Philippines remains among world’s top geothermal producers

MANILA, Philippines — The Philippines is expected to remain among the world’s largest markets for total installed geothermal power capacity over the next decade, but its position of being the third biggest could slip with limited capacity seen coming online.

In a report, Fitch Solutions Country Risk & Industry Research has identified the Philippines and the US as geothermal power sector 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.

Fitch Solutions is forecasting the US and the Philippines to be the third and fourth largest markets, respectively, in terms of installed geothermal capacity globally by 2031.

The Philippines’ market is currently estimated to have the world’s third largest installed geothermal capacity at 1,928 megawatts (MW).

Fitch Solutions said that over its 10-year forecast period, geothermal power will be the dominant source of non-hydropower renewable electricity output in the Philippines, accounting for an annual average share of 64 percent of total renewable power generation.

“However, we remain bearish on the future growth prospects of geothermal power capacity in the Philippines, given that most of the market’s proven reserves have been commercialized while the unproven potential reserves of just under 2.4 GW are in more inaccessible areas,” it said.

Over the next decade, Fitch Solutions’ forecast is that only 217 MW of geothermal capacity will come online in the Philippine market, bringing installed capacity to 2,145 MW by 2031.

By 2025, it sees Turkey overtaking the Philippines for total installed geothermal capacity, making the country the world’s fourth largest geothermal market.

But while new growth is forecast to be limited, Fitch Solutions said the Philippine market has upside risk for new growth following renewed interest in the technology.

“That said, geothermal exploration is on the rise, presenting an upside risk to our subdued geothermal capacity and generation forecasts,” it said.

According to Fitch Solutions, the government in 2018 launched new exploration surveys and signed around 10 contracts with companies looking to drill exploratory wells.

In 2019, it said the Asia-Pacific Economic Cooperation received approval from the Department of Energy (DOE) to carry out a grid impact study for its proposed 120-MW geothermal power project in Kalinga province.

The Kalinga Geothermal project and Mount Malinao geothermal project were awarded the certification of energy project of national significance by the Energy Investment Coordinating Council, which entitles them to a faster approval process.

Fitch Solutions said the DOE has also reclassified geothermal as a mineral resource and now allows for 100 percent foreign investment into geothermal projects, in a bid to attract more foreign investors into the sector.