Global Geothermal Power: Policies, Funding, Wells, Strengths, Opportunities and Barriers Geothermal is moving into a broader investment cycle. In 2026, the story is no longer limited to volcanic power plants in a few classic markets; it now includes enhanced geothermal systems, closed-loop designs, district heating, superhot rock, lithium from brines and industrial heat. Across the United States, Canada, Germany, the United Kingdom, Australia, New Zealand, Japan, Iceland, France and Italy, the sector is being shaped by a simple question: who is de-risking the first wells, and who is ready to finance the next ones? United States: the next-generation testbed The United States has the broadest geothermal innovation ecosystem in this group, with a mature conventional base in the West and a fast-growing next-generation pipeline. The main policy signal in 2026 is the Department of Energy’s US$171.5 million funding opportunity for next-generation geothermal field-scale tests, exploration...
Philippines Approves P10‑Billion Geothermal Risk Fund to Derisk Exploration and Boost Renewable Energy Investment
The Philippine government’s approval of a P10.07‑billion Philippine Geothermal Resource Derisking Facility is a pivotal move to unlock more baseload renewable energy, cut exploration risk for developers, and keep the country on track toward its 2040 clean energy targets.
A landmark P10‑billion geothermal risk facility
The Economy and Development Council (EDC), chaired by President Ferdinand R. Marcos Jr., has cleared the creation of a P10.07‑billion Philippine Geothermal Resource Derisking Facility. This facility is a government‑backed financing mechanism aimed squarely at the most difficult part of geothermal development: high‑risk, early‑stage exploration. By absorbing a portion of the financial risk associated with resource confirmation, the facility is designed to move more projects from concept into drilling and eventually to commercial operation.
Geothermal has long been one of the Philippines’ strategic advantages, yet new development has lagged behind its technical potential. Exploration wells are expensive, take years to plan and execute, and may still fail to find a commercial reservoir. That combination of high cost and high uncertainty has made private investors cautious, especially when other renewable options like solar and wind have much lower upfront risk. The new facility directly targets this bottleneck by sharing risk between the state and private sector.
Why geothermal still matters for the Philippines
The Philippines has historically been a global leader in geothermal energy, ranking among the top countries in installed capacity. Geothermal has provided reliable baseload power, helping reduce dependence on imported fossil fuels and underpinning the stability of the national grid. Yet in recent years, growth in geothermal has slowed even as demand for clean energy has increased.
Several factors explain this slowdown. Many of the “low‑hanging fruit” fields were developed decades ago, leaving more complex or less explored prospects. The cost and risk of drilling exploration wells has risen, especially as projects move into deeper or more challenging reservoirs. At the same time, solar and wind costs have dropped dramatically, attracting much of the private investment that might otherwise have gone into geothermal.
Despite these challenges, geothermal remains uniquely valuable. Unlike solar and wind, which are variable and require balancing, geothermal provides continuous, 24/7 baseload output. This firm capacity is crucial for grid stability and for supporting industrial loads. In a tropical archipelago vulnerable to climate change, having a portfolio of firm, low‑carbon generation is a major resilience advantage. The new derisking facility is therefore not just about one technology; it is about preserving and expanding a strategic pillar in the country’s energy mix.
Addressing the exploration risk problem
Exploration risk is the central problem the Philippine Geothermal Resource Derisking Facility is designed to solve. Before developers can build a power plant, they must drill several exploration and appraisal wells to confirm the resource: reservoir temperature, permeability, pressure, chemistry, and sustainable production potential. Each well can cost millions of dollars, and a bad well can sink a project’s economics before it even leaves the ground.
From a financial perspective, this early‑stage risk is very different from the relatively predictable cash flows of an operating plant. Traditional project finance is poorly suited to exploration because lenders prefer proven resources and stable revenues. As a result, developers often need equity capital for exploration, which is more expensive and limited.
A government‑backed derisking facility can bridge this gap in several ways:
- Co‑funding exploration drilling, so the state shares part of the cost and risk.
