The Philippines may need about P60 billion in de-risking funds to unlock more geothermal capacity as high exploration and drilling costs continue to hold back investments in one of the country’s most reliable renewable energy sources.

Energy Secretary Sharon S. Garin said the funding requirement could emerge if the government supports a much larger geothermal development pipeline beyond its initial P10-billion de-risking facility, which is expected to unlock around 300 megawatts (MW) of capacity.

“For the de-risking facility lang, that would involve about 60 billion. Kung kailangan mo ng de-risking,” Garin told reporters at the sidelines of the 7th Philippine International Geothermal Conference on Thursday.

The initial facility will be supported by the Asian Development Bank (ADB), with Land Bank of the Philippines serving as the financing conduit and the Department of Energy (DOE) screening projects eligible for support.

The program is designed to absorb part of the exploration risk that has kept some geothermal projects from moving forward. Developers may borrow 50 percent of drilling costs, with the financing converted into a grant if drilling fails and into equity if successful.

The DOE has initially identified 12 active geothermal service contracts covering greenfield projects that are in exploration drilling or preparing to drill.

DOE Chief Science Research Specialist Rainier Halcon said the projects would require about $174 million based on their submitted work programs, while five additional areas could also be considered. 

“Those are all greenfields. They're in exploration drilling, and that's the basic criteria,” Halcon said.

Geothermal development itself is capital-intensive, with Halcon estimating costs at around $6,000 per kilowatt, or roughly $6 million per MW. The de-risking facility will run for about six years, requiring participating developers to meet prescribed project schedules.

Once the initial program succeeds, Garin said the DOE intends to seek another de-risking facility by potentially tapping ADB or other financing partners.

Successful implementation could also help attract more private capital without continued government-backed support.

The DOE is targeting geothermal to eventually account for around 10 percent of the country's power mix, up from about 6 percent or 2,000 MW currently. The agency sees geothermal as critical to the renewable energy mix because, unlike intermittent sources, it can provide round-the-clock baseload power.