Geothermal players explore new ‘sweet spot’
By Myrna M. Velasco – October 29, 2021, 3:28 PM
from Manila Bulletin
Geothermal industry players are exploring new ‘sweet spot’ that will invigorate fresh round of large-scale capital flow in this renewable energy (RE) investment space amid sluggish developments in this sector for roughly three years already.
During the recent three-day conference of the National Geothermal Association of the Philippines (NGAP), the geothermal industry players noted that they have fleshed out “innovative technologies and disruptions, while keeping close attention to providing clean and renewable energy alternatives.”
The group stressed that “as the country shifts from coal to baseload renewable energy, sustaining the current production and accelerating the development of new geothermal fields are of utmost priority to achieve emission targets.”
Regrettably though, Senate Committee on Energy Chairman Sherwin T. Gatchalian outlined in his presentation during the NGAP conference that geothermal had already gone past its ‘sexy phase’, with investments in the sector considerably stagnating since the mid-1990s.
The lawmaker lamented that there are several factors dislodging geothermal technology’s allure in the RE investment terrain and in the overall Philippine energy mix – and such include the ‘very high risk’ facet of exploration and development ventures; high upfront cost on capacity installations; and the expensive cost of electricity coming from geothermal source of generation.
Gatchalian thus persuaded investors in the sector that “as a policy moving forward, let’s find ways to encourage more developments, more exploration, more expansion and more private sector participation.”
On the part of the government, the solon said it is paramount to come up with a policy “with a risk-sharing or a risk-mitigation mechanism, because this is not like solar that has almost zero risk…this one, you have to explore and you don’t know if there’s something that you can find underneath. So in that aspect, we need to enable it by sharing the risk and geothermal will play a very big role in our quest for a cleaner energy grid.”
On project buildup, geothermal capacity installation is considered a high-priced RE venture, with Gatchalian emphasizing that this is at the scale of US$3.8 million per megawatt as compared to solar and wind; of which per-megawatt capital cost already dwindled significantly over the years.
“This is quite expensive compared to the other technologies. The other technologies have gone down tremendously – if you look at the others, especially solar and wind, they are actually at the bottom. But if you look at the other legacy technologies, such as hydro and geothermal, they are at the top. In other words, legacy technologies are quite expensive to install on a per-megawatt basis,” the lawmaker explained.
Gatchalian stated though that geothermal remains “a significant source of energy – it’s about 9.0% when it comes to installed capacity –although it’s not growing, but it still contributes to around one in every 10 households in terms of installed capacity.”
He nevertheless reiterated that investments “had not grown over the years, it stalled since 1995. In fact, there were times that it (installed capacity) dipped because some of the wells dried up.” To date, the installed capacity of geothermal energy in the country stands at 1,900 megawatts.
As to the technology’s impact on consumers’ pockets, Gatchalian pointed out that it is relatively pricey at P5.00 per kilowatt hour (kWh), and he attributed such high cost of generation as a factor “why geothermal has not grown economically because of the costs compared to variable RE which had gone down tremendously in the Philippines.”
