Q: Which country is #2 in geothermal production, trailing only the U.S.?

A: The Philippines. And in another few years, the power-packed archipelago could overtake Uncle Sam.

The Philippines is drawing $10 billion over the next 10 years into its burgeoning renewable energy infrastructure... and that money will go toward more than just boosting an already impressive geothermal industry.

Run-of-river hydropower companies will play an integral role in the island chain's move to double its clean energy capacity.

With 1,081 potential hydroelectricity generation sites spread throughout the country's 7000+ islands, it's easy to see why the Philippines is part of a growing list of nations embracing run-of-river. "Mini-hydro," as some call it there, uses generation sizes between 101KW and 10MW to expand efficient electricity access with minimal transmission distances.

Moreover, local hydropower operators have the luxury of tapping into an established renewable energy infrastructure.

The Philippines: Rich in Renewables

The Philippines now gets 23% of its electricity from a combination of hydroelectricity, solar, wind, biomass, and above all, geothermal — up from 21% in 2005.

Rich underground energy resources have made it easier for the Philippines to move away from its two-pronged colonial past (first Spain called the islands its own, then the U.S. took over until 1946) and into relative energy independence.

To take autonomy a step further, President Gloria Arroyo launched a new Philippine Energy Plan in 2005 to propel the country to 60% self-sufficiency by 2010.

The Philippine government is dialing back on coal imports and ramping up oil and gas exploration. But like other countries with near-term plans to maximize existing petroleum resources, the shot-callers in Manila know renewable energy is the real long-lasting way to satisfy growing energy demand.

With Arroyo's 2010 clean energy target fast approaching, it's more and more evident that the government's additional goal of doubling capacity will take more than geothermal alone.

And they've added a new goal, too. Energy Secretary Angelo Reyes says the national objective is "to double the power being generated from renewable sources, from 4,500 MW to 9,000 MW in 10 years."

Over the same 10 years, homegrown and foreign firms will combine in joint venture investments — outsiders are limited to 40% stakes in any given RE project — that could exceed the $10 billion mark.

To stimulate that spending, the Manila-based Philippine government is offering attractive tax advantages:

• 7 years without income tax

• Duty-free equipment imports

• 0% VAT (value-added tax) on electricity sales

If the resource potential alone weren't enough, the tax sweeteners have drawn more than a dozen letters of interest from local and international power companies.

An invitation to to develop known resources, tax-free, in a country where consumption is expected to grow at an average of 6% annually? You bet they're interested.

Our interest is piqued, too. Even with its thousands of islands, the Philippines makes up one big piece of the global clean energy puzzle. As for hydropower, the country joins Canada, India, China, and others where run-of-river is transitioning from feasability studies into practical implementation.

Next week, I'll have a full report for you on more of the countries and listed companies ready to dive into run-of-river hydropower.

Until then,

 
Sam Hopkins
Green Chip International