for the successful closing of this pioneering ETM transaction. We hope that this sets the tone for others to pursue the just transition of thermal plants to cleaner technologies.”

The ETM for the SLTEC plant involved ₱13.7 billion in debt financing provided by the Bank of the Philippine Islands and Rizal Commercial Banking Corporation, as well as ₱3.7 billion in equity investments from the Philippine Government Service Insurance System (GSIS), The Insular Life Assurance Company, (InLife), and ETM Philippines Holdings, Inc., for a total deal value of ₱17.4 billion.

ACEN received ₱7.2 billion from the transaction for reinvestment in the company’s renewable energy projects. The balance of proceeds was used for refinancing debt and transaction fees.

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.

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