The Department of Energy (DOE) said as much as $250 million could be raised by the Asian Development Bank as a derisking component of a fund proposed to benefit geothermal power developers.
DOE assistant secretary Mylene Capongcol, at the sidelines of a forum hosted by the National Geothermal Association of the Philippines in Makati on Wednesday, said the ADB) should soon submit the plan operationalizing the fund.
The ADB is helping the DOE craft the fund helping geothermal developers manage risks associated with exploring and drilling resource wells.
Capongcol said the DOE anticipates the completion of fund mechanics and its participants, especially those that provide funding and its management.
“Actually, the concept paper and framework is already okay but we are still looking for one who will implement it and one who will serve as fund manager,” Capungcol said.
According to him, the DOE has actually talked to a few and that Energy Secretary Raphael Lotilla has met with the International Monetary Fund and various other financing sources for an agreement.
“Those eligible for de-risking are entitled for up to 50 percent share of the cost of the drilling and exploration stage, deemed as the riskiest stage of geothermal projects,” Capongcol said.
Partner institutions who may participate include the Land Bank of the Philippines, the Development Bank of the Philippines, the Philippine Guarantee Corp. and the Department of Finance.
Marvin Bailon, Energy Development Corp. (EDC) vice president and head of business development group, said a geothermal developer needs up to P2 billion to drill the first two resource wells to jumpstart a proposed project.
Based on initial discussions, Bailon said the proposed derisking mechanics will compel developers to shoulder a portion of the cost whether the drilling results in a successful or failed venture.
Bailon said given the chance, geothermal developers would rather the full cost is subsidized by the government as practiced in some Latin America and African countries.
DOE said that as of end-July 2024, the country’s total geothermal installed capacity is at 1,952 MW with potential for another 981 MW.
The Philippines is currently the third largest producer of geothermal power in the world following the United States and Indonesia.
