DOE eyes $250 million to bankroll de-risking geothermal facility

FILE PHOTO: A Department of Energy (DOE) official bares plan to seek an initial $250 million for a de-risking mitigation fund meant to reduce power producers’ financial risks in pursuing geothermal projects. Photo from DOE

The government is seeking to secure an initial $250 million for a de-risking mitigation fund meant to reduce power producers’ financial risks in pursuing geothermal projects, an energy official said.

On the sidelines of the 5th Philippines International Geothermal Conference in Makati, Mylene Capongcol, director of the Renewable Energy Management Bureau of the Department of Energy (DOE), said the framework for the proposed geothermal resource de-risking facility (GRDF) has already been finalized.

The GRDF is envisioned to cost-share exploration drilling with qualified developers to de-risk geothermal resources at the pre-development stage.

Currently, the agency is on the lookout for a financing partner or a group that can help the government manage the facility. She noted that the country’s energy chief already initiated talks with the International Monetary Fund. State-run Land Bank of the Philippines, Development Bank of the Philippines, Department of Finance, and Philippine Guarantee Corp. were also on their radar.

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She said the DOE was in collaboration with the Asian Development Bank to explore which financial institution could inject money into the facility.

“Kung sino eligible, entitled sila to up to 50 percent (Those eligible will be entitled to up to 50 percent),” Capongcol said Wednesday, referring to the GRDF’s share to companies’ initial costs for exploration and drilling stage.

The official said this phase was the “most risky” part of the geothermal sector as it involves a hefty amount.

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According to Marvin Bailon, Energy Development Corp. vice president-head of Business Development Group, firms usually earmark P1.5 billion to P2 billion for the first two wells—this is on top of the surface study and 3D seismic they need to conduct to check for potential sources.

Bailon said the government was “willing to spend for one to two wells.”

But it would be a “big help,” if the government could subsidize the whole exploration, he added.

“After you hurdle the difficult front-end investment, it gets easier,” the EDC official said.

In an earlier briefer from the DOE, it said the facility may recover the costs by imposing interest on loans; levying a royalty once the project becomes operational; and securing a share of project equity.