The document discusses geothermal energy exploration and development in the Philippines after the passage of the Renewable Energy Act of 2008. It provides an overview of key provisions of the Act that promoted geothermal energy, such as allowing 100% foreign ownership of geothermal resources. It also summarizes trends in geothermal energy capacity, production, and contracts awarded since the Act's passage. While progress has been made, the document notes some ongoing challenges like legal uncertainties, environmental permitting issues, and the need for more data and research.

1. National
Geothermal
Association of the
Philippines
Geothermal Exploration and
Development After the
Passage of the
Renewable Energy Act of 2008
Atty. Fernando S. Peñarroyo
21 November 2012
4th African Rift Geothermal Conference
Nairobi, Kenya

2. Discussion Outline
§ RE Law
§ Geothermal resource capacity
§ Legal and regulatory framework
§ Geothermal energy use, market
development and stimulation
§ Constraints, issues and risk factors
Data and illustrations courtesy of DOE Philippine Energy
Program 2012-2030

3. Total Primary Energy
Actual vs. Low Carbon Scenario (LCS)

4. 20112010
Primary Energy Mix
2010
2011
Total
Energy
(MTOE)
39.29
39.40
Self-­‐sufficiency
58.5
60.0
Shares
(%)
Renewable
Energy
(RE)
39.8
40.7
Green
Energy
(RE
+
Natural
Gas)
47.8
48.7

5. 20112010
Fuel Input Mix Power Generation
2010
2011
Total
Energy
(MTOE)
19.97
20.63
Self-­‐sufficiency
67.12
68.11
Shares
(%)
Renewable
Energy
(RE)
52.61
53.07
Green
Energy
(RE
+
Natural
Gas)
67.12
68.11

6. Renewable Energy Act of 2008
§ Signed on 15 December 2008

7. Renewable Energy Act
§ Implementing Rules and Regulations
issued by DOE Secretary on 23 May
2009 (DOE Circular No.
DC2009-05-0008)
§ First open and competitive selection
process for awarding Geothermal RE
Service Contracts on 23 Oct. 2009
under DC2009-07-0011.

8. Important Features of RE Law
§ Definition of geothermal as mineral
resource paving the way for the entry of
100% foreign ownership
§ Promotes the purchase, grid connection
and transmission of electricity generated
from RE sources to ensure its market
§ Provides incentives such as exemption
from various taxes and duties to RE
developers to make investments more
attractive
§ Provision allowing ECCs to be issued from
the appropriate DENR regional office
§ Institutionalize local government’s share

9. Support Initiatives and Market
Stimulations
§ Renewable Portfolio Standard
§ Renewable Energy Purchase Agreement/
Wholesale Electricity Spot Market
§ Certified Emission Reduction Market
§ High volume backbone system of
interconnected transmission lines, sub-
stations and related facilities
§ Presidential Order directs local
governments hosting power plants to
develop ecozones that will draw power
from geothermal

10. Contracts Awarded under the RE
Law
32 Geothermal RE Service/Operating Contracts
§ 7 conversion of existing Geothermal Service
Contracts under PD 1442 into Geothermal
RE Service Contracts under RA 9513
§ 2 Geothermal RE Operating Contracts
§ 8 Geothermal RE Service Contracts under
the Open and Competitive Selection Process
§ 15 Geothermal RE Service Contracts under
Direct Negotiation

11. Production Contract Areas

12. Exploration Contract Areas

13. Cost of Doing Business
§ Capital costs: US$4-5M per installed MW
§ Operating and maintenance cost: US$0.03
to $0.05/kWh
§ Tariff: no FIT rates & reflects costs
incurred to obtain market-based financing
prices (≈US$0.19/kWh); mainly contracted
on Php/kWh; base rate escalated by
inflation and forex indices
§ Volume: plants are baseload with 90%
capacity factor but will depend on the
contracted kilowatt hours
§ Government share: 1.5% of gross income

14. Installed Capacity, 2009-2011

15. Power Generation Mix
Total Generation: 68,279.07 GWh
20112010
Total Generation: 67,743 GWh

16. Committed Projects

17. Direct Use Applications
§ limited to bathing and balneology and to a
lesser extent, agriculture-drying plants
located in the Southern Negros Geothermal
Production Field in Palinpinon, Negros
Oriental and in the Bacman Geothermal Field
in Manito, Albay.
§ Total installed thermal capacity is 3.30 MWt
and thermal energy used is 1.25 MWt.
Capacity factor stands at 0.39 while total
energy used is 39.58 TJ/year.

