First Geothermal Dialogue: Effective Financing of Geothermal Development – What Have We Learned?
This meeting was organized by Climate Policy Initiative, in partnership with the Climate Investment Funds and the Energy Sector Management Assistance Program (ESMAP). It is the first of a series of Geothermal Dialogues that will take place over the next year, aimed at bringing together major actors in financing geothermal development, to enable a global sharing of experiences and to explore emerging lessons in the quest to scale up effective geothermal finance. The Dialogue will assemble countries receiving support from the CIF for geothermal projects and host countries involved in other (‘non-CIF’) geothermal projects, donor countries, project developers & financiers, multilateral development banks, representatives of the CIF Administrative Unit and a few selected additional participants.
Welcome to the Geothermal Dialogue
Thomas C. Heller, Executive Director, Climate Policy Initiative
This session revisited the purpose and objectives of the Geothermal Dialogues and introduced focal themes and questions to guide our discussions.
The Geothermal Landscape: Setting the Scene
This session set the scene for discussing the current state of geothermal based on a background paper that describes the current landscape of geothermal development financing, including the development of the technology, the financial models and the role of policies and public investment in driving progress. After an opening presentation, representatives of countries engaged in geothermal development shared their perspectives for investing in this energy source.
Chair: Shaanti Kapila, Global Support Program Coordinator, Administrative Unit, Climate Investment Funds
- Valerio Micale, Analyst, Climate Policy Initiative
Presentation: Deploying Geothermal: Background Paper
- Paul Ngugi, Chief Manager, Business Development, Geothermal Development Corporation, Kenya
- Dina Irvina, Acting Head of State Owned Enterprises Risk Division, Fiscal Policy Office, Ministry of Finance, Indonesia
Presentation: Business Model for Geothermal: Experience in Indonesia
- Tamara Babayan, SREP Coordinator and Director of the R2E2 fund, Armenia
Financing Geothermal Development: The Roles of the Public and Private Sector in the Gümüşköy Geothermal Power Plant Project
This session discussed a case study on the Gümüşköy Geothermal Power Plant Project by BM Holding Group in Turkey. Although relatively small-scale, the project was entirely developed by the private sector from the exploration stage (it was the first private sector-led high enthalpy geothermal discovery in Turkey) providing significant lessons for the expansion of the sector both in Turkey and globally. The project was financed with a debt to equity ratio of 70:30 through an EBRD MidSEFF $24,9m loan; a $9,6m lease finance loan; and $15m in equity.
Based on this concrete example, financiers and experts from the host country commented on the roles of the public sector and the private sector (e.g., national policies, financing structure, risk allocation).
Chair: Pierre Audinet, Senior Energy Economist, ESMAP
- Padraig Oliver, Analyst, Climate Policy Initiative
Presentation: Gümüşköy Geothermal PP, Turkey
- Deniz Yurtsever, Project Manager, MWH Global (Midseff team) – on behalf of Caglan Kuyumcu, Vice-Chairman, BM Holding
Presentation: Heating Up the Surface since 2004
- Tom Harding-Newman, Operations Officer, International Finance Cooperation (IFC)
Presentation: PPP in Geothermal Development: Role of Public and Private Sectors in Turkey, and Beyond
- Adonai Herrera-Martinez, Principal Manager, European Bank for Reconstruction and Development
Presentation: EBRD’s Geothermal Experience: Combining Financing with Technical Assistance and Policy Dialogue Under the Sustainable Resource Initiative
Financing Geothermal Development: Perspectives from project developers and financiers – Panel and roundtable discussion
This session focused on recent developments from the financing perspective, with insights from projects developers, technology providers, and both public and private investors. Panelists shared experiences and explored how existing geothermal projects can identify viable financing and policy options to mitigate explorations risks, achieve economies of scale, reduce costs, and close competitiveness gaps.
Chair: Thomas C. Heller, Executive Director, Climate Policy Initiative
- Nachman Isaac, VP for Project Finance, Ormat Technologies
- Gunnar Örn Gunnarsson, COO and Board Member, Reykjavik Geothermal, Iceland
Presentation: GGDP Roundtable 2014
- Ahmet Tohma, Manager Energy Finance, Garanti Bank
- Enrique Nieto, Director of Sustainable Projects, NAFIN, Mexico
Presentation: Financing Program for Geothermal Projects
Stocktaking Session: What have we learned?
Moderation and wrap up: Barbara Buchner, Senior Director, Climate Policy Initiative
The concluding session invited a broad discussion among participants to highlight priorities for the future. Based on the previous sessions, the aim was to draw preliminary lessons and highlight key issues that require further attention to render geothermal financing effective.
Conclusion and Next Steps
Chair: Rohit Khanna, Program Manager, ESMAP