MunichRe and IFC to provide exploration risk insurance in Turkey
Munich Re and the International Finance Corp. are to develop and pilot an exploration risk insurance for four geothermal pilot projects in Turkey expected to facilitate $420 million of private-sector investment.
In a news piece today, Munich Re announces a new advisory services agreement with the International Finance Corporation (IFC) that will help Munich Re “in identifying and preparing suitable geothermal projects in Turkey that will use exploration risk insurance to reduce their exposure to the geothermal-well productivity risk.
Four pilot projects will be supported under the agreement, expected to facilitate US$ 420 million of private-sector investment and to lead to the installation of 140 MW of geothermal capacity. Munich Re’s partner is the IFC, a member of the World Bank Group. The project is funded by the Global Environment Facility (GEF).
Patrick Luternauer, the IFC’s Regional Business Line Manager for Sustainable Business Advisory, said: “High exploration risk is one of the key barriers facing geothermal developers, both in Turkey and around the world. This innovative insurance instrument, supported by the IFC, will drive further global investment in geothermal energy, a clean, renewable, base-load energy source, reducing greenhouse gas emissions and improving countries’ energy security.”
Ansgar West, head of Munich Re’s Financial & Entrepreneurial Risks unit, said: “Deep geothermal heat is considered a very promising form of renewable energy. However, the substantial drilling and development costs associated with this technology often constitute a huge investment barrier because there is a certain risk of not making a find, in which case the investment is lost. With our expertise, we can assume renewable energy risks that are not everyday occurrences and thus help provide greater investment security.”
Source: Munich Re