Geothermal investors seek ‘risk insurance perks’ for new projects

Published January 19, 2021, 7:00 AM

by Myrna M. Velasco

Geothermal investors in the country are batting for ‘insurance-type of incentives’ or ‘mitigation fund’ that seeks the “sharing of cost-risks” with the government, so investments in the sector could be reinvigorated.

Atty. Fernando Penarroyo, member of the board of trustees of the National Geothermal Association of the Philippines (NGAP), indicated that the proposed risk mitigation fund was already recommended formally to the government – via the Department of Energy (DOE), but concrete action on it is still being awaited.

Atty. Fernando Penarroyo (Photo credit:

The propounded fund, he noted, could be “in the form of insurance where developers can reimburse or the government can take certain equity in drilling.”

Penarroyo acknowledged that geothermal investments in the country slowed down for several years already, and the stalled exploration activities had been primarily traced to the onus of high capital costs required in exploration and the fact that much of the country’s geothermal resources up for exploration are more of the ‘low enthalpy’ deposits.

“What we have discussed with the government is the establishment of a ‘risk mitigation fund’ to mitigate risks in exploration. If the government can sort of make an arrangement to share risks on exploration, a lot of companies will consider going into exploration,” Penarroyo said.

Under the third Open and Competitive Selection Process (OCSP-3), the energy department is offering five areas that investors can avail of for geothermal resource exploration and to potentially advance them to commercial developments.

Bid submission deadline is February 15 this year, and it remains to be seen if there will be takers of the offered geothermal blocks – including foreign investors because this had been opened to them via the tender process set forth by the DOE.

Investors affiliated with NGAP previously indicated that they are willing to consider injecting fresh capital in low enthalpy or low-temperature areas, but this will entail higher risks when it comes to their investments, hence, they are seeking government’s help on prospective incentives.

The group of geothermal producers stated that the prospect-areas are often in mountainous sites and they are close to communities inhabited by indigenous peoples, hence, permitting alone would be extremely difficult to hurdle. Plus, investments could come at very high costs.

The geothermal investors also sounded off that they don’t have high hopes anymore of discovering conventional or the high-temperature resources – primarily of massive scale capacity – because these were already harnessed in the earlier developments pursued by then state-run Philippine National Oil Company-Energy Development Corporation.