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Guidebook on Geothermal Power Financing, DOE/ NREL/ Navigant

Guidebook to Geothermal Power Finance (snapshot)
Alexander Richter 21 May 2011

A new Guidebook on financing geothermal power projects released by the U.S. Department of Energy's National Renewable Energy Laboratory and co-authored by Navigant Consulting.

The US Department of Energy’s National Renewable Energy Laboratory has made available a new guidebook on financing geothermal power projects.

The Guidebook to Geothermal Power Finance was co-authored by Navigant and is intended to facilitate further investment in conventional geothermal projects in the United States.

It includes a brief primer on geothermal project development. The trends in geothermal project finance are the focus of this tool, relying heavily on interviews with leaders in the field of geothermal project finance.

>> Download your copy of the guide here (pdf)

Using the information provided, developers and investors may innovate in new ways of developing partnerships that match investors’ risk tolerance with the capital requirements of geothermal projects in the dynamic and evolving marketplace.

“Investment in conventional geothermal power projects on the utility side of the meter has evolved dramatically since the economic downturn began in 2008,” said Jane Pater Salmon, Associate Director with Navigant.

  • As a result, developers and investors identified new, innovative ways to address the capital constraints in the marketplace and to take advantage of the new policy incentives that emerged.”

The guidebook identifies several positive developments in the market for financing conventional geothermal power projects in recent months, including:

  • Improved access to capital and financing terms. This is evident in the anticipated return of a specific type of bridge finance to the U.S. geothermal project finance market and in the loosening of construction financing.
  • Innovative structures to facilitate deals. Groups of investors are pooling resources to create risk profiles in line with their objectives. Construction and term loans are being bundled, reducing transaction costs and streamlining investment.
  • Anticipated return to the tax appetite needed to facilitate tax equity transactions. A return to profitability for many institutional investors is a critical input to successfully monetizing the federal tax credits that complement the Treasury Cash Grant program.

The Guidebook will be of interest to developers of conventional geothermal power, investors interested in geothermal projects, and regulators in areas where geothermal resources may contribute to the achievement of renewable energy portfolio standards.

Source: Brighter Energy