When super typhoon Goni – known locally as Rolly – barrelled across the Bicol region in 2020, unleashing winds of up to 225 kilometres per hour and torrential rainfall, Joel Jay Soriano recalled his stint working at the Bac-Man geothermal energy plant. The 150-megawatt (MW) facility is nestled on a 25,000-hectare reservation in the hilly region of the Philippines.
“When I heard that Typhoon Rolly was approaching, I feared for our facility and the surrounding communities,” Soriano said in a speech at Asian Clean Energy Summit (ACES) in October. “True enough, the storm left Bicol in chaos. Communities flooded, homes destroyed, and power lines down. Yet within hours of the typhoon’s passing, the lights came back on – thanks to our power plants.”
Three years of upgrading cooling towers and reinforcing pipelines had paid off for the facility, which is owned by Energy Development Corporation (EDC), the world’s largest vertically integrated geothermal energy producer, and a subsidary of First Gen, a company owned by the influential Lopez family. “While other plants waited for fuel deliveries or repairs, Bac-Man was already helping to reconnect communities,” Soriano recalled.
The company hasn’t always had such adaptive capacity. In 2013, EDC geothermal facilities in Leyte were devastated by Typhoon Yolanda, known internationally as Haiyan, the strongest storm to ever hit the Philippines.
“Most of the plant was destroyed. It took us months to get operations back online,” Soriano told Eco-Business on the sidelines of ACES. “We realised that this would keep happening – the typhoons were getting more severe. We had to think of ways to stop the typhoons from affecting our facilities. The cost of getting them back online was huge.”
The parts of a geothermal plant that are most vulnerable to typhoons are the cooling towers, which suck in air to lower the temperature of the water pumping through the facility. “When a typhoon comes in, the cooling towers get ripped apart. We had to build cooling towers that can withstand 300 km/h wind speeds,” Soriano said.
The Philippines is struck by an average of 22 typhoons each year – storms that have grown increasingly intense as ocean temperatures rise. Powerful winds can force wind farms offline, while flooding poses persistent risks to First Gen’s natural gas facilities, which have been reinforced with concrete barriers. In 2017, an earthquake temporarily shut down an EDC geothermal plant in Leyte after a 6.5 magnitude tremor; it has since been rebuilt by cementing the mountain slopes to protect critical infrastructure.
“You cannot just mitigate against one – you have to think about all calamities,” said Soriano, noting that EDC works with the University of the Philippines on climate resilience engineering. “Infrastructure needs to be rigid for wind, but flexible for earthquakes – striking the right balance is a challenge.”
Soriano is helping the company navigate its own mission to mitigate the impact of climate change in one of the world’s most climate-vulnerable countries. The company operates 2,700MW of power, of which 1,650MW is renewable and 1,050MW is gas. By 2050, First Gen is aiming to be net zero, which will mean eventually powering down its gas operations and ramping up wind, solar, and geothermal – all the while meeting ambitious business growth targets.
First Gen subsidiary EDC is already the Philippines’ largest producer of renewable energy. Yet it now faces a major opportunity to help drive the nation’s decarbonisation goals – replacing 12,000MW of coal-fired capacity on the grid with clean power. In this interview with Eco-Business, Soriano discusses the challenges of scaling up renewables in the Philippines, the delicate “balancing act” of reducing the country’s over-reliance on coal, and the prospects for greater energy connectivity across the Association of Southeast Asian Nations (ASEAN).
Tell us about your experience joining EDC, 11 years ago, and how your role has evolved.
Before joining EDC, I worked in sales and marketing for a pharmaceutical company. I initially thought I was hired as the commercial guy who would manage the contracts and the finances. But from day one, I was confronted by engineers trying to explain to me why the plant was down. It became very clear to me early on that it was a hands-on operational role, running the business units. I first worked at Bac-Man, and then later moved to Negros [the Philippines’ third most populous island] for two years, where we have geothermal projects in the north and south of the region.
The 150-megawatt Bac-Man geothermal plant in the hilly Bicol region. The plant was hit by Typhoon Rolly in 2020 but typhoon-proofing in the years prior enabled the plant to restart soon after the storm passed. Image: EDC
I later set up the integrated planning function for EDC in 2017, when the company centralised all of the commercial operations for our plants. I later set up a strategy and planning function for First Gen. So my role has evolved over the last decade from being very engineering- and operations-driven to a more commercial and strategic position.
Gas remains a “bridge fuel” in the Philippines’ energy mix. How does the strategy highlighted in First Gen’s 2024 integrated report balance ongoing investment in gas infrastructure with the ambition for 100 per cent renewable energy? First Gen has a 2050 net zero target, while EDC is aiming for net zero by 2040.
Our [decarbonisation] journey really started after Typhoon Yolanda. It was 2015, and the chairman [Federico Lopez] said “no” to coal. He also said we would eventually exit gas – and we will, as we work towards net zero by 2050. But we have to be cautious about switching off gas. It’s a balancing act. As an archipelago, connecting islands with electricity is already difficult, and we have to be energy self-sufficient – or we’ll be without power.
Also, if we say we’re going to develop 100MW of onshore wind, that means taking land away from what could be used for agriculture. We’re an agriculturally driven country, and the footprint for renewable energy is huge compared to the same capacity of coal or gas.
Our ambition is to grow our capacity by 13 gigawatts (GW) by 2030, with 9GW of that from renewable energy and 4GW from gas. As we’re growing, our absolute emissions will increase – but our carbon intensity is starting to decline as we use disproportionately less gas and more renewables. Earlier this month, First Gen sold 60 per cent of its gas business to Prime Infrastructure Capital, and will be using the proceeds (US$850 million) to fund renewables projects.
