FIT for Emerging Geothermal Technologies

National Geothermal Association of the Philippines

Feed-in Tariff for Emerging Geothermal Technologies: New Lease on Life for

the IndustryAtty. Fernando S. Peñarroyo Chair, Public Policy Committee


16 August 2016Marco Polo Hotel, Pasig City, Philippines

National Geothermal Association of the Philippines13th Annual General Meeting

Presentation Outline

Meeting the NREP geothermal target– Regulatory impediments– Declining quality of unexploited resources

Policy considerations Incentivizing the geothermal industry

Geothermal Energy Roadmap (DOE)

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

Development increments and plant decommissioning since 2005 (DOE)

Challenges in Achieving Geothermal Power Generation Targets

Regulatory impediments Declining quality of unexploited

resources

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

Geothermal Exploration Projects with Permitting Issues

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.

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

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.

Revised Geothermal Energy Roadmap (2016)

Revised Target with NGAP input

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.

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.

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.

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

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.


Feed-in Tariff for Emerging Geothermal Technologies: New Lease on Life for

the IndustryAtty. Fernando S. Peñarroyo Chair, Public Policy Committee


16 August 2016Marco Polo Hotel, Pasig City, Philippines

National Geothermal Association of the Philippines13th Annual General Meeting

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/

http://www.punopenalaw.com/