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New Risk Transfer Financing Program for geothermal energy launched in Mexico

Geothermal installation at Los Azufres, Michoacan, Mexico (source: flickr/ Shane_R, creative commons)
Alexander Richter Alexander Richter 23 Jul 2018

Mexico's Ministry of Energy (SENER) has shared details of a new Risk Transfer Finance Program with a budget of $50 million at the recently held GEOLAC conference. The program is a joint effort by IDB with the Clean Technology Fund (CTF), SENER, NAFIN and INEEL.

During the 5th Geothermal Congress for Latin America and the Caribbean (GEOLAC) last week, a thematic workshop introduced the new  Risk Transfer Financing Program for Geothermal Energy . Previously we had already reported on this program .

The program is developed by the Inter-American Development Bank through the Clean Technologies Fund (CTF), together with NAFIN, SENER and INEEL, have developed the Program for Financing and Risk Transfer for Geothermal Energy, with the objective of reducing exploratory risk and financial barriers for developers, increasing the capacity to generate electricity from geothermal resources in Mexico.

Programa-Riesgo-Mexico-1-1024x510

The financing program is divided into two stages, where the first is responsible for the drilling phase and the second for the development of the plant.

The developer has to contribute with 25% of the cost of total drilling and the wells are bounded to wells of commercial diameter up to 3500 meters deep.

The financing, in case of not having a satisfactory well, is a non-refundable grant, while in the satisfactory case it is a contingent credit with concessional rate that must be paid to NAFIN. Another particularity of the program is that the developer can obtain financing for up to 2 projects.

For the execution of the drilling phase, the Program, through NAFIN , takes charge of the drilling, for which, it is currently carrying out an international tender for geothermal well drilling services:

  • Publication International Calling Drilling Services: July 12
  • Board Clarifications: August 3
  • Reception of proposals: August 30
  • Award tentative date: 01 Ocutbre
  • Contract tentative signature: November 2018
  • Drilling start: 1st semester 2019

From the environmental and social point of view, the program establishes compliance with the Mexican law in this matter and additionally compliance with the international standards “IFC Perfomance Standard”. For this purpose, the ERM company is in charge of the development of an early assessment tool for these matters, for which it developed the Tool for the Analysis of Environmental and Social Sensitivity of Geothermal Exploration Areas in Mexico, in order to help the developers to plan the best projects in a better way and in advance, for the Program of Financing and Transfer of Risks for Geothermal Energy.

The details of the program will be published soon.

Source: our sister publication PiensaGeotermia