Insular Life (InLife) has inked an agreement with a subsidiary of ACEN Corporation for P1.0 billion worth of investment in the preferred shares of South Luzon Thermal Energy Corporation (SLTEC), the corporate vehicle of the Ayala group that is retiring its coal plant via the energy transition financing (ETF) mechanism.
In a statement to the media, InLife indicated that “investment proceeds from ACEN’s divestment of the redeemable preferred shares will be used in the development of more renewable projects.”
InLife, along with ETM Philippines Holdings, Inc. (EPHI), has a “committed aggregate value of P3.7 billion to support the ETF mechanism implemented by ACEN and SLTEC.”
According to InLife Executive Chairperson Nina D. Aguas, “the proceeds of our investment will be used to develop renewable energy and eventually allow decommissioning of the coal plants.”
She added that their company is joining “the call for the development of more renewable energy sources through this pioneering transition mechanism.”
ACEN, in particular, has opted to decommission its SLTEC coal-fired power plant fleet ahead of schedule in line with the energy transition mechanism (ETM) paradigm being pushed under the Paris Agreement.
The Ayala firm specified that it will be retiring the asset at least 15 years ahead of schedule based on the full life cycle of the coal plant, which can typically stretch for 40 years.
By decommissioning the SLTEC facility, the Ayala company can already fully transition into cleaner renewable energy investments, which has been the core focus of its investments.
InLife expounded that “the ETF mechanism is a partnership between like-minded institutions whose goal is to responsibly shift energy production from fossil fuels to clean energy.”
The insurance company further noted that such capital-raising approach “allows ACEN-SLTEC to pursue a just energy transition for its coal plant and, at the same time, start the development of renewable energy projects.”