EBRD-led US$ 125 million initiative supports investments in exploratory drilling
The European Bank for Reconstruction and Development (EBRD) has presented its innovative financing scheme in support of geothermal energy projects at a three-day IGC Turkey conference which concluded in Izmir today.
The new US$ 125 million PLUTO initiative provides finance and advice to private developers at exploratory stages in a move to tap Turkey’s significant potential for geothermal energy and help the country meet growing demand for electricity.
Geothermal energy projects face high risks, particularly in their initial stages, including high investment costs and development risks and very limited access to project finance once drilling has confirmed the existence of the resource. PLUTO, named after the ruler of the underworld in classical mythology, helps minimise these risks.
PLUTO combines US$ 100 million from the EBRD with US$ 25 million from the Clean Technology Fund, a funding window of the Climate Investment Funds. The programme is part of a global push by multilateral development banks to scale up geothermal energy production.
EBRD Managing Director for Turkey and Central Asia Natalia Khanjenkova said: “Turkey is probably the hottest geothermal market in the world, not because of the temperature of its hot springs, but thanks to its vibrant private sector and the strong regulatory support that has been put in place by the government.”
Turkey ranked first globally for new geothermal power capacity last year, according to the Renewables 2016 Global Status Report. The country accounts for half of new additions to global capacity, the report found, and is well on its way to meeting the goal of having 1 GW of geothermal power capacity in place by 2023.
The EBRD – a leading investor in renewable energy in Turkey – has financed over a third of the total installed capacity for geothermal energy. It has provided finance to seven geothermal power plants in Turkey, including Efeler, the largest in Turkey and the second-largest in Europe.
Under the PLUTO initiative, the Bank aims to develop at least five new geothermal power plants with a combined capacity of at least 60 MW, generating more than 450 GWh of renewable electricity per year. It will increase the amount of installed geothermal capacity in Turkey by more than 10 per cent, thereby making a substantial contribution to reaching the country’s renewable energy targets.
The conference in Izmir, a Turkish city at the heart of the country’s geothermal resources, brought together over 180 local and foreign developers, suppliers, investors and policy-makers to discuss Turkey’s significant geothermal energy potential and project development opportunities.
Participants also explored ways to expand the use of geothermal energy, including the carbon dioxide that it sometimes produces, to such sectors as agriculture, fish farming and district heating.
Izmir Mayor Aziz Kocaoğlu said his municipality is keen to realise the geothermal potential in the area, ranging from the rehabilitation of a district heating system powered by geothermal energy to building a geothermal power plant. He also highlighted the role of thermal springs for the health and wellbeing tourism industry in the Izmir region.
Investing in sustainable energy is a strategic priority for the EBRD in Turkey, as the country aims to diversify away from expensive imported fuel. The Bank has already committed around €1.8 billion of its funds through dedicated credit lines such as TurSEFF and MidSEFF as well as through direct financing – both debt and equity – to renewable projects ranging from small ventures to very large ones.
The EBRD has also helped the Turkish Ministry of Energy and Natural Resources develop Turkey’s first National Renewable Energy Action Plan to attract more investment in renewable energy projects.
The EBRD’s focus on sustainable energy is part of the Bank’s overall strategy of helping to re-energise the transition process in its regions according to three key priorities: strengthening resilience, promoting integration, and addressing global and regional challenges.