Energy Transition Mechanism Closing Ceremony
L-R) : Asian Development Bank director for infrastructure finance division Jackie Surtani, RCBC executive vice president of corporate banking Elizabeth Coronel, BPI senior vice president Barbara Ann Untalan, Government Service Insurance System president and general manager Jose Arnulfo “Wick” Veloso, ACEN president & CEO Eric Francia, Insular Life chairperson Nina Aguas and EPHI president Ronald Goseco.

Equity

₱3.7 Bn

GSIS
Insular Life

Debt

₱13.7 Bn

Bpi
RCBC

The first
market-based
ETM
in the world

246 MW

Net dependable
capacity
Unit 1 - Apr 2015
Unit 2 - Feb 2016
Start of Operations

Sub-critical Circulating
Fluidized Bed (CFB)

Calaca, Batangas, Philippines
South Luzon Thermal Energy Corporation (SLTEC)
South Luzon Thermal Energy Corporation (SLTEC)

First
market-based
ETM
in the world

246 MW

Net dependable capacity
Unit 1 - April 2015
Unit 2 - February 2016
Start of Operations
Sub-critical Circulating
Fluidized Bed (CFB)

Calaca, Batangas,
Philippines

South Luzon Thermal Energy Corporation (SLTEC)

South Luzon Thermal Energy Corporation (SLTEC)

ETM is a key enabler

in accelerating the transition from fossil fuels to cleaner technology

ETM is a key enabler in accelerating the transition from fossil fuels to cleaner technology

The Asian Development Bank (ADB) promoted the ETM concept, which leverages public and private investments – from governments, multilateral banks, private sector investors, philanthropies, and long-term investors to retire coal assets on an earlier schedule than if they remained with their current owners.
ACEN decided to apply the ETM concept with the divestment of the 246 MW SLTEC coal power plant.

100% of the net proceeds to ACEN will be used for the company’s renewable energy investments.
Notwithstanding the divestment, the transaction was structured in such a way that ACEN can commit to a Just Energy Transition, which involves transitioning the coal plant to a clean technology by 2040, and ensuring an effective workforce evolution, community resilience, and collaboration with stakeholders.
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The Asian Development Bank (ADB) promoted the ETM concept, which leverages public and private investments – from governments, multilateral banks, private sector investors, philanthropies, and long-term investors to retire coal assets on an earlier schedule than if they remained with their current owners.
ACEN decided to apply the ETM concept with the divestment of the 246 MW SLTEC coal power plant.

100% of the net proceeds to ACEN will be used for the company’s renewable energy investments.
Notwithstanding the divestment, the transaction was structured in such a way that ACEN can commit to a Just Energy Transition, which involves transitioning the coal plant to a clean technology by 2040, and ensuring an effective workforce evolution, community resilience, and collaboration with stakeholders.
Previous
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Key Outcomes & Impact

₱17.4 billion

total transaction value, providing steady
returns to ETM investors

Up to

50 million MT CO2

emissions avoided with early retirement

₱7.2 billion

proceeds to ACEN can enable
construction of the equivalent
of a 600 MW solar plant

Zero coal
ownership for ACEN

following the successful completion
of the ETM transaction

Completed November 2022

Key Outcomes & Impact

Capital structure & cost of capital are optimized

ACEN is
committed to
Just Energy Transition 

quote
The Energy Transition Mechanism can be done in a market-based driven by the private sector so that we can move faster. And that’s what we did. And the good news is that we closed the world’s first market-based ETM about a year ago, in November of 2022.
ERIC FRANCIA
President & CEO
contact

Leveraging domestic private sector financing was possible given the reasonable plant size and value.

SLTEC capital structure was optimized through the refinancing / upsizing of project debt. The loan upsizing allowed the partial return of capital to ACEN.

The balance of equity was taken by equity investors with competitive cost of capital (e.g., major insurance companies, smaller institutional investors, high net worth investors).

Capital Structure

ACEN owned 100% of equity

New investors owned 100% of equity

Universal
Net-Zero Energy
  • ACEN can transition SLTEC to cleaner technology.
  • Replacing SLTEC with RE requires ~1 GW of new solar and wind; ACEN expects over 10x this when SLTEC is retired. 
Workforce
Evolution
  • Workforce evolution involves continuous plant hiring from the local community, training and reskilling, and rotations to ACEN RE plants.
Community
Resilience
  • Since SLTEC is one of Calaca, Batangas’ largest taxpayers, ACEN will assess and mitigate the ETM’s impact alongside local stakeholders, part of which is the prospective transition of SLTEC to newer and cleaner technology.
Collaboration &
Transparency
  • Just Transition plan to be shared with key stakeholders and shall ensure adequate output to replace foregone coal capacity, in cooperation with DOE.
  • Key learnings will be shared with industry peers and other organizations