With geothermal, hydro, wind/solar and battery storage all in the First Gen portfolio, what type of renewables are proving to be the most challenging to develop in the Philippines?
All of them are hard. Hydropower is difficult as you have to build a dam. Wind is difficult as you have to find the right location with sufficient wind potential. But what’s slowing us down is navigating very localised permitting rules for energy projects. In the Philippines, local government units are devolved from the national government, and so will have their own approach to the permitting processes. And at the national level, we have to talk to a number of different departments, from the Department of Energy; Department of Environment and Natural Resources; the Board of Investments; and in some cases, even the National Commission on Indigenous Peoples, among others. So, it’s not about the technology, it’s the time it takes to get things moving.
There have been a few incidences recently of power plants installed in nature reserves in the Philippines. How much of an issue is opposition from environmental groups and Indigenous communities who oppose power plants on their land?
It’s all about responsible development. If you follow the rules and regulations, at some point you’ll get the permits. But developers need to carefully consider the rights of Indigenous peoples and the environment as we expand our operations – and that requires a lot of communication. When we announced that we wanted to drill more wells to expand our geothermal plant in Negros, there were concerns among environmental groups that more trees would have to be cut. We had to go into communities to explain why we needed to expand. Cutting some trees was unavoidable. But even as we cut trees, we replaced them. The regulation dictates that if you cut one tree, you have to replace with 10. But we go beyond compliance simply because it’s the right thing to do. We replace 10 with at least 100 trees – and are deliberate about planting species that are endemic to the area. In the 1900s, Negros was entirely forested. Now, the province has only 4 per cent of its original forest cover left – and much of those forests are in our concession area.
How does the current Philippine regulatory environment help or hinder renewables growth – and what changes would most accelerate the energy transition from your point of view?
There are a lot of good laws that already exist in the Philippines, for instance the Renewable Energy Act [which aims to accelerate the deployment of renewables]. We’re now in the fourth round of the Green Energy Auction [GEAP, a competitive bidding process run by the Department of Energy, which aims to increase the share of renewables in the energy mix to 35 per cent by 2030 and 50 per cent by 2040], which is encouraging. Finance is critical, and one of the great things about the Philippines is that there are mechanisms that you can bank on. If all of the plants under the GEAP programme get built next year in Luzon, we will have 3GW of solar. The following year, we will have an additional gigawatt of solar.
The next piece will be downstream. RCOA [Retail Competition and Open Access, which allows customers to decide which electricity suppliers to source power from] started out enabling customers with one megawatt and above to contract directly with a power generator. By end-June 2026, RCOA will go down to 100KW from the current 500KW. This really allows producers to talk to end users, who will be able to appreciate the nuances of renewable energy and what it can deliver.
Part of the push for renewables in the Philippines is being driven by US or Europe-headquartered multinationals, which are mandated to use more renewable energy. But the bottom line is, end users are asking for renewable energy, and want to contract directly with the generator. It’s liberating, both for end users and from our perspective.
The Philippines’ energy secretary Sharon Garin, recently commented that almost everywhere in Asean has a connected energy system except for the Philippines, but the country is exploring connections with Malaysia. What is your view on the potential for the Philippines to be part of the Asean Power Grid and how that might work?
It certainly feels like the Philippines is the last mile for the Asean Power Grid. It will be a welcome development if it does happen.
From an engineering perspective, connecting the southern Philippine region of Mindanao with Malaysia would be challenging, because it would require submarine cables and there would be significant transmission losses. If we were to import electricity from Sabah or Sarawak [both located in Malaysian Borneo], those regions have considerable thermal energy, and it wouldn’t make sense to import fossil fuel-based electricity from a climate perspective. If the Philippines were to export electrons from Mindanao, the region is rich in hydro and geothermal, so Malaysia and even Singapore could benefit it the grid gets connected.
But I think the non-physical interconnectivity – the financing and the carbon markets – is more of an issue at this point in time. Singapore’s Minister of State for Foreign Affairs and Trade & Industry Gan Siow Huang talked a lot about the potential for carbon credits and renewable energy certificates (RECs) in connecting the region – and that is an area where we can help.
The uptake of carbon credits is quite limited at the moment [The Philippines released its first carbon credit rules to boost clean energy projects in October]. But once the market is established, it begs the question, where is the best place to monetise carbon credits? For the Philippines to reach a price point of US$50 to US$100 for a metric tonne of carbon sequestered, I think the region’s carbon markets will need to be interconnected. Once the market is harmonised, we’d be paying the same price, because everybody would be competing for carbon credits. Then it would make a lot more sense for us to say we’ll go ahead with transition initiatives as a region.
What is the one challenge that excites you the most about the renewable energy space in the Philippines?
Imagine what it takes to displace a power source – coal – that makes up 60 per cent of the generation mix. That’s 12,000MW of coal plants – some of them new, some nearing the end of their life cycle – from a grid that is growing by 1MW a year. That will require a lot of renewable energy construction. But this challenge is an opportunity for a business like ours.
A big challenge of the energy transition is the shift of skills from fossil fuels to clean energy jobs. How is EDC working to enable this skills transition?
There’s a lot of collaboration internally between our gas, hydro, and geothermal businesses to ensure information and knowledge sharing. We are working on creating technical communities to allow the transfer of skills between disciplines. The energy transition is not that difficult from a skills perspective; it’s just a question of willingness to make it happen.
There’s been a lot of talk over the last year about the comeback of nuclear power. Where does First Gen stand on the potential for nuclear energy in the Philippines?
The main concern First Gen has with nuclear is that we have yet to come across a project that has been completed on time and within budget without government support. Also, from a supply chain perspective, where to deposit nuclear waste is a serious issue – it’s also expensive. So, the short answer is, we haven’t closed the door to nuclear – but we have to be sure that we would be successful.
