Icelandic EFLA and Crescent Capital to cooperate on geothermal development in Turkey

Istanbul, Turkey (source: flickr/ John Virgolin, creative commons)

Alexander Richter 15 Apr 2015

With the country considered to be among the top ten countries with geothermal resources in the world, there are numerous opportunities in the Turkish geothermal market. Icelandic engineering firm EFLA, has actively worked on geothermal projects in Turkey since 2007.

Turkey has set itself ambitious development goals and plans to have a geothermal power generation capacity of over 740 MW by 2018 and 1,500 MW by 2023.

Today, there are 17 geothermal power plants operating in Turkey. Together they have an installed power generation capacity of around 410 MW. There is good government support for geothermal development with an existing feed-in-tariff of $0.105/ kWh. There are nearly 230 geothermal fields with identified reservoir temperatures up to 287°C, making them highly interesting both for electrical production and for potential direct use.

“EFLA and its cooperating partners have been working on developing of geothermal projects and operating geothermal power plants with number of companies in Turkey, thereby gaining a strong track-record and gaining experience in the growing geothermal market in the country. All our clients share our goal to have a sustainable geothermal system with a good reinjection program,” states Mr. Runar Magnusson, Mechanical Engineer, Director at EFLA Geothermal Division. “But EFLA Engineers is also one of the leading companies in Europe in the provision of engineering services for high voltage transmission lines, underground cables, pylons and substations having worked on projects world-wide, including the Turkish market. The geothermal sites in Turkey are different in character and potential. Depending on the resource temperature, resources can be used for power generation from the available fluid/steam either suitable for flash, or binary solutions, or the heat used directly, e.g. in heating applications. There is an increasing interest in direct use of geothermal heat in Turkey for district heating and spa centers. With about 90% of all homes heated by geothermal in Iceland and geothermal used for spas and swimming pools, we at EFLA have a deep understanding of geothermal district heating and other direct use applications.”

Arranging suitable financing is always crucial for the successful implementation and development of projects. Funding the initial development steps has to be secured at the same time as exploration work is conducted. “To attract funding, projects need to have seen sound and coherent exploration work performed by a qualified team of experts. Their work needs to withstand review by specialist hired by financial institutions. With drilling cost of US$4 to 6 million per well, poor exploration data can be devastating for the project and the funding entity. Financial institutions need to trust in the engineering work and the estimated power potential of the project. Unsuccessful initial drilling results often lead to an end of further development and the exit of investors. Thus, we see our work as a crucial help for investors and developers to plan their projects in line with acceptable returns and the availability of potential funding, but also to better understand expected risks and returns,” says Ingi Ingason, financial consultant and project manager at EFLA.

In Turkey, EFLA cooperates with Istanbul-based Crescent Capital, an independent private equity firm, with valuable experience in renewable energy and geothermal energy development and financing in Turkey.

“Jointly, we evaluate potential projects and work hand in hand on technical evaluation as well on the evaluation of financial viability. Our cooperation with Crescent allows us to assist our clients in arranging both debt financing and equity investment”.

“The cooperation with EFLA has been very beneficial. It allows us to better understand the technical aspects of geothermal development and the risk-reward profile of projects.  Our joint work helps filter projects that are more financially viable,” says Aygen Yayikoglu, Managing Partner of Crescent Capital. “Given the upfront risk profile of geothermal development, working with top technical experts at a very early stage to jointly assess both technical and financial parameters, provides a strong foundation for our cooperation,” adds Mr. Yayikoglu.

EFLA will participate in the World Geothermal Congress in Melbourne, Australia, April 20-24, 2015. For more information on EFLA’s activities and services contact runar.magnusson@efla.is or ingi.ingason@efla.is or visit the company’s website at: www.efla-engineers.com

To contact Crescent Capital; aygen.yayikoglu@crescent.com.tr

Source: Press Release by Efla