- Providing guarantees or insurance‑like instruments that compensate developers if exploration fails to confirm a viable field.
- Offering concessional finance that lowers the effective cost of capital in the high‑risk phase.
By doing so, the facility lowers the barrier to entry for developers, encourages more exploration campaigns, and increases the likelihood that promising prospects will be drilled. Even when a particular well fails, the data can benefit the broader sector by improving understanding of the resource base.
How the facility fits into the EDC’s agenda
The Economy and Development Council approved the Philippine Geothermal Resource Derisking Facility during its 10th meeting, reflecting the project’s strategic importance. The decision sits alongside other major approvals, including investments in rail, energy, and skills, underscoring a broader push to modernise infrastructure and human capital in tandem.
In this context, geothermal derisking is not an isolated initiative. It aligns with the country’s renewable energy roadmap, which targets 52 gigawatts of installed renewable capacity by 2040. Achieving that target will require not only solar and wind but also firm renewables like geothermal and hydropower. The facility is therefore a concrete instrument to ensure geothermal contributes meaningfully to that 52‑gigawatt goal.
Institutionally, the facility can also improve coordination between agencies. The Department of Energy (DOE), the Department of Finance, and planning bodies must align on risk‑sharing structures, eligibility criteria, and governance. The EDC’s approval provides political backing and a framework through which these institutions can operationalise the facility.
DOE and ADB’s geothermal derisking roadmap
The Department of Energy first engaged the Asian Development Bank (ADB) in 2022 to develop a geothermal derisking roadmap for the Philippines. This roadmap acknowledges that exploration risk is one of the industry’s biggest barriers and sets out a strategy to address it systematically.
Key elements of such a roadmap typically include:
- Mapping and prioritising prospective geothermal fields based on technical and economic criteria.
- Designing risk‑mitigation instruments tailored to different project stages.
- Reviewing regulatory frameworks to ensure they support timely approvals and clear permitting processes.
- Identifying capacity‑building needs within government and industry to manage complex geothermal projects.
The P10.07‑billion facility effectively turns this roadmap into a funded programme. It moves the concept out of the planning domain and into implementation, giving developers a clear signal that the government is willing to put money behind its geothermal ambitions.
Project timelines and the 4–6 year development cycle
The DOE has underscored that geothermal projects typically take four to six years to reach commercial operation. This long timeline reflects the sequence of activities: resource identification, exploration drilling, appraisal, field development, plant construction, and grid integration. Each stage carries its own risks and costs.
In comparison, solar and onshore wind projects can often be developed in two to three years, and they require no exploration drilling. This difference in timelines further explains why private capital has favoured these technologies. The derisking facility aims to make geothermal more competitive by reducing the risk premium associated with the longer development cycle.
By underwriting part of the early risk, the facility can compress decision timelines. Developers can proceed with exploration knowing that a portion of the downside is cushioned, and financiers can model projects with clearer risk‑sharing parameters. Over time, this can shorten the elapsed time between resource identification and financial close for new plants.
Strengthening the pipeline of clean energy investments
One of the facility’s explicit objectives is to “strengthen the country’s pipeline of clean energy investments.” This is a crucial point: geothermal exploration projects that do not advance beyond early studies represent lost opportunities, both for energy supply and for investor confidence. A robust pipeline of projects at different stages—exploration, appraisal, development, construction—signals a healthy sector and helps attract long‑term capital.
The derisking facility can support this pipeline in several ways:
- Encouraging multiple developers, including smaller or newer players, to enter the geothermal space.
- Supporting a wider geographic spread of projects, beyond legacy fields, into underexplored regions.
- Ensuring that promising prospects are not abandoned prematurely due to lack of risk capital.
For the Philippines, which aims to maintain its leadership in geothermal while expanding overall renewable capacity, this pipeline effect may be as important as any single project that emerges from the programme.
