ACEN: Thermal assets still needed for energy transition

ACEN Pilillia diesel plant

While Ayala-led ACEN may be leading the charge towards attaining an all-renewable energy (RE) platform by 2025, it said thermal power assets, primarily gas and diesel, are still needed to attain energy security while transitioning to RE.

Speaking during the first episode of Power Podcast, ACEN President and CEO Eric Francia expressed that while “full reliance on renewables is not yet possible,” dependence on gas and diesel plants for energy will be reduced as the country slowly transitions to RE.

“Getting to Net Zero will entail a transition. It’s not [going to] happen overnight. There is a role for [thermal power as] a transition fuel. There’s no [liquefied natural gas] in the Philippines yet, but you need peaking capacity, you need ancillary capacity — a quick response plan. Battery storage is not yet at the level that will obsolete diesel plants,” Francia explained.

“Hopefully over time, we will have less reliance on diesel plants and over time, we will have less reliance on gas plants, but for gas, it’s [going to] take multiple decades, I think, before we can have zero reliance,” he added.

As part of its transition strategy, ACEN is in the process of transferring all its thermal assets to subsidiary ACE Enexor.

“We will be transferring our other thermal assets like diesel from ACEN to Enexor and then we will orient Enexor to provide the transition fuel or technology, be it diesel or natural gas,” Francia said.

“We just signed an agreement with a Blackstone affiliate [to work] on a project would have a component of gas, but we would [have dual-fuel], so that it will be future-ready when hydrogen becomes economic and competitive”, he added.

Enexor disclosed to the Philippine Stock Exchange (PSE) in November that the Ayala unit and Gen X Energy L.P., an affiliate of New York-based The Blackstone Group, is set to acquire 50% each of shares in Batangas Clean Energy, subject to clearance from the Securities and Exchange Commission.

Once the shareholders’ agreement becomes final, Enexor would develop and eventually co-own and operate the said 1,100-megawatt combined cycle power plant in Batangas.

Prior to this, ACEN disclosed to the PSE in October that it will transfer to Enexor its current diesel plants and projects in Subic, La Union, and Batangas City. It also announced back then that it would take on an early retirement program for its coal plant in Calaca, Batangas via the Energy Transition Mechanism.

Watch the full episode of Power Podcast with ACEN President and CEO Eric Francia on YouTube or listen on Spotify.