The race toward energy transition is gaining momentum as state-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to include the 200-megawatt (MW) Mindanao coal power plant in the carbon credit program.

In an ambush interview, PSALM President and Chief Executive Officer (CEO) Dennis Dela Serna said the retirement plan for the coal facility, which has support from the Manila-based Asian Development Bank (ADB), is still being finalized. But Dela Serna confirmed that it will form part of the carbon credit trading framework.

“The grand plan is a retirement in 2031, but as to the impact, the mode of transaction itself, it’s for further discussion with the ADB, our financial consultants,” he told reporters.

“Yes, [carbon credits], that’s part of the plan of the ADB, right? The carbon credits contribution of the savings or the avoidance.”

Earlier this month, the Department of Energy (DOE) released new guidelines establishing a financial mechanism to provide capital for early coal plant retirement. The DOE would be the central body in charge of issuing carbon credit certificates (CCCs), representing the reduction or removal of one ton of carbon dioxide equivalent of greenhouse gas (GHG).

With CCCs, coal operators and clean energy developers would have rights to use, sell, trade, or transfer their generated certificates.

For the Mindanao coal power plant retirement, Dela Serna clarified that the facility is up for pure decommissioning, as he stated, “there can be flexibilities afterwards… That’s why the DOE, based on their studies, we cannot really terminate it.”

PSALM chief further explained the need for new baseload capacity to replace the generation currently supplied by the coal plant.

“If there is no proper replacement that comes in that system, then that puts a lot of pressure on the decommissioning.”

Apart from decommissioning the coal plant, Dela Serna said the Agus-Pulangi Hydropower Complex (APHC) rehabilitation project is still in the process of selecting a concessionaire that will undertake rehabilitation of its power plants, with target completion by 2028.

The 1,001-MW APHC has about seven power plants under PSALM, but because of aging facilities, these plants only supply about 600 to 700 MW of power.

“By our mandate, [this will be done] by competitive bidding. However, we’re also allowed to entertain unsolicited proposals. So, when there’s unsolicited proposal, then we will evaluate based on that, following the PPP [Public-Private Partnership] Code.”

Even without an unsolicited proposal from the private sector, PSALM is still positive that the bidding process should begin next year.