The Philippine geothermal industry is described as a mature sector operating in a developed private investment market. Geothermal investments in the country will be driven by the combination of a strong clean energy supply imperative, increasingly liberalized energy sector, achievable capacity targets and a relatively stable regulatory framework with appropriate pricing or fiscal incentives, and off-take mechanism. Some of the remaining undeveloped geothermal resources pose special technical challenges, requiring development or adaptation of “emerging technologies” such as binary-cycle generation, ground source heat pumps, and corrosion-resistant alloys. With an appropriately structured feed-in tariff rate that will provide guaranteed payment to investors through a universal charge, these acidic and lower enthalpy resources can be developed to generate electricity. In order to address the barriers related to costs and resource exploration risks faced by geothermal energy developers, the National Geothermal Association of the Philippines calls for the coverage under the FIT program of geothermal emerging technologies currently not commercially viable under existing market and pricing structures.

1. National
Geothermal
Association of the
Philippines
Feed-in Tariff for Emerging
Geothermal Technologies: New Lease
on Life for the Industry
Atty. Fernando S. Peñarroyo
Chair, Public Policy Committee
National Geothermal Association of the Philippines
16 August 2016
Marco Polo Hotel, Pasig City, Philippines
National Geothermal Association of the Philippines
13th Annual General Meeting

2. Presentation Outline
 Meeting the NREP geothermal target
– Regulatory impediments
– Declining quality of unexploited resources
 Policy considerations
 Incentivizing the geothermal industry

3. Geothermal Energy Roadmap (DOE)

4. Investment Trends in Geothermal
 ODA loans from WB and JBIC for exploration
to plant commissioning for state energy and
power companies
 BOT for power generation, EPIRA, privatization
of EDC
 Foreign equity under RE Law (?)
 Traditional energy companies and new
greenfield developers
 Company equity and risk capital financing for
new developers
 Role of Philippine local banks

5. Development increments and plant
decommissioning since 2005 (DOE)

6. Challenges in Achieving Geothermal
Power Generation Targets
 Regulatory impediments
 Declining quality of unexploited
resources

7. Regulatory Impediments
 Environment - Government administrators must work
doubly hard to address cognitive barriers, which
relate to the low level of awareness, understanding
and attention, afforded to geothermal projects and
their wider economic and environmental benefits.
 Local government - The legal issue of local autonomy
vis a vis the power of control by the executive over
LGUs
 Indigenous Peoples - the complexity in applying the
concept of free and prior informed consent
 Power Permitting- shortening the procedures and
requirements for permitting: NGC takes at least 18
months to finish a Grid Impact Study; DENR takes at
least 2-3 years to issue an ECC; ERC takes around
12 months to process the review of the Power Supply
Agreement

8. Geothermal Exploration Projects with Permitting Issues

9. Declining Quality of Unexploited Resources
 Rare “elephant-sized” resources as these
have been fully accessed and evaluated by
the former state-owned energy development
and public utility companies during the
previous waves of geothermal deployment
 apply new development technologies to
second tier resources:
- technologies that can utilize acidic, young
geothermal systems;
- low enthalpy geothermal systems;
- direct use of small-scale geothermal
energy technologies; and
- hybrid technologies.

10. Government Initiatives
 Detailed studies of exploration,
development and marketing of low
enthalpy and acidic resources
 Development of local technological
and intellectual capacity
 Updating inventory of resources
including off-grid areas
 Improvement of the way database is
built, maintained and accessed

11. Technological Growth Areas
 Two are being inventoried as non-
conventional generation project
incubators requiring additional R&D
and investment:
- acidic, magmatic or immature
resources; and
- low enthalpy geothermal systems.

12. Revised Geothermal Energy
Roadmap (2016)

13. Revised Target with NGAP input

14. Policy Considerations for Regulators
 Political will –lobby for Congressional endorsement
of DOE initiative to push for a law that will
recognize and provide ease of permitting for
projects of “national strategic significance”.
Government needs to address the perceived veto
powers on energy and power projects of
indigenous peoples and local government units.
 Valuing environmental and social benefits - fossil
fuel plants have a shorter lead time making them
more attractive but with no allowance for
environmental externalities. This places renewable
energy at a commercial disadvantage but this can
be resolved by regulating and internalising the
associated cost of greenhouse gas emissions, noise
and air pollution. Valuing these externalities will
place geothermal on an even economic playing
field.

15. Incentivizing Geothermal Investments
 RE Law provides for establishment of an RPS
system requiring electricity suppliers to source a
certain amount of their energy supply from RE
resources. The National Renewable Energy Board
shall set the minimum percentage of generation
from eligible sources and determine to which
sector RPS shall be imposed on a per grid basis.
 RPS will also be complemented by a feed-in tariff
system but geothermal energy has been
excluded.
 The DOE still has to establish a Green Energy
Option program, which provides end-users the
option to choose RE resources as their sources
of energy.

16. Feed-in Tariff (FiT)
Requires utilities to pay a fixed above-market rate for
specific types of RE that are considered “emerging
technology”
 Section 7. Feed-In Tariff System. - To accelerate
the development of emerging renewable energy
resources, a feed-in tariff system for electricity
produced from wind, solar, ocean, run-of-river
hydropower and biomass is hereby mandated.
(d) The feed-in tariff to be set shall be applied to the
emerging renewable energy to be used in compliance
with the renewable portfolio standard as provided for in
this Act and in accordance with the RPS rules that will be
established by the DOE.

17. Legislative and Administrative Options
 Pursue the endorsement by DOE to NREB on
recognition of emerging technologies for
geothermal
 Move to amend the RE Law to include
geothermal as FIT-eligible
 Pursue the amendment of the RE Law IRR for an
inclusive definition of “emerging technologies”
 Strong advocacy for regulators to implement the
guidelines for RPS and Green Energy Option
 Pursue the must-dispatch classification of
geothermal source to DUs through an
Administrative Order

18. Conclusion
 DOE, in consultation with NGAP, has determined
that meeting that NREP geothermal target will
require certain enabling actions by the
government.
 Industry needs expedited regulatory action and
approval in partnership with government to
mitigate social and environmental concerns.
 Regulatory policy should be open to fast-paced
development of technology in providing the legal
cover and additional incentives to private
investors.
 NGAP calls for the coverage under the FIT
program of geothermal emerging
technologies currently not commercially
viable under existing market and pricing
structures.

19. National
Geothermal
Association of the
Philippines
Feed-in Tariff for Emerging
Geothermal Technologies: New Lease
on Life for the Industry
Atty. Fernando S. Peñarroyo
Chair, Public Policy Committee
National Geothermal Association of the Philippines
16 August 2016
Marco Polo Hotel, Pasig City, Philippines
National Geothermal Association of the Philippines
13th Annual General Meeting

20. About the Presentor
 Managing Partner, Puno and Penarroyo
Law (www.punopenalaw.com)
 Chief Operating Officer, Clean Rock
Renewable Energy Resources Corporation
 Director, International Geothermal
Association
 Legal Counsel, National Geothermal
Association of the Philippines
 Professorial Lecturer, UP National Institute
of Geological Sciences, Asian Institute of
Technology
 Master of Laws (Univ. of Melbourne),
Bachelor of Laws, BS Geo (UP)
 http://www.philippine-resources.com/