Southeast Asian Nations Target Coal to Boost Geothermal
New financial de-risking models aim to lower exploration costs and challenge coal's dominance in regional power grids.
Updated on Oct. 22, 2026 in Energy
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The Asean Centre for Energy reports that heavy reliance on coal remains the primary obstacle to expanding geothermal power in Southeast Asia. Officials are now turning to specialized financial de-risking models to shift the region toward renewable baseload generation.
Why it matters
Coal currently provides over 60 percent of electricity in key markets, creating a stable price floor that makes new geothermal projects difficult to finance. Overcoming this requires addressing the market advantages of existing thermal plants and the geographic distance between resources and industrial hubs.
Coal supplied 61.8 percent of Indonesia's power and 61.9 percent of Philippine electricity in 2023. Meanwhile, the Philippines has launched a $170 million geothermal de-risking facility to lower capital barriers.
The players
Asean Centre for Energy
An intergovernmental organization focused on regional energy security and sustainable transition policies.
Department of Energy
The Philippine government body responsible for implementing energy infrastructure and exploration policies.
LandBank
A state-owned Philippine bank providing financial services and implementation support for government energy projects.
The details
Geothermal energy relies on accessing underground heat, but the exploration process carries significant financial risk due to the high cost of exploratory drilling. To mitigate this, governments like Indonesia are using state-led drilling programs to certify sites before tender. The Philippines is utilizing a $170 million facility—a government-backed fund to offset initial project costs—to replicate the successful state-absorption models used in the 1970s and 1980s.
Timeline
1970s and 1980s: The Philippine government absorbed early geothermal exploration costs.
2023: Coal provided roughly 62 percent of electricity in both Indonesia and the Philippines.
October 2026: The Asean Energy Business Forum convened in Manila.
The Tech Race
The push to scale geothermal follows the Philippine Geothermal Resource De-Risking Facility model to overcome market-entry barriers. This initiative marks a strategic shift to compete with established coal infrastructure that currently dominates the regional baseload.
Regional industrial electricity consumers may see shifts in power procurement as nations move to integrate geothermal baseloads. These policy changes aim to stabilize energy costs long-term by reducing dependence on imported coal, though widespread grid integration remains in the early development phase.
The takeaway
The transition away from coal in Southeast Asia hinges on the success of state-backed financial de-risking for geothermal exploration. Stakeholders should track the deployment of the Philippine facility to see if it lowers project lead times in other regional markets like Indonesia.
Further reading
For broader trends in regional power transitions, see our Energy section.
Source note: This article includes information reported by Eco-Business.
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