Geothermal investors eye ‘unconventional’ resources

Updated October 7, 2019, 10:40 AM By Myrna M. Velasco

https://business.mb.com.ph/2019/10/06/geothermal-investors-eye-unconventional-resources/

Investors in the geothermal sector are now setting their sights on capacity-megawatt installations utilizing “low enthalpy or lower temperature resources” similar to what is being done in energy markets in various parts of the world.

Jeff Caranto, president of the National Geothermal Association of the Philippines (NGAP), said “we want to revitalize the industry (and) we want to put together new history for geothermal, for the third wave of developments by looking into the unconventional.” He’s referring to the low-enthalpy prospects which he said could be easier to develop because they are closer to power transmission systems and are located at lower elevations.

For the past 15 years, Caranto noted that geothermal capacity addition in the country’s power mix had been way too sluggish – at just 62 megawatts because the industry just concentrated on the conventional resources – or on the “high temperature systems” but these had grown more difficult to explore and develop through the years.

“The Philippine conventional geothermal resources – they are very expensive, they’re up in the mountains; and permits are very difficult to obtain. But if you look at the un-conventionals, the low temperatures – they are closer to the communities, lower elevation areas – so economically it could be easier to get them developed,” Caranto stressed.

With the industry’s push for investments in the “low temperature geothermal systems” though, the NGAP president asserted that there are a number of policy and regulatory support that they would need from the government – especially so since they will be shelling out capital in a market that is no longer underpinned by state-sponsored power purchase agreements.

Caranto emphasized that the industry is very much aware that there’s no more turning back on the deregulated or private sector driven frame of the country’s power sector. However, to get the Philippine geothermal sector back into its “high rank” map, certain pricing mechanisms shall be prescribed by the government so capital flow will flourish in the sector.

He said the proposed “energy green pricing” being pushed by the National Renewable Energy Board (NREB) is a good starting point – and that has been stimulating interests so far for the sector to revive investment plans.

Caranto admitted that beyond infrastructure and security hurdles confronting geothermal sector investors, tariff is one major dilemma for them when it comes to justifying the economic viability of investments.

Nevertheless, he said the “green pricing scheme” could be a succor to prospective investments, “so what we’re doing is we’re talking with the DOE (Department of Energy) to come up with some regulation or incentives for the industry.”

Exploration and development of geothermal resources is considered a high-risk proposition, but the industry players said they would be able to live with an electricity tariff that could match those on the baseload capacity sphere, such as the cost level for coal or gas.

The tariff-setting regime under the green pricing being batted for by the industry, according to Caranto, “is something that is compared to the cost of baseload like coal – it could vary in range as long as there is economics in it. But obviously with the current pricing right now, it’s very challenging especially if we’re going to invest $30 million to $50 million in exploration just to prove that there is a resource.”