World Bank releases report comparative analysis to geothermal risk mitigation
At a recent Geothermal Roundtable event, the World Bank released an interesting report providing a comparative analysis of approaches to geothermal risk mitigation with case studies and conclusions.
At the Global Geothermal Development Plan Roundtable in Reykjavik, Iceland yesterday, the World Bank released its latest report related to geothermal energy, “The Comparative Analysis of Approaches to Geothermal Resource Risk Mitigation.” (draft event version)
Prepared by the Energy and Extractives Global Practice at the World Bank the goal with the report is to share global experience in geothermal resource risk mitigation with client countries in order to assist them with selecting an approach that best suits their specific circumstances.
It is part of a larger analytical exercise reviewing the Opportunities and Challenges of Scaling-Up Geothermal in Latin America and the Caribbean Region. Funding for the research and evaluation in the report was provided by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and the Global Geothermal Development Plan (GGDP). Drafts of this report and its findings have been presented and feedback received during past GGDP Roundtable Discussions held in The Hague, Netherlands, and Copenhagen, Denmark; and the regional geothermal congresses GeoLAC 2014 (San Jose, Costa Rica), and GeoLAC 2015 (Managua, Nicaragua).
In addition, specialized workshops around the findings of the report were carried out with multiple stakeholders in Santiago, Chile; Mexico City, Mexico; and Managua, Nicaragua. While there has been numerous formal and informal reviews that have provided input towards improving the report, the findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to the World Bank, its affiliated organizations, to members of its Board of Executive Directors or the countries they represent.
While resource risk mitigation schemes can be critical for kick-starting and scaling-up geothermal development programs, they are not substitutes for addressing various other challenges and risks faced by those investing in geothermal in a specific country. These factors that can undermine the investment climate, depending on the circumstances of a given country, could include inadequate policies to support the development of the sector, the high up-front costs to develop the steam field and the power plant, the availability of transmission access to geothermal sites, a lack of basic infrastructure required to provide easy access to these areas, limited availability of technical expertise, and the overall country risk perceived by investors.
The implementation of any resource risk mitigation scheme should be in coordination with addressing these other important investment considerations, should they exist, as any or all of them can impact the success of the geothermal development programs.
The report concludes with a number of illustrative cases of countries that have implemented various resource risk mitigation schemes and other types of support to promote geothermal development. They include examples in select countries with significant geothermal development such as Japan, Kenya, Nicaragua, the Philippines, Turkey, and the United States; and also several nations that have had significant public sector support for geothermal development but have had little or no geothermal power production to date such as Australia, Chile, and Argentina.
Key topics discussed include:
- Government as total geothermal project developer
- Cost-shared drilling to mobilize private investment
- Geothermal resource risk insurance
- Early-stage fiscal incentives
- Other factors on acceptance and mitigation
- Impact of risk mitigation strategies – case studies
Source: ESMAP/ World Bank (pdf)