Government seeks tie-ups for geothermal derisking facility
By Lenie Lectura – July 17, 2024
from Business Mirror
The Department of Energy (DOE) is keen on partnerships with interested firms to help manage risks in developing additional geothermal energy resources.
“We are talking to possible an implementing partner as our study is almost complete. We’re just looking for a financing partner or an agency that will co-manage the fund or the facility. We are under discussion with various financial firms and agencies,” said DOE Assistant Secretary Mylene Capongcol.
The DOE and the Asian Development Bank (ADB) are working on a roadmap for derisking geothermal development in the Philippines.
“The riskiest and most expensive part of geothermal development is exploration. This is what we are derisking. We will be utilizing a derisking tool which we have to work with an ideal partner. We will launch this derisking tool, a sort of guarantee for the project, once we find a partner,” said Capongcol.
“The geothermal resource derisking facility (GRDF) will cost-share exploration drilling with qualifying private developers to derisk geothermal resources at the pre-development stage,” the proposed roadmap read.
The DOE is expected to establish a fund for the initiative, 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, such as test and confirmation wells including associated investments, as a way of incentivizing developers to proceed with resource confirmation by reducing their exposure to potential financial loss. It encourages developers to take risks but limits moral hazard because of their counterpart cost-shared investment.
The DOE and ADB have been working together to source funds to actualize the GRDF. Similarly, initial coordination was made with possible entities that would house the GRDF.
Among those considered were the Philippine National Oil Co., National Development Co., and Power Sector Assets and Liabilities Management Corp.
Image credits: www.petroenergy.com.ph Google signage
