The government is set to finalize a loan from the Asian Development Bank (ADB) this year to help ease the high upfront exploration costs of geothermal energy development.

Speaking at a recent forum, Energy Undersecretary Rowena Cristina Guevara said the Department of Energy (DoE) has secured backing from the Department of Finance (DoF) and the National Economic and Development Authority (NEDA) to share exploration risks with private investors.

The initiative aims to revive geothermal development, which has stalled due to the high cost of drilling.

“There is no new geothermal (deal) because exploration is expensive. The DoE approached the DoF and NEDA and they said the government finally needs to invest in energy infrastructure after 24 years,” Guevara said.

Economical in long run

The ADB loan is expected to fund initial exploration efforts, reducing financial risks for investors.

While geothermal energy requires significant capital in its early stages, Guevara noted that after a 20-year loan period, it becomes one of the cheapest and most stable baseload power sources.

Alongside geothermal, the DoE is ramping up support for pumped storage hydropower as part of its broader renewable energy strategy. The government has auctioned 4,300 megawatts (MW) of capacity, but private sector interest has already reached 7,000 MW, Guevara said.

Pumped storage hydro functions as an energy storage system, absorbing excess electricity during off-peak hours and supplying it back to the grid when demand spikes.

“These plants last for more than 50 years, making them worth the initial investment,” she said.

The government’s renewable energy roadmap targets 52 gigawatts of installed capacity by 2040.

While solar and wind will play a key role, Guevara stressed that a diversified mix — including hydro and geothermal — is essential to reducing dependence on imported liquefied natural gas.

To ensure policy stability for investors, the DoE will also revise its energy plan only every five years, with minor adjustments as needed.

“In that way, our private sector investors will have a more stable plan to look at and we’ll know that this is long term,” she said.