The Department of Energy (DOE) is pushing for a voluntary early and orderly decommissioning or repurposing of existing coal-fired power plants in line with the Philippines' energy transition program.

The DOE said the country's power sector set-up is market driven and privately owned, with the regulator's role limited to ensuring the competitive environment for the sector.

This makes the Philippines unique compared to other countries, most especially in Southeast Asia, it said.

As a result, the DOE noted that decisions by private businesses to retire coal-fired power plants and shift to full renewable energy are also purely market-driven and based on the economics of which projects will provide the most return to investors.

In addition, the agency said the Philippines is one of the few countries in Southeast Asia which does not subsidize its power sector.

'Unlike other countries which are energy-source rich and use export revenues to subsidize their power sector, the Philippines only relies on cross-subsidy to provide support to its marginalized consumers, as well as for renewable energy incentives,' the DOE said.

'Therefore, the costs of transition, as well as the need for greater investment infrastructure, will be fully borne by our already overburdened electricity consumers if we will not find strategic ways to shift the burden,' it said.

The DOE said a voluntary early and orderly decommissioning or repurposing of existing coal-fired power plants must be done while securing a stable supply and addressing the climate emergency by ramping up renewable energy to 50 percent share by 2040.

'In all of these, adequate and timely access to climate financing is crucial for the Philippines to equitably and effectively pursue its energy transition,' the agency said.

In line with the government's push for a managed and just coal phasedown, the DOE has lauded the initiative of the Ayala group's ACEN Corp. for the early retirement of its coal plant.

'The Philippine Department of Energy, therefore, strongly applauds ACEN in pioneering the voluntary retirement of its 246-megawatt (MW) South Luzon thermal coal-fired power plant (SLTEC),' it said.

'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 un-subsidized,' the agency said.

ACEN successfully implemented last year the world's first market-based energy transition mechanism, which involved the divestment and early retirement of the 246-MW SLTEC coal plant.

Last Monday at a COP28 side event, ACEN also announced that it is joining forces with the Rockefeller Foundation and the Monetary Authority of Singapore to pilot the use of transition credits for the early retirement of coal plants.

The transition credits will enable ACEN to increase its ambition of further accelerating the transition of the SLTEC coal plant to clean technology as early as 2030.

The DOE said it is encouraging every effort to incentivize the business owners and institutions that will participate in similar undertakings and work towards energy transition.

According to the agency, the Asian Development Bank and ACEN's energy transition mechanism concept, which leverages public and private investments with the aim of retiring coal power assets on an earlier schedule, is a laudable mechanism.

'ACEN has our full support for this initiative, and we will explore ways to facilitate this program through access to climate financing,' it said.

The DOE, however, pointed out that the country's energy transition goes beyond just coal retirement.

The agency said it would also entail expanding 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.

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