ACEN commits to attain carbon neutrality by 2050

MANILA, Philippines — The power unit of the Ayala Group has committed to achieve net zero, or carbon neutrality, by 2050 as it charts plans to become a fully renewable energy company by spinning off thermal assets and retiring coal plants ahead of time.

Net Zero is a global movement to achieve zero net greenhouse gas emissions to limit global warming to 1.5 degrees C by 2050.

As part of its net zero journey, ACEN’s board also approved the company’s transition of its generation portfolio to 100 percent renewable energy by 2025.

To enable this transition, ACEN will spinoff all its thermal assets by 2025. Its thermal assets include Palawan 55 Exploration and Production Corp., Bulacan Power Generation Corp., One Subic Power Generation Corp., CIP II Power Corp., and Ingrid3 Power Corp.

CIP II and BPGC respectively own and operate a 21-megawatt (MW) diesel plant in Bacnotan, La Union and a 52-MW diesel plant in Norzagaray, Bulacan, while OSPGC leases the 116 MW diesel plant in Subic Bay Freeport.

Meanwhile, Ingrid3 plans  to invest P25 billion to put up a 1,200-MW gas turbine power facility in Batangas City aimed at serving the power grid’s mid-merit and peaking requirements.

To spin off these assets, ACEN secured board approval to enter into a property-for-share swap with ACE Enexor Inc. (ACEX), the listed oil and gas exploration and production unit of the Ayala Group.

ACEN will assign its 100 percent equity in the five companies – valued at P3.39 billion – in exchange for 339 million primary shares to be issued by ACEX at P10 per share. The price is supported by a fairness opinion from FTI Consulting Philippines Inc.

In relation to the share swap, ACEX will conduct a stock rights offer amounting to P1.053 billion.

Meanwhile, ACEN was also cleared to retire South Luzon Thermal Energy Corp. (SLTEC) by 2040, 15 years ahead of its technical life.

SLTEC owns and operates the 2x135-MW coal-fired power plant in Calaca, Batangas.

The early retirement of the coal plant will be done through the Energy Transition Mechanism (“ETM”).

ETM is an innovative funding mechanism that leverages low cost and long-term funding geared towards early coal retirement and reinvestment of proceeds to enable renewable energy.

The ACEN board has appointed BPI Capital Corp. as lead arranger for SLTEC’s ETM.

Last year, ACEN announced its transition to a low carbon future and coal divestment plan by 2030.

In April 2020, it launched an Environment and Social Policy (E&S), which aims to transition to a low carbon portfolio by 2030.

Aligned with the United Nations Sustainable Development Goals, the policy will be integrated into the company’s business strategies, performance management and governance.

With the adoption of the E&S policy, the company will be focusing on renewable investments and will not be making additional investments in coal plants.

Ahead of this development, ACEN sold part of its stake in its thermal platform, AA Thermal Inc., to Aboitiz Power Corp. for $579.2 million (roughly P31 billion) in 2019 to pursue its expansion of renewable energy projects.

AA Thermal housed conventional power projects namely SLTEC, the 668-MW GN Power Dinginin Ltd. Co. coal plant in Bataan, the 604-MW GNPower Mariveles and the 4x135-MW coal-fired power plant in Kauswagan, Lanao del Norte in Mindanao through GN Power Kauswagan Ltd. Co.