Geothermal Risk Mitigation in the Philippines

Geothermal energy is an underdeveloped clean energy resource due primarily to the high risks associated during early stages of development. Some form of government support is typically required to minimize uncertainty and attract private investors. Since the 1960’s the Philippines’ government has made a clear, sustained commitment to support geothermal development. Overtime, the Philippines’ government divested of its geothermal capacity ownership, spurring new waves of private sector-led geothermal development. Highlighted below and profiled in this case study, are actions and good practices that supported geothermal development in the Philippines.

• The Philippine National Oil Company set up a dedicated subsidiary to explore and develop geothermal resources in the Philippines provided a clear signal to investors of government support for geothermal development and reduced project development risk for the private sector.
• Partnership with international specialists and companies to conduct geothermal research and exploration enabled capacity building within the Government and supported expansion of geothermal development.
• Balancing the roles of the public and private sector in geothermal development supported sustained investment. First, the Philippines’ government backed geothermal developers and started selling electricity to consumers. Later government-owned entities privatized in order to leverage private investment.
• Additional fiscal incentives such as an exemption of taxes on geothermal machinery imports and for geothermal project developers (except for income taxes) further reduced the capital required for geothermal exploration and development.