CLIMATE analytics firm TransitionZero said on Thursday that the early retirement of coal power plants in the Philippines to transition to renewable energy was feasible provided there were clear policy decisions.

The policies are needed for a smooth transition and should not affect related stakeholders such as customers, energy-related businesses and the economy, it added.

"The Philippine energy transition is a complex undertaking that requires evidence-based planning and policies. This comes as the recent extended blackouts in Panay have exposed the need for upgrades in the power system and a diversified energy mix," TransitionZero Southeast Asia engagement analyst Isabella Suarez said.

"The Philippines will need to make critical policy decisions for the early retirement of the coal fleet to be not only feasible but imperative for businesses," she added.

According to TransitionZero, the early retirement of coal supply agreements in the Philippines can prevent 290 metric tons of carbon dioxide (CO2) emissions, nearly double the country's annual CO2 emissions.

Buyouts for early retirement, however, could cost between $19,198 per megawatt (MW) and $2.80 million per MW on average.

Coal retirement costs $140 per ton of carbon dioxide (tCO2) to buy and replace coal plants, which in turn is comprised of $41 per tCO2 to end existing supply agreements and $99 per tCO2 to replace them with solar plus storage systems.

Despite this, TransitionZero noted that these policies should be clear on tailored deal structures, robust selection criteria, and incentives for early movers amid high marginal abatement costs due to the country's tariff structures."Our data highlights that policy incentives to jumpstart coal retirement and refinancing options must account for the complexity of the Philippine market and its players. Retirement deals and refinancing mechanisms need to be bespoke and tailored to the local context," TransitionZero CEO Matt Gray said.TransitionZero also said that refinancing should be designed to foster investments in clean energy."By channeling resources into clean energy projects and grid enhancements, distribution utilities, electric cooperatives, and consumers can benefit from a more cost-effective system, making early retirement arrangements more viable and equitable," it said.

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