Philippines seen as geothermal power investment hotspot in 10 years

MANILA, Philippines — The Philippines is seen as an outperforming geothermal power investment hotspot in the next decade given its strong capacity for the renewable energy (RE) resource, according to Fitch Solutions Country Risk & Industry Research.

The unit of Fitch Solutions Group Ltd has named the Philippines, along with Kenya, as global geothermal outperformers, or those geothermal power markets that have a significant capacity base installed, and/or will register substantial growth in capacity over a 10-year forecast period to 2029.

Fitch Solutions said the Philippines would have the second largest geothermal capacity in Asia on an annual basis, and will be the fourth largest globally over the next decade.

The Philippine market is projected to have a short term growth outlook of 3.1 percent and a long-term growth outlook of 0.86 percent.

“Although limited growth forecast for the country does pose a downside risk, the Philippines does have a strong existing capacity,” Fitch Solutions said.

This year, Fitch sees the country having an installed geothermal capacity of 1,928 megawatts (MW) by the end of the year, ending the decade with 2,098 MW of geothermal capacity.

The capacity growth forecast is limited by the country’s growing reliance on coal-fired power generation and on non-hydropower renewables which will account for only 12 percent of the country’s total electricity output.

But Fitch Solutions noted that the country already has a high level of existing geothermal capacity, which means that geothermal power will supply just over 70 percent of the total renewable electricity generation.

“Although we aren’t factoring in new geothermal power capacity coming online in the Philippines over the next decade, we still expect that the country will remain one of the largest geothermal markets in the world over this period. By 2029, we expect that the Philippines will have the fourth largest installed geothermal capacity in the world, behind only Indonesia, USA and Turkey,” it said.

Energy Secretary Alfonso Cusi earlier said he was pushing for the development of geothermal power among the country’s renewable resources to help attain energy security and boost RE in the power mix.

In promoting RE development, Cusi said it is best for the country to focus on the resources that are abundant and extend all the necessary support to encourage its development through innovative policies and strategies.

He cited Vietnam as an example, where the country focused on developing the strength of its hydro resources.

The Philippines used to be the second largest geothermal producer in the world, next to the US. However, the country was overtaken by Indonesia in 2018.

In 2018, the Philippines continues to have the highest RE generation mix within the Southeast Asian region. That year, RE accounted for about 33.2 percent of our country’s total primary energy supply.

The figure is already 10 percent ahead of the regional target set forth in the Association of Southeast Asian Nations  Plan of Action on Energy Cooperation, which seeks to increase the RE component on the ASEAN total primary energy mix to 23 percent by the year 2025.

However, the share of RE in the energy mix dropped to a low of 21 percent last year.