18. Updates on RE Policy Mechanisms
§ Launched the National Renewable Energy Program on
14 June 2011 (9,931 MW)
§ Renewable Portfolio Standard (RPS)
ü Conducted seven (7) Regional Public Consultations
(Luzon, Visayas, Mindanao) and Plenary Public
Consultation (Manila)
ü RPS Rules for final review
§ Feed-in-Tariff (FiT) Rates for solar, wind, biomass &
hydro were issued by ERC
§ Finalized the Guidelines on FIT-ALL Payment and
Collection
§ Finalized the Rules Enabling the Net Metering Program
for Renewable Energy

19. DOE Plans and Programs for
Geothermal
§ Encourage service contractors to undertake expansion and
full utilization /optimization of existing geothermal projects
§ Develop non-power geothermal applications, as well as
formulation of guidelines for non-power use
§ Continue to promote the use of geothermal resources
through Open and Competitive Selection Process (OCSP)
§ Strengthen closer coordination efforts with other gov’t
agencies and local governments to address environmental
and socio-cultural issues
§ Develop a framework/methodology for the pricing of
geothermal resource to determine true cost of steam
production, as well as to facilitate formulation of realistic
price projections
§ Intensify IEC campaign to increase level of awareness

20. Expected Milestones 2011-2030

21. NREP Targets 2011-2030

22. On-grid Capacity Installation
Targets

23. Important Laws on Permitting
§ Local Government Code of 1991
§ Indigenous Peoples Rights Act (“IPRA”)
§ Environmental Impact Statement
(“EIS”) System
§ National Integrated Protected Areas
System

24. Investment Trends
§ 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 (EDC, Chevron,
Aboitiz) and new greenfield developers
§ Company equity and risk capital financing for
new developers
§ Role of Philippine local banks
§ Collaboration with civil society organizations
(WWF Ring of Fire)

25. What Government Must Do
§ Development of publicly available
database protocols and tools for
geothermal resource assessments
§ Inclusion of Enhanced geothermal
systems and Low enthalpy for Feed-in
Tariff Rates
§ Public-private partnership must be
encouraged in the field of research,
development and demonstration for
new technologies in resource
exploration.

26. Potential Issues with LGU
§ Law is silent on whether LGU consent is
needed for exploration
§ Local government veto/moratorium on
geothermal exploration and development
§ National government should develop a
transparent system of accounting for and
allocation of sharing of revenues and taxes
with LGUs.
§ Expedite and streamline the release of LGU
share on revenues and taxes through a
simplified process with timeframe
requirements to lessen local opposition to
geothermal projects.

27. Potential Issues with IPRA
§ Lack of clear cut rules on how to
arrive at a decision making process of
IPs
§ Preferential rights of IPs; right of veto
§ RE Law is silent on share of ICCs on
geothermal revenue

28. Development Constraints
• Full foreign ownership
• Availability of geo-scientific information
and professionals
• Area status and clearance, conflict with
other land use, surface/land ownership
• Procedural efficiency and clarity between
government agencies
• Environmental issues - Judicial intervention
• Tax issues
• Cheap shale gas in the US and its wide use
for power generation - coal producers to
export more to Asia at cheaper prices.

29. Conclusion
• Philippine government will continue to
ensure energy security by optimizing the
use of geothermal energy by investment
promotions and identification and
implementation of sector reforms
• BUT: Regulatory framework should be long
term, transparent, predictable and
independently administered
• Need to address environmental and social
acceptability issues by harmonizing the
permitting process and intensifying efforts
to increase the level of awareness for
geothermal energy

30. Asante!

31. About the Speaker
§ Director, International Geothermal Association
(www.geothermal-energy.org)
§ Trustee, National Geothermal Association of
the Philippines (www.ngaphil.org)
§ VP and Treasurer, Clean Rock Renewable
Energy Resources Corp. [Natib and Daklan
areas]
§ Managing Partner, Puno and Penarroyo Law
(www.punopenalaw.com)
§ Professorial Lecturer, UP National Institute of
Geological Sciences
§ BS Geo, Bachelor of Laws (UP), Master of Laws
(Univ. of Melbourne)