Accelerating the

ENERGY
Transition

ACEN's Energy Transition Mechanism (ETM), the First in the World

Accelerating the

ENERGY
Transition

ENERGY

TRANSITION

MECHANISM

ACEN completes the world’s first market-based ETM transaction that will enable the early retirement of the 246-MW SLTEC coal plant by 2040 and its transition to a cleaner technology

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.
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.

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

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.

Key Investors

Equity

₱3.7 Bn

Private investors have supported the deal in the first ever market-based ETM implementation

Debt

₱13.7 Bn

Energy transition loan classification has enabled banks to support the project by differentiating it from traditional coal financing.

Equity

₱3.7 Bn

Private investors have supported the deal in the first ever market-based ETM implementation

Debt

₱13.7 Bn

Energy transition loan classification has enabled banks to support the project by differentiating it from traditional coal financing.

Equity

GSIS
Philippine Government Service
Insurance System (GSIS)
₱2.2 Bn
EPHI
ETM Philippines Holdings, Inc.
₱466 Mn

An SPV that allows financial investors to invest in energy transition to enable the accelerated retirement of coal-fired power plants, and to fund the development of new clean energy technologies

Debt

Bpi
Insular Life
The Insular Life
Assurance Company
₱1.0 Bn
RCBC

ACEN is
committed to
Just Energy Transition 

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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.
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