PH, NZ sign geothermal energy cooperation

A cooperation agreement was inked between the governments of the Philippines and New Zealand to advance the common goal of fortifying geothermal energy developments which will anchor on technology for the country's energy transition agenda.

The formal covenant, which is already the second tie-up for both governments, was formally signed on Friday, Nov. 5, between Energy Secretary Alfonso G. Cusi and New Zealand Ambassador to the Philippines Peter Kell.

According to the Department of Energy (DOE), “the agreement would facilitate the continued exchange of best practices and technical expertise in the geothermal energy sector.”

The New Zealand government had previously assisted the Philippine energy sector in the Tongonan and Southern Negros geothermal developments which remained as viable operating assets feeding generated clean energy into the country’s power system.

Cusi said the new geothermal cooperation pact with New Zealand “comes at such an opportune time, considering that one of our primary goals is to revitalize the state of geothermal energy development and utilization in the Philippines.”

One of the policy re-positioning recently advanced by the energy department had been opening the geothermal energy sector to 100-percent foreign ownership; for as long as the minimum capital outlay of the investor would be at $50 million for amalgamated ventures on exploration and commercial development of geothermal generating facilities.

Cusi defended that broadening ownership base of that conventional renewable energy (RE) resource to foreigners had been appended to goals of “revving up competition” so capital flow in the geothermal sector could be buoyed.

The Philippines used to be the second largest geothermal energy producer in the world, but it eventually skidded in that ranking because the remaining resources in the country are known to be in frontier areas and of low-enthalpy genus, hence, these will be needing higher upfront capital to bring them to commercial fruition.

At the very least, Philippine geothermal investors have been batting for ‘insurance-type of incentives" or ‘mitigation fund’ that seeks “sharing of cost-risks” with the government, so investments in the sector could be reinvigorated.

The proposed "mitigation fund" for geothermal investments was lodged by the industry players with the DOE, but concrete action has yet to be taken by the government.

The fund could be extended to geothermal developers “in the form of insurance where developers can reimburse or the government can take certain equity in drilling.”

Industry players 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.

Investors affiliated with the National Geothermal Association of the Philippines (NGAP) primarily conveyed that while they are willing to consider injecting fresh capital in low enthalpy or low-temperature areas, this will entail higher risks when it comes to their investments, thus, they are seeking government’s help on prospective incentives.