MAPping the Future

The race to find clean and sustainable energy has never been more relevant for the country than it is today.

In the first quarter of 2024, the Philippines posted an economic growth of 5.7 percent. At the current rate we are going, it is projected that our economy will reach upper middle income status by 2025. Driving this growth is the country’s people. Yet we are also a nation of 118 million at latest count, the 13th most populous in the world.

While we have made great strides in managing our population growth—we have entered a demographic sweet spot, which could propel economic growth—but with the opportunities, there are also challenges, more so in the energy sector.

As the economy grows, so do energy requirements.

As far as demand for electricity is concerned, latest data from the Department of Energy (DOE) show that the two immediate needs of the Filipino come first. Hence, the transportation and household sectors are identified as the two major consumers of energy.

The recent yellow alerts underscore the need for additional sources of constant and reliable power to ensure power security.

Another factor in the spike in demand and diminished supply of power is the current heat wave we are experiencing, with climate change as the root cause.

The government is determined to push forward into the future with clean energy. The DOE’s National Renewable Energy Program for 2020-2040 currently aims for at least 35 percent of the country’s total energy supply to be generated by renewable resources such as hydro, wind, solar and geothermal by 2030. By 2040, the program targets to have renewable energy (RE) sources account for at least half—50 percent—of the country’s total power generation capacity.

There is room for geothermal to grow with the need for more RE in the future. In 2021, geothermal energy comprised about 10 percent of the total energy generated in the country and made up about 45 percent of the total RE mix. By 2040, an additional capacity of about 700 MW is targeted for geothermal.

We believe that the country has a strong potential to be at the top, given enough technology and resources to harness this energy.

The Philippines is one of the world’s top producers of geothermal power, owing to its location along the Pacific Ring of Fire, ranking third among geothermal-producing countries.

We are also the pioneer in the development of geothermal power in Southeast Asia. In 1971, a company called Philippine Geothermal Inc. (PGI) explored the steam fields in Tiwi, Albay, and developed the Philippines’ first geothermal power plant. This was followed by development of the Mak-Ban geothermal plant in the Laguna and Batangas areas at the foothills of Mount Makiling and Mount Banahaw.

In 2017, the SM Group entered the energy sector when it acquired the Philippine Geothermal Production Co. (PGPC), formerly PGI. The goal is to make geothermal even more vital and available as a source of baseload power for the country by exploring and developing more steam fields.

Why did SM, whose core businesses are in retail, banking and property, decide to invest in RE, particularly in geothermal?

Our acquisition into PGPC strongly reflects our commitment to sustainability, particularly our support to help preserve the planet by promoting clean energy.

The clear benefits of geothermal

Geothermal energy is reliable.

Geothermal plants produce energy fueled by the heat from the Earth’s core. This is the same planet that has been nurturing life for billions of years. This is energy that has always been there for us that, when harnessed correctly and responsibly, provides baseload RE 24×7, rain or shine, day and night. Baseload is the minimum power we need over a 24-hour period. It should come from dependable, readily available sources. Geothermal meets these requirements.

Two of the main geothermal plants operated by PGPC, Tiwi and Mak-Ban, accounted for almost 65 percent of the electricity generated from geothermal energy in the Luzon Grid in 2021. The Mak-Ban and Tiwi locations are strategic because of their proximity to load centers. Mak-Ban in Laguna is about 70 kilometers from Metro Manila, while Tiwi in Albay is about 340 km away.

Geothermal energy is also renewable

RE comes from unlimited, naturally replenished resources, like the sun, wind, flowing water or hydro, biomass from plants and geothermal. This is in contrast with non-RE, which comes from coal, gas and oil.

The specific way we harness geothermal energy in our power plants makes the renewable aspect even more beneficial. It’s a closed-loop system where nothing is wasted. Therefore, by the very nature of geothermal energy, geothermal power plants are low emitters of greenhouse gases.

In the time that PGPC pioneered the development of geothermal resources in Southeast Asia in 1971, it has produced 145 billion kilowatt-hours cumulative gross generation, equivalent to about 57 billion kilos of carbon dioxide emissions avoided as of 2022.

If we consider that solar power is intermittent and that vast areas of land are needed to set up solar panel farms capable of generating enough power to contribute significantly to the grid, or that wind power is subject to the unpredictability of nature apart from the logistical challenges of setting up wind turbines up in mountains or near the oceans, tapping geothermal energy in identified sites in the country becomes a very viable option.

The economic and social impact of harnessing clean, reliable and sustainable energy, like geothermal, are also quite clear.

Energy security is one of the cornerstone goals of the government’s RE programs. All efforts should be so that our vulnerability to global energy market fluctuations are significantly reduced. Being able to harness geothermal energy right in our own backyard is in line with this national goal.

Five new geothermal projects are currently being developed by PGPC in areas in Benguet, Quezon, Camarines Norte, Camarines Sur, Albay, Cagayan and Kalinga. These projects have the potential of delivering a total of 250 to 400 megawatts (MW) of additional renewable baseload power, nearly doubling PGPC’s current capacity of 300 MW.

We need people to make this happen. About 2,000 jobs are expected to be created from these projects, with a majority of employment coming from the local communities.

Significant improvements are also expected for the host local governments, as has been the case with Tiwi when geothermal was first explored there. The town has since progressed from being a sixth class municipality to first class. SM, through our various corporate social responsibility efforts, has also been privileged to help train farmers, support community livelihood organizations, produce scholars and plant thousands of trees to protect the environment in Tiwi.

Energy is the lifeblood of a country. As it moves forward in its development, the demands of its ever-growing activities necessitate an increase in the consumption of energy.

If we are to continue the Philippine growth story for generations to come, then we must ensure that the right conditions are in place.

Geothermal is clean, reliable, sustainable energy and can pave the way for this growth to further flourish.

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This article reflects the personal opinion of the author and not the official stand of the Management Association of the Philippines or MAP. The author is a member of MAP and the president and CEO of SM Investments Corp.