Current State of Philippines Geothermal Energy Industry
By: John Arnel T. Vito
Philippines identified as ‘outperformer’ in the geothermal power market
Financial information services company Fitch
Solutions has placed the Philippines among the nations that are regarded
"outperforming" in the geothermal sector. The company underlined the
country's huge installed geothermal capacity and potential for substantial
development. Geothermal power markets that have a sizable installed capacity
base and are anticipated to experience significant expansion throughout the
forecast period are considered outperformers, according to Fitch Solutions.
The Fitch research states that the Philippines
"has one of the highest levels of installed geothermal capacity in the
world and it makes up a considerable part of its total renewables output."
Fitch Solutions predicts that, aside from hydropower, geothermal power will be
the main source of renewable electricity supply in the nation during a 10-year
forecast period. The nation is anticipated to have average growth of 1.1%
between 2022 and 2032 from a total installed capacity of 1,918 MW last year.
The anticipated installed capacity by 2031 will be 2,145 MW
ThinkGeoEnergy’s Top 10 Geothermal Countries 2021 – installed power generation capacity (MWe)
The Philippines currently holds the 3rd position globally in terms of geothermal installed capacity. However, Fitch Solutions expects the Philippines to fall to 4th place by 2025 as most of the country’s proven geothermal reserves have already been commercialized. The potential reserves, on the other hand, are in more inaccessible areas.
There is still cause for optimism as new
exploration surveys have been launched since June 2018. About 10 deals have
been inked by the Philippine authorities with companies for the drilling of
exploratory wells. Four geothermal projects with a combined capacity of 542 MW
have also been endorsed by the Department of Energy for a power grid impact
study.
Fitch Solutions also cited the granting of
certification of energy projects of national significance (EPNS) to the
geothermal projects in Kalinga and Mount Malinao, with potential capacities of
120 MW and 12 MW respectively. The certification is meant to help speed up the
approval process for the projects
PHILIPPINES GEOTHERMAL ENERGY MARKET – GROWTH, TRENDS,
COVID-19 IMPACT, AND FORECASTS (2023 – 2028)
The Philippine Geothermal Energy market is Segmented by Technology Type (Ground Source Heat Pump, Direct Use Geothermal, and Deep Geothermal System). The report offers the market size and forecasts in installed capacity (in MW) for all the above segments.
Philippines
Geothermal Energy Market Analysis
The Philippine geothermal energy Market is
projected to register a CAGR of around 1.5 % during the forecast period. The market
was negatively impacted by COVID-19 in 2020. Presently the market has now
reached pre-pandemic levels. Over the medium term, factors such as rising
energy demand and the demand for cleaner energy are expected to drive the
growth of the Philippine geothermal energy market during the forecast period. On
the other hand, low domestic investment due to the high installation cost of
the geothermal plants is expected to restrain the Philippine geothermal energy
market in the forecast period.
Nevertheless, due to its favourable geological
characteristics, the deep geothermal system sector is anticipated to experience
significant expansion in the Philippine geothermal energy market. By 2040, the
Philippine government hopes to stop using coal and shift its attention to
renewable and natural gas energy sources. This can create several opportunities
for the Philippines geothermal energy market in the future. Favourable
government policies and incentives on renewable energy are likely to drive the
Philippine geothermal energy market during the forecast period
The Philippines currently has seven geothermal
fields which supply about 12 percent of the nation’s energy, with a long-term
plan to nearly double capacity by 2040. Targeting geothermal, the Philippines
Department of Energy has set targets for geothermal power generation capacity
additions … short term 183 MW (2016-2020), 900 MW in the medium-term (2021 to
2025), and 288 MW in the long-term (2026 to 2030). The total objective to be
reached by 2030 is 1,371 MW in added capacity (correlating with a total Installed
of around 3,676 MW. With ambitious development plans elsewhere, the Philippines
would though find it hard to remain in its no. 3 position it holds today
However, despite the potential of geothermal
resources in the Philippines, there are still a number of factors contributing
to a decline in investments: unattractive incentives package compared to other
countries, a privatised energy sector, tedious permitting processes and a lack
of potential investors who are willing to take the risk. Although geothermal
energy is theoretically free, finding the resource is an expensive enterprise,
with exploration wells costing up to US$8 million each with no guarantee of
success.
Geothermal trailblazer and leading renewable
energy company, Energy Development Corporation (EDC) believes that geothermal
is the key to establishing a stable energy baseload suited to the constant yet
dynamic power needs of the Philippines’ developing economy. Perhaps, geothermal
might be the answer to the Philippines’ goal of cutting carbon emissions by 70
percent by 2030. In reports from this week, its seems the outlook is though not
as bright with a new low in renewable power generation only 21% in 2019.
With that the National Renewable Energy Board
is looking at a review of its renewable energy program. The country is way
behind its 15,000 MW by 2030 target. With around 35% of the energy mix in 2008
when the renewable energy legislation was passed, it gradually decreased to
25.6% in 2014, 24.2% in 2016 and now to 21%. The overall renewable energy power
generation capacity stood at 5,438 MW in 2010 (with about 35% represented by
geothermal) with a target of 15,000 MW by 2030. So proposals are made to
increase the target to 20,000 MW to realistically reach the set energy mix
targets.
With a focus on mostly solar capacity (15,000
MW), wind 3,000 MW, hydro 1,000 MW, geothermal (and biomass) would see an increase
of only 500 MW each. This is naturally far off from the targets initially set
by the Department of Energy in the Philippines.
So industry expectations and the now rather old
and outdated targets need to be revisited.
(1) Mordor Intelligence. https://www.mordorintelligence.com/industry-reports/philippines-geothermal-energy-market. [Online]
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