THE Department of Energy (DoE) has called for the early retirement or repurposing of coal-fired power plants to help it meet the goal of raising the share of renewables in the power generation mix.
“The government is encouraging a voluntary early and orderly decommissioning or repurposing of existing coal-fired power plants, while securing a stable supply and addressing the climate emergency by ramping up our renewable energy (RE) target of 50% share by 2040,” the DoE said in a statement late Tuesday.
Decisions by the private sector to retire coal-fired plants and transition to RE “are purely market-driven and based on economics of which projects provide the most return to investors,” it said.
Support for a coal phasedown is gaining momentum after ACEN Corp., the listed energy arm of the Ayala Group, pioneered the voluntary retirement of its 246-megawatt (MW) South Luzon Thermal Coal-Fired Power Plant.
“This is consistent with our view that it must be voluntary and must make business sense in a power sector like the Philippines that is privately owned, market driven and unsubsidized,” the DoE said.
“ACEN has our full support for this initiative, and we will explore ways to facilitate this program through access to climate financing,” it added.
In 2020, the government issued a moratorium on greenfield coal-fired plants, signaling a shift to a more flexible power mix.
The DoE puts the number of coal-fired plants connected to the grid at 62 as of August, with total installed capacity of 12,472.6 MW.
Some 29 coal-fired plants are in Luzon with a combined installed capacity of 8,792.1 MW. The Visayas hosts 14 with capacity of 1,412.5 MW, while Mindanao has 19 coal-fired plants with capacity of 2,268 MW.
RE accounted for about 22% of the Philippines’ energy mix, with coal-fired power plants providing nearly 60% as of the end of 2022.
The government hopes to increase RE share to 35% by 2030 and 50% by 2040.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said that the call for accelerated retirement is “a delicate balancing act” for the Philippines, with power an important consideration for foreign investors and locators.
“This is consistent with the global trend of increased compliance with ESG (environmental, social, and corporate governance) standards as encouraged by regulators even before the pandemic,” he said in a Viber message.
The DoE also encouraged efforts to incentivize business owners and institutions that will participate in similar undertakings and work towards energy transition.
“But we must also emphasize that our energy transition is beyond coal retirement,” the DoE said. “It also entails expanding our people’s access to electricity in remote islands, building a smart and green grid and improving the distribution systems, putting up more energy storage systems, and making energy affordable for all.”
The DoE said that climate financing will be crucial for the Philippines in effectively pursuing its energy transition.
On Monday, the Asian Development Bank (ADB) said it is allocating $10 billion in climate finance for the Philippines starting next year until 2029.
The ADB said the funds will allow the Philippines to carry out its climate action commitments under the Paris Agreement.
The Paris agreement aims to keep the rise in global temperatures to below 2°C. — Sheldeen Joy Talavera