At the GEOLAC conference in Mexico City, a panel is talking about risk mitigation to help scale up geothermal development. With participants from the Inter-American Development (IDB), German development bank KfW and the World Bank, the session compared and set up a contrast of two new risk mitigation funds.
In his presentation on the experience of KfW, Senior Project Manager Jens Wirth discussed the experience of his bank in the facilities set up. Describing the bank’s supported Geothermal Risk Mitigation Facility (GRMF) for East Africa, he talks about the success but also what the bank has learned in the process of starting and operating this facility. So far no project supported under the scheme has brought any MW online yet, but have been successful in their activities to conduct the work funded under the program.
He then described the Geothermal Development Facility (GDF) set up as the first multi-donor climate initiative to promote geothermal energy in Latin America. With the first call for proposals concluded, the facility is now operational.
He also shared details of the expressions of interest received, which are now being evaluated. Qualified proposals will then be invited to provide technical proposals. The program received 25 expressions of interest (projects) from 9 of the 10 countries covered by the program. Countries covered under GDF are Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala Honduras, Nicaragua, Peru. From the initial round no expression of interest was received from El Salvador.
Entities that have sought support were 22 private sector players (88%), 7 public companies and one public-private driven project. About 56% or 14 projects have sought funding for surface studies and 44% (or 11 projects) have sought funding for exploration drilling.
Here a detailed look at the number and type of projects and countries where they are located:
- Bolivia: 2 projects (one each for surface studies and exploration drilling)
- Chile: 8 projects (5 for surface studies and 3 for exploration drilling)
- Colombia: 2 projects for surface studies
- Costa Rica: 1 project for surface studies
- Ecuador: 1 project for surface studies
- El Salvador: no project sought funding
- Guatemala: 4 projects (2 for surface studies, 2 for exploration drilling)
- Honduras: 2 projects (1 for surface studies, 1 for exploration drilling)
- Nicaragua: 1 project for surface studies
- Peru: 4 projects (2 for surface studies, 2 for exploration drilling)
Following the presentation by KfW, Thrainn Fridriksson, Energy Specialist of the ESMAP program in the World Bank, shared details about the World Bank’s Turkey Geothermal Development Project, which includes a Risk Mitigation Fund (RSM) similar to the GDF program by KfW.
The Turkey Geothermal Development Project has a volume of $352 million ($250 million are an IBRD loan, $62 million from TKB and TSKB and $40 million from the Clean Technology Fund). The volume for the Risk Mitigation Fund is $38 million.
The fund is administered by the Turkish Development Bank. The success criteria for the World Bank will be defined on a case-by-case basis and thereby helping to include other forms of utilisation than electricity. So the opportunity of utilising a well for a swimming pool can be calculated in. The World Bank looked inward and outside to see what have worked in the context of risk mitigation, among others the GeoFund and comparative analysis of risk mitigation tools, facilities and their applications. The approach to allow private sector projects to qualify has proven to create a lot of interest.
The Turkey Geothermal Development Project has been operational since last month, but the Risk Mitigation Fund is not operational yet.
The World Bank will introduce the TGDP and the Risk Mitigation Fund at the upcoming IGC Turkey geothermal conference in Izmir/ Turkey – 22-24 May 2017, co-hosted by the World Bank.
Note: this article was updated with some corrections on 26 April 2017