Investors seeking insurance type incentives for geothermal development in the Philippines
The Philippines geothermal sector is seeking support by government in the form of risk mitigation funds or similar incentives to help attract international interest and investment into geothermal development for the upcoming auction for geothermal areas.
To push geothermal investment and development in the Philippines, investors are seeking incentives for investment in the form of an insurance, a risk mitigation fund or cost sharing for the drilling stage of development. With this investors hope to cover the riskier early stage of geothermal development, as reported by the Manila Bulletin.
Attorney Fernando Penarroyo, member of the board of trustees of the National Geothermal Association of the Philippines (NGAP) indicated, that a risk mitigation fund was already proposed as useful too to the government via the country’s Department of Energy. There has though been no indication of the possibility of such a fund.
The goal with a mitigation fund would be to cover drilling cost in form of reimbursements or an equity stake in the drilling activities.
The high capital cost in the beginning of geothermal development is seen as a key hurdle to attract investment and push development, particularly in the push for utilising lower temperature resources in the country. Geothermal development has been slow in the Philippines and the country has fallen behind Indonesian in the ranking of countries with the largest geothermal power generation capacity.
A risk mitigation fund would help mitigate the drilling risk in the exploration phase. With the government sharing some of the risk, investors could be incentivized to go into exploration.
As we reported earlier, an open and competitive selection process has been announced for five areas for geothermal exploration that could advance to commercial development. Deadline for submissions is February 15, 2021. If there is international interest, also after opening up renewable development ownership for international investors will have to be seen.
With higher risk involved in going into low enthalpy and low-temperature areas, the sector is seeking help from the government to attract investment.
For further details see link to article below.
Source: Manila Bulletin