Philippines approves $163.7m geothermal risk-sharing fund

The state-backed facility will share costs for exploration drilling.

The Philippines has approved a $163.7m (PHP10.07b) financing facility to reduce the financial risks of geothermal exploration, aiming to attract private investment and accelerate geothermal development.

The Philippine Geothermal Resource Derisking Facility (PGRDF), approved during the Economy and Development Council's 10th meeting chaired by President Ferdinand Marcos Jr., will establish a government-backed cost-sharing mechanism for exploration drilling.

The Department of Energy (DOE) said in a statement that the facility targets the most capital-intensive and uncertain stage of geothermal development by sharing exploration costs with developers.

“Geothermal development requires significant investment long before a single kilowatt is delivered to consumers,” Energy Secretary Sharon Garin said, adding that the facility will reduce exploration risks to help viable projects advance to development.

The department said the facility supports the government's target of increasing renewable energy's share of the power generation mix to 35% by 2030 and 50% by 2040.

It added that geothermal energy provides weather-independent baseload power that supports grid reliability.

The approval follows the DOE's partnership with the Asian Development Bank in 2022 to develop a geothermal derisking roadmap.

“The PGRDF translates these efforts into a concrete financing mechanism that will help accelerate geothermal project development nationwide,” DOE said.

The DOE also said the facility could help restore the Philippines' position amongst the world's leading geothermal power producers by encouraging more exploration.

The Philippines, which ranked second globally for years, was outpaced by Indonesia in installed geothermal power capacity in 2018.

“By de-risking exploration and enabling more projects to move from uncertainty to confirmation, we are widening the pipeline of investible geothermal opportunities, strengthening the resilience of our power system, and reducing our exposure to volatile imported fuel prices,” Garin said.

(US$1 = PHP61.52)