Geothermal Risk Mitigation Facility - Possible Implications and Applicability On Geothermal Development In The Philippines

Geothermal development in the Philippines is experiencing a standstill. After the privatization of geothermal assets, new developments have solely relied on private investments but due to the inherent high risks of geothermal development, particularly the uncertainty of the resource and drilling, private developers require higher risk premiums, which does not align with the low energy generation prices of on-grid markets. With a reference to a Geothermal Risk Mitigation Facility (GRMF) in East Africa this study investigates how a risk mitigation facility could affect the financial attractiveness of geothermal developments for both project and equity investments in the Philippines. ESMAP (2012) highlighted that a donor geothermal development facility, such as the GRMF, is one the keys to scale up new opportunities for private investments. However, no studies were conducted to measure the impact of such facility particular to geothermal development in the Philippines. This study will financially model four hypothetical development scenarios that reflects available or under exploration areas in the country. To improve the current growth trend of geothermal in the Philippines, further reducing the risk of private investors thru a risk mitigation facility might spur a new wave of development of Philippine geothermal energy.