Risk mitigation fund for geothermal ventures takes shape
The Department of Energy (DOE) and the Land Bank of the Philippines have formalized a partnership to set up a financing mechanism that will lower the risk of investing in upstart geothermal exploration.
The proposed Philippine Geothermal Resource De-Risking Facility (PGRDF) is aimed at accelerating early-stage geothermal exploration by sharing risks and costs associated with the most capital-intensive phase of development.
Under a memorandum of agreement signed on Tuesday, the PGRDF will serve as a targeted intervention to address one of the biggest barriers to geothermal development: the high upfront cost and uncertainty of exploration and initial drilling.
The $170-million de-risking facility is supported by the Asian Development Bank (ADB) through a sovereign loan to the Philippine government.
The DOE said the program is designed to mitigate exploration risks at the earliest stages, allowing developers to drill exploration wells with greater confidence and advance new greenfield prospects toward full-scale development.
Energy Secretary Sharon Garin said geothermal projects require substantial capital long before any electricity is delivered to consumers, making early-stage risk a major deterrent for developers.
Significant investment
“Geothermal development requires significant investment long before a single kilowatt is delivered to consumers,” she said. “Through the PGRDF, the government is helping de-risk the exploration stage so that viable prospects can move faster from resource confirmation to project development.”
She added that the partnership with Landbank would strengthen the government’s ability to expand clean and dependable power supply. It is also expected to enhance energy security and advance a “just and sustainable” energy transition that ultimately benefits Filipino communities.
Under the memorandum, the DOE will act as the executing agency, responsible for policy direction and governance, including the establishment of technical standards, eligibility criteria and overall program oversight.
Landbank, meanwhile, will serve as the facility administrator and manager, overseeing sub-loan applications, milestone-based fund releases, collections and program reporting.
Energy Undersecretary Rowena Cristina Guevara, who oversees the country’s renewable energy program, said the PGRDF could accelerate geothermal capacity additions beyond the reference scenario under the Philippine Energy Plan 2023 to 2050 by unlocking more viable prospects.
“By de-risking exploration and enabling more projects to move from uncertainty to confirmation, we are widening the pipeline of investible geothermal opportunities,” Guevara said.
She added that strengthening geothermal development would enhance the resilience of the power system while reducing the country’s exposure to volatile imported fuel prices.
“This is how we translate energy transition goals into firm capacity that supports affordability and long-term energy security for Filipino consumers,” she said.
