EBRD mulls $125 mln loan to Turkey's geothermal energy developers
ISTANBUL (Turkey), October 20 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) said on Monday it is considering launching a $125 million (98 million euro) framework support early stage geothermal development project in Turkey to provide loans to private sector investors in the geothermal energy sector.
The project is aimed at bridging the funding gap at the early stage of the development of geothermal power plants (GPPs). It will combine up to $100 million from EBRD’s funds with $25 million from the Clean Technology Fund (CTF) to support sub-project sponsors during the early stage of the GPP development through a risk mitigation financial instrument, the EBRD said in a statement.
The facility will also provide technical assistance to promote best practices in the development of geothermal resources for power and heat generation, particularly at an early stage.
An additional $200 million is expected to be mobilised from private sector investors (equity) and other local lenders, the EBRD said.
The proposed EBRD financing is pending final review.
Turkey’s geothermal potential is estimated to be around 4.0 gigawatts (GW), of which only 300 megawatts (MW) have been developed. High investment costs, combined with high project development risks, particularly at the initial phase, are some of the key barriers to development, according to the EBRD.
The EBRD also explained that early stage exploration and drilling expenses account for 40% of the total project costs, with a drilling success rate reaching 70% once a reservoir is well plumbed, and a significantly lower success rate at earlier stages or for less experienced developers.