Geothermal derisking tops ADB’s PHL projects
The Asian Development Bank (ADB) is advancing a geothermal derisking facility for the Philippines. This project, which has government approval, aims to fund up to 50% of exploration drilling costs. The financing will convert to a grant if exploration fails, reducing risk for private investors. The ADB also plans to support public financial management and capital market development in the Philippines, with some approvals expected by early 2027.
The ADB's geothermal derisking facility in the Philippines is a direct play to boost renewable energy. It targets the high upfront costs of exploration, a major barrier for private capital. By covering up to 50% of drilling expenses, the ADB aims to unlock new geothermal capacity in the country. This strategy addresses a known market failure in early-stage energy projects.
The initiative benefits the Philippines' energy security and its clean energy transition. It also offers a template for other Southeast Asian nations with geothermal potential. The facility's structure, converting sub-loans to grants if exploration fails, directly mitigates developer risk. This could attract more local and international startups to the Philippine energy sector.
The test for this initiative is its approval timeline. ADB Philippines Country Director Andrew Jeffries noted potential approval by late 2026 or early 2027. Delays could dampen private sector interest. Watch whether the government's new focus on project readiness accelerates or slows these approvals.
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