US-based power company AES has signed an agreement with the Government of Chile to retire 1,097MW of coal power generation by 2025.
Under the voluntary retirement plan, AES will retire the plants as soon as January 2025, subject to the requirements of the power grid.
AES president and CEO Andrés Gluski said: “The retirement of these conventional assets will remove around six million tonnes of CO₂ from the atmosphere, the equivalent of taking more than 2.4 million cars off the streets of Chile.
“Our purpose is to accelerate the future of energy, and AES Andes is a great example of how we have committed to responsibly decarbonise the Chilean electricity sector, working constructively with authorities and our customers.”
The agreement was signed at the Moneda Palace in Santiago, with the government represented by President Sebastián Piñera, Mines and Energy Minister Juan Carlos Jobet and Environment Minister Carolina Schmidt.
Representing the single largest announcement on coal retirement by any power company in Chile to date, the agreement covers around 20% of the country’s installed coal capacity.
The move is said to be in line with AES’s strategic decarbonisation plan, which includes the sale and retirement of coal assets and a focus on deploying renewable energy sources.
The agreement also complements the company’s $3bn investment plan to build 2.3GW of renewable development and energy storage capacity by 2024 in Chile and Colombia.
Earlier this year, AES set a target of reducing its coal power generation to less than 10% on a pro-forma basis by the end of 2025. It has also set a goal of reaching net-zero emissions from its electricity sales by 2040.
The company said the agreement with the Chilean government will not affect its current guidance or expectations for its 2025 target.