GeoTermico – a new early stage geothermal investment fund being introduced

Geothermal well at Menengai, Kenya (source: flickr/ ScientificDrilling)
Parker O'Halloran 12 Jun 2017

GeoTermico is setting up a fund to invest in geothermal projects that have licenses and have performed some exploration work. The fund aims to invest approximately U.S. $100-150 million over the next few years in approximately 5-10 projects worldwide.

Geothermal energy development is often hampered by the lack of funding available, particularly in the earlier stages of development. So anyone trying to tackle this is quite welcomed in the industry. Learning about a new fund being set up by London based Renewable Energy Partner raised our curiosity.

We reached out to the company to learn more and got the chance to speak with Adel Baba-Aissa, director of Renewable Energy Partner, about the thinking behind the fund.

Q: Our readers may not be familiar with your entity and why you are launching GeoTermico?

Our background is in solar energy, we have been developing and funding solar projects in emerging markets for close to 5 years, so we know renewable energy and understand what it takes to get projects off the ground. We appreciate that geothermal is different from solar projects as you are never too sure of the exact power potential in a geothermal project until you start the drilling work. So the development phase is risky and expensive. However we have been monitoring the geothermal sector worldwide for a while now and we feel that geothermal energy can compete with other renewable energy technologies especially since it is a highly reliable baseload power source. Further geothermal creates additional value that other forms of renewable don’t offer such as district heating, horticulture, industrial processes and more as proven in Iceland and Turkey for example.

Q: What will the fund do exactly?

The fund is being set up to invest in geothermal projects that have licenses and have performed some exploration work or even drilling. The fund aims to invest approximately $100-150 million over the next few years in approximately 5-10 projects worldwide. The fund will be part of the project team, deciding on further exploration work and drilling.

We are receiving invitations to projects every week and are now in the process of reviewing the most interesting ones. When entering projects we will evaluate all available data with our fund management and our geothermal experts. Then we will meet with the team working on the project. Based on that we will decide on next steps for exploration or drilling. For every project we will have our geothermal experts on hand. This way we get the best picture of the risk profile and can adjust fast to any changes.

Adel Baba-Aissa
Adel Baba-Aissa

Q: Isn’t this precisely the risky part that every investor is worried about?

We are fully aware of the upfront risk in geothermal projects and we find the World Bank´s ESMAP report highlights this well. Many projects have stopped due to poor exploration work or got stuck in the production drilling phase as drilling has been unsuccessful and investors lost confidence in the project. We have identified experts from Iceland, USA, Turkey, Kenya and Indonesia in geothermal exploration and drilling to work with us on the projects to ensure that state of the art work is performed. Even though we will take on resource risk and drilling risk, we will work with multilateral financing agencies and other organisations working on promoting the funding of geothermal projects, on risk mitigation instruments.

Q: Is there anywhere in particular you are looking to invest?

We are open for projects of all sizes in most major geothermal countries of the world. We have so far evaluated projects in the US and Africa and are open for projects from Turkey, Central and South America and Asia.

Q: What do developers need to do if they like to have GeoTermico as a partner?

We have set up a specific page on our website about GeoTermico. So we look forward to interested parties contacting us if they want to join the fund, work with us or bring new projects to our attention.

Source: Renewable Energy Partner in the UK