The Department of Energy (DOE) and the Asian Development Bank (ADB) are in talks with financing institutions to support geothermal projects and establish a geothermal resource de-risking facility (GDRF).
“[We are] under discussion with various financial and agencies that can be partners. What we are de-risking is the most expensive, the riskiest part of geothermal development which is really the exploration. Part of that is the de-risking tool that we will be using. When we find the ideal partner for de-risking, then we will launch it,” DOE assistant secretary Mylene Capongcol said.
Under the project brief, the proponents are looking for an entity that would house the GDRF, with state-owned Philippine National Oil Co. (PNOC), National Development Co. (NDC) and Power Sector Assets and Liabilities Management (PSALM) Corp.
“The study is almost complete so we’re just looking for a partner financing or an agency that will co-manage the fund or the facility…The general framework is private financing, and we want to address the risk through de-risking tool. A sort of a guarantee for the project,” Capongol said.
The proposed GRDF will share exploration drilling cost with qualifying private developers to de-risk geothermal resources at the pre-development stage.
Geothermal exploratory drilling costs up to $5 million per megawatt based on industry estimates.
The DOE will arrange funding to capitalize the facility with the support of ADB as its anchor partner.
The cost-shared mechanism, through the Resource Risk Mitigation Window, will cover a proportion of the exploration drilling costs (test and confirmation wells including associated investments/activities) to incentivize developers to proceed with resource confirmation by reducing their exposure to potential financial loss.
The DOE said geothermal projects that are determined to be commercially viable would repay the cost-shared funds received from GRDF into the facility’s cost recovery account.
The recovered funds will then be used to de-risk additional fields.
Meanwhile, developers with projects that are not commercially viable would not have any further obligation to GRDF, except to ensure development is ceased following proper industry protocols.
