New funding to support second generation geothermal development in Mexico
A new funding programme announced by the IDB will support further geothermal development in Mexico through risk mitigation mechanisms.
The Inter-American Development Bank (IDB) will be supporting the Government of Mexico in geothermal development through the “Financing and Risk Transform Program for Geothermal Energy in Mexico” (PFTRG). The goal of this program is to increase power generation from geothermal resources to contribute to the diversification of the energy mix and to reduce Mexico’s greenhouse gas emissions and dependence on fossil fuels.
PFTRG will combine funds from the IDB with the Clean Technology Fund. It will be executed by the Nacional Financiera with the support of the Ministry of Energy and the National Institute of Electricity and Clean Energies. The fund will increase the escalation of investments in geothermal power generation projects by giving access to a series of financial mechanisms to meet the specific needs of each development stage, including risk mitigation mechanisms and financing for the exploration, drilling, field preparation, construction, and operation phases of geothermal projects.
For now, the PFTRG has USD 51.5 million, which will be used to drill seven exploratory wells up to 3,500 meters deep in four geothermal areas as a contingent grant. If the drilled wells are successful, they will have been financed with a preferential rate, for which payment will begin when said wells generate power. If the wells are unsuccessful, the amount of exploratory drilling will be considered a grant.
Likewise, the IDB has allocated a line of credit to the PFTRG with a concessional rate for the construction of the plant, transmission lines, as well as other auxiliary services that may be needed to take advantage of geothermal steam in case the exploration is successful.
In this context, during the latest Geothermal Congress for Latin America and the Caribbean (GeoLAC), the International Public Tender to contract for geothermal drilling services was launche within the framework of the PFTRG. This will be open for the participation of Mexican and international companies with drilling experience in the last ten years. The period to receive suggestions from potentially interested companies will be open until January 6th, 2023. The draft can be consulted and downloaded at this link.
At GeoLAC, Leonardo Ramón Álvarez Larrauri, Deputy Director of the Federal Electricity Commission (CFE), praised the convenience and innovation of the PFTRG in Mexico. This program that allows him to reaffirm the CFE’s commitment to continue being one of the leaders in geothermal energy at an international level.
Source: GeoLAC – Mexico session via our Spanish language platform PiensaGeotermia