DOE to issue policy to spur geothermal sector

MANILA, Philippines — The Department of Energy (DOE) plans  to issue a risk mitigating policy to help spur the development of the capital-intensive geothermal sector.

DOE-Renewable Energy Management Bureau (REMB) Mylene Capongcol said the agency is spearheading the development of mitigation risk for geothermal energy.

“We all know that the cost of developing geothermal is very expensive and the success rate is very low,” she said.

“Recognizing the value of that, we will be coming out soon with a mitigation risk policy for geothermal energy development,” Capongcol said.

In drafting the policy, the DOE is tapping industry stakeholders to come out with a well-rounded measure that will support geothermal development.

“We are now in talks with several stakeholders, including donor partners for necessary assistance in developing policy studies for geothermal development in the country,” Capongcol said.

The Philippines used to be the second largest geothermal producer in the world, next to the US. However, the country was overtaken by Indonesia in 2018.

Geothermal power developers have been seeking fiscal and non-fiscal incentives from government as geothermal projects are high risk and require large capital for low to medium enthalpy geothermal resources.

Low enthalpy geothermal resources are areas with a relatively low temperature. Compared to conventional geothermal areas with temperatures of over 250 degrees centigrade, low enthalpy resources range between 60 and 180 degrees centigrade.

The National Geothermal Association of the Philippines (NGAP) said geothermal resource is one of the renewable energy developments that could provide baseload or 24/7 power supply. The other is hydropower.

In a report in 2020, Fitch Solutions Country Risk & Industry Research said the Philippines is seen as an outperforming geothermal power investment hotspot in the next decade given its strong capacity for the renewable energy (RE) resource.

The unit of Fitch Solutions Group Ltd. sees the country having an installed geothermal capacity of 2,098 megawatts (MW) by the end of the decade.

If the potential is developed, this would place the Philippines as the second largest geothermal producer in Asia on an annual basis, and the fourth largest globally over the next decade.

Energy Secretary Alfonso Cusi has said he is pushing for the development of geothermal power among the country’s renewable resources to help attain energy security and boost RE in the power mix.

In promoting RE development, Cusi  said it was best for the country to focus on the resources that are abundant and extend all the necessary support to encourage its development through innovative policies and strategies.

To help spur interest in the geothermal sector, the DOE opened the sector to greater foreign investments in 2020 by allowing 100 percent foreign participation in large-scale geothermal projects.

This is through the third Open and Competitive Selection Process (OCSP3) wherein foreign companies are now allowed to participate in geothermal exploration, development, and utilization activities with a minimum investment cost of $50 million and under the Financial and Technical Assistance Agreements as provided by the Philippine Constitution.