The 19 geothermal projects involve investments of approximately $2.5 billion and will amount to around 620 MW of additional capacity. The Philippines is a leading country in the world in terms of renewable energy, with 43% of total primary energy supply coming from such sources, and, as per the Philippine Energy Department “next to the United States, is the second largest producer of geothermal power in the world”. According to official data, with almost 2,000 MW of installed geothermal power, geothermal plants are the largest suppliers of electricity on the islands and accounted for 22.2% of it power mix (in 2001).
However, the Philippine government wants to do more and has introduced a series of incentives to encourage investment in geothermal energy. The Act to Promote the Exploration and Development of Geothermal Resources establishes among others: the recovery of operating expenses; a service fee of up to 40% of net proceeds, and exemption from all taxes except income tax. Apart from providing a substantial amount of electricity, it is hoped that geothermal resources with help the country save huge amounts of foreign exchange through the displacement of a large fraction of imported fuels.
Geothermal key to energy dependence
The Philippine Energy Department calculates that for the next ten years, geothermal energy is projected to displace an average of 25 million barrels of oil equivalent (MMBFOE) of imported fuel yearly, equivalent to foreign exchange savings of about $588.4 million (based on an average crude price of US$25 per barrel).
To date, the country's total estimated potential of untapped geothermal resource is about 2,600 MW. For the succeeding ten years, plans to develop proven reserve areas will make possible the availability of a maximum capacity of 1,200 MW of this estimated potential. Of these potentials, about 610 MW are situated within service contract areas belonging to the government-owned Philippine National Oil Corporation-Energy Development Corporation.
Clean Technology Fund will help
The Philippine’s Energy Secretary, Angelo T. Reyes, has also announced that his country will benefit from $250 million from the World Bank’s Clean Technology Fund, much of which could be used to tap into these rich geothermal resources.
"The $250 million of clean technology fund money will leverage about $2.75 billion investment, said Reyes, adding that it will help generate the resources needed to cut greenhouse gas emissions and accelerate the implementation of renewables projects and programs.
Clean Technology Fund donor countries include Australia, France, Germany, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom and United States, who pledged over $6.1 billion in 2008 for the Clean Technology Fund and Strategic Climate Fund. The Clean Technology Fund is as part of a broad global initiative to help developing countries meet the cost of actions needed to combat climate change.
In the Philippines, the amount received from the Clean Technology Fund will be used for programs in the power sector (renewable energy and highly efficient technologies to reduce carbon intensity), transport sector (efficiency and modal shifts), and in energy efficiency (buildings, industry and agriculture).
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