MANILA, Philippines – The Philippines is set to revive its geothermal energy exploration after a 12-year hiatus with a $250 million de-risking facility co-developed by the Department of Energy (DOE) and the Asian Development Bank (ADB).
The initiative aims to share exploration costs with private developers, targeting 431 megawatts (MW) of new geothermal power and reducing dependence on imported natural gas.
The Geothermal Resource De-Risking Facility (GRDF) will co-finance 50% of exploration drilling costs, making it more viable for private developers to invest in greenfield geothermal projects.
DOE Undersecretary Rowena Guevara highlighted the program’s importance during the 3rd Roperto P. Alonzo Memorial Lecture at the University of the Philippines School of Economics.
“The last time we were drilling holes was in 2012. There are no new geothermal projects because exploration is expensive,” Guevara said.
She noted that the DOE had collaborated with the Department of Finance (DOF) and the National Economic and Development Authority (NEDA) to secure government support for geothermal infrastructure investments.
De-Risking Facility Details
The GRDF uses a two-stage selection process to ensure that technically and financially capable geothermal service contract (GSC) holders are chosen.
Developers must submit detailed drilling plans, which are then evaluated under the program’s guidelines.
To encourage prudent drilling, GRDF mandates a 75% success rate for resource confirmation. If this benchmark is not met, new sub-loan approvals will be halted to prevent financial losses.
ADB officials say the program could pave the way for up to $2.6 billion in downstream geothermal investments.
ADB’s funding includes $60 million from ASEAN Catalytic Green Finance (ACGF) concessional funds and $190 million from its ordinary capital resources.
The GRDF’s full implementation will require $431 million to cover all exploration drilling.
Economic and Environmental Impact
The program is expected to generate significant economic and environmental benefits.
According to ADB, it could save $329 million annually on natural gas imports and reduce carbon dioxide emissions by 1.7 million tons per year.
“This initiative does not just open new geothermal fields; it sends a strong signal that the Philippines is serious about attracting clean energy investments,” Guevara said.
She underscored the importance of diversifying the country’s energy mix to meet its 52-gigawatt renewable energy capacity target by 2040.
Geothermal energy, known for its consistent output compared to weather-dependent solar and wind power, is seen as a cornerstone for achieving energy stability in the Philippines.
However, high upfront exploration costs have stalled new geothermal projects since 2012.
Industry stakeholders are optimistic about the GRDF’s potential to address these challenges. If successful, the program will support up to 16 geothermal projects, unlocking the country’s vast geothermal potential and reducing reliance on fossil fuels.
With DOE and ADB aiming to finalize the GRDF loan by 2025, all eyes are on the facility’s ability to catalyze investment and reshape the country’s renewable energy sector.
