Early stage geothermal support framework

Location:

Turkey

Project number:

46809

Business sector:

Power and energy

Notice type:

Private

Environmental category:

IEE

Target board date:

09 Dec 2015

Status:

Board approved

PSD disclosed:

20 Oct 2014

Translated version of this PSD: Turkish

Project Description

The EBRD is considering launching a USD 125 million framework to support early stage geothermal development in Turkey. The project will combine up to USD 100 million from EBRD’s funds with USD 25 million from the Clean Technology Fund (CTF).

The project will provide loans to private sector investors aimed at bridging the funding gap existing at early stage of development of Geothermal Power Plants (GPPs). In particular, the CTF will be supporting sub-project sponsors during the early stage of the GPP development through a risk mitigation financial instrument.

The facility will also provide technical assistance to promote best practices in the development of geothermal resources for power and heat generation, particularly at early stage. This will include supporting developers during their exploration and production drilling campaigns to minimise technical and financial risks.

The geothermal potential in Turkey is estimated to be around 4 GWe, of which only 300 MW has been developed. One of the key barriers to development is the combination of i) high specific investment costs, with ii) high project development risks, particularly at the initial phase.

Early stage exploration and drilling costs account for as much as 40% of the total project costs, with a drilling success rate reaching 70% once the reservoir is well understood, and significantly lower success rate at earlier stages or for less experienced developers.

Transition Impact

The project is expected to have the following sources of transition impact:

Demonstration effect and transfer of new behaviours and activities - The framework will have a significant demonstration effect by introducing new financing structures for GPP financing and proving the economic benefits of geothermal power generation in a country where energy consumption is rapidly growing and sustainable energy generation solutions are not sufficiently developed.

Transfer of skills - The project is expected to build and transfer expertise related to geothermal resources development based on global best practices. Perceived as a key barrier by the local financial institutions, the use of TC funds will develop the sector expertise in the local market and allow implementation of best business conduct and corporate governance.

In that context, the framework will facilitate investments in the geothermal power sector by developers and private local banks, thus catalysing an increase in the power generated from renewable sources, reducing fossil fuel.

The Client

The EBRD Early Stage Geothermal Support Framework funds will be available to private sector developers operating in the Geothermal Energy Sector in Turkey.

EBRD Finance

USD 100 million in senior loans.

Project Cost

USD 125 million Framework.

Expected additional USD 200 million to be mobilised from private sector investors (equity) and additional local lenders

Environmental Impact

The framework itself will not be subject to Environmental and Social categorisation and each sub-project will be reviewed on a case-by-case basis.

Overall, environmental and social issues associated with geothermal power can be readily assessed and mitigated based on an Environmental and Social Due Diligence (ESDD). It is anticipated that the Projects presented under the framework may be Category A or Category B under the Bank's Environmental and Social Policy and therefore the ESDD for each Project will need to be appropriately scoped. Following on this initial assessment each project will be subject to specific disclosure and due diligence requirements to ensure the specific nature of each development is well understood and assessed.

Based on the ESDD a Non Technical Summary (NTS), Stakeholder Engagement Plan (SEP) and an Environmental and Social Action Plan (ESAP) will be developed and agreed with the Sponsor for every project.

Technical Cooperation

Technical cooperation will be funded by the EU IPA 2013 TA funds.

The mobilised funds are going to provide:

  • Pipeline Preparation
  • Risk Mitigation Analysis:
    - Early Stage exploration best practices: apply best practices in the geological, geochemical and geophysical activities during surface exploration;
    - Drilling Campaign: review well design to maximise drilling success rate; support in implementing drilling best practices.
    - Plant Construction: assess the construction and operational risks of the plant and provide mitigants for those risks; evaluate the project’s expansion capacity and replicability in preparation for a plant expansion.
  • Environmental Support
  • Project Development Support

Company Contact

Dr. Adonai Herrera-Martinez
Principal Manager
Tel. + 90 549 72 48 090
Email: martinea@ebrd.com

 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

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Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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