Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

B O x 3 . 7
Indonesia’s Concession Holders Reluctant to Expand Capacity 
The example of Indonesia shows that even in those cases where private developers are already holding 
concessions in a large number of geothermal development areas, private investments in building and expanding 
new geothermal power capacity may be slow in coming (CIF 2010). Presently, there is nearly 1,000 MW of 
unexploited geothermal power potential under private control and over 3,000 MW with state-owned enterprises. 
About half of these resources are in geothermal fields which are currently producing electricity (brownfields) or 
with confirmed reserves (quasi-brownfields) and are well placed for further expansion (World Bank/GEF 2008).
Brownfield developers would be better equipped to proceed with investments if sufficiently attractive feed-in tariff 
policies were introduced in the country.
Source | Authors.
The second approach—a national policy commitment to support geothermal power generation, 
such as FIT, while phasing out public support in the upstream phases—has a chance of success 
if: (a) geothermal exploration and resource confirmation resulting from prior public support is well 
advanced in many areas of the country, so there is substantial scope for immediate brownfield rather 
than greenfield development; (b) the companies expected to respond are financially able to take the 
residual exploration risk—including, if necessary, through balance sheet financing rather than seeking 
loans; and (c) the off-take tariff or FIT is sufficient to compensate the developer for the incremental cost 
relative to lower cost generation alternatives, if any.
Increasing private participation in the sector can also be accomplished by privatization of the national 
geothermal development company and its assets. However, this does not necessarily lead to further 
geothermal development by the in-coming private sector entities. Such privatization, therefore, needs 
to come with explicit commitment of the investor to further geothermal development.
Privatization of geothermal facilities built by the public sector is the route taken by the Philippines in 
2007, when it privatized PNOC EDC (now called EDC). As a private company, EDC and its subsidiaries 
have been actively acquiring state-owned geothermal power generation assets (see Pilipinasenergy 

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G e o t h e r m a l H a n d b o o k : P l a n n i n g a n d F i n a n c i n g P o w e r G e n e r a t i o n 
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2009 and Danapal 2011). This approach is a sure way to increase private sector participation in 
the sector and raise some capital for the state budget, but the benefits for continued geothermal 
development are yet to be demonstrated. In fact, there has been a noticeable slowdown in greenfield 
geothermal development in the Philippines since privatization (World Bank/PPIAF 2010). It is hoped 
that the newly announced projects by EDC and Chevron will restart the momentum in the Philippines 
(Chevron 2011; Danapal 2011).
B O x 3 . 8
Chevron’s Investment in a New Greenfield Geothermal Project in the 
Philippines 
Chevron holds a 90 percent-owned and operated interest in the Kalinga geothermal prospect area in northern 
Luzon, which is under a 25-year renewable-energy service contract with the Philippine government. The project 
could add 100 MW of capacity to Chevron’s geothermal portfolio, which is in the early phase of geological and 
geophysical assessment.
Source | Chevron 2011.