Skills, jobs and the TESDA TVET project
In the same meeting where the geothermal facility was approved, the council also cleared a P15.76‑billion “Boosting Employability in Strategic Technical and Vocational Education and Training Sectors” project under the Technical Education and Skills Development Authority (TESDA). This project will be financed through official development assistance loans and is designed to align Filipino skills with the needs of high‑quality jobs.
The link between these two approvals is not accidental. As the country invests in more complex energy projects—including geothermal, grid upgrades, and new renewables—it must also invest in the workforce that will design, build, and operate them. Geothermal development requires specialised skills in geology, drilling, reservoir engineering, power plant operations, and environmental management. TVET programmes can help build these skills domestically, reducing reliance on foreign expertise and ensuring that the benefits of investment accrue to Filipino workers.
By pairing risk finance for projects with skills finance for people, the government is trying to ensure that the energy transition also becomes a jobs and skills transition. This integrated approach can strengthen public support for energy investments and improve long‑term competitiveness.
Implications for private developers and investors
For private developers and investors, the P10.07‑billion derisking facility changes the risk‑reward equation. While details on the specific instruments and eligibility criteria will matter, several implications are already clear:
- Developers can reconsider shelved or marginal projects if early‑stage risk is partly absorbed by the facility.
- International investors may find the Philippine geothermal market more attractive, especially if the facility is paired with clear regulations and transparent processes.
- Domestic financial institutions can gain confidence in geothermal as a viable asset class, especially once derisking structures and successful case studies are in place.
This is not a guarantee of success; poorly designed or implemented facilities can fail to attract participation. But if managed effectively, the fund can catalyse a new wave of geothermal investment that complements the surge in solar and wind.
Geothermal’s role in the 52‑gigawatt 2040 target
The government’s renewable energy roadmap targets 52 gigawatts of installed renewable capacity by 2040. Achieving this will likely require a mix of technologies:
- Large‑scale solar, both ground‑mounted and rooftop.
- Onshore and offshore wind, where resource conditions allow.
- Hydropower, including rehabilitation of existing plants.
- Biomass and waste‑to‑energy in specific niches.
- Geothermal as firm baseload and grid‑stabilising capacity.
Geothermal’s contribution will not be measured only in megawatts but also in its qualitative role. Firm output helps stabilise frequency and voltage, supports industrial loads, and reduces the need for fossil‑fuel peaker plants. In planning models, each megawatt of geothermal can often be more valuable than a megawatt of variable renewables because of its capacity value and dispatch profile.
By creating a dedicated derisking facility, the Philippines is signalling that geothermal is expected to remain a significant contributor to the 52‑gigawatt goal, not just a legacy technology from past decades.
Risks and success factors for the facility
Like any public‑backed financing mechanism, the Philippine Geothermal Resource Derisking Facility will face several risks and success factors:
- Governance: Clear rules, transparent selection criteria, and robust oversight will be essential to avoid misallocation of funds or politicisation.
- Technical rigour: Projects supported by the facility must be grounded in sound geoscience and engineering, with independent review where appropriate.
- Coordination: Effective coordination between DOE, finance agencies, regulators, and developers will be needed to ensure timely approvals and disbursements.
- Learning and adaptation: The facility should be designed to learn from early projects, adjusting its instruments and processes as experience accumulates.
If these factors are managed well, the facility can become a model for other countries seeking to derisk high‑potential but high‑risk renewable resources. If not, it risks becoming a dormant fund or a source of frustration for developers.
A strategic step toward a firm, clean energy future
Ultimately, the P10.07‑billion Philippine Geothermal Resource Derisking Facility represents a strategic bet on firm, clean power. In a world where many countries are racing to build renewables, those that can combine high shares of variable renewables with firm, low‑carbon baseload will be better positioned to maintain reliability, competitiveness, and resilience.
For the Philippines, this facility is a practical step toward that future. It recognises that geothermal’s biggest obstacle is not physics but finance and risk. By tackling exploration risk head‑on, the government is giving geothermal a fresh chance to contribute to a modern, diversified, and low‑carbon power system—one that can support economic growth while meeting climate and energy‑security goals.
Source: Tribune Net
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