geothermal finance

Updated: 31.03.2010 Contract Number: IEE/07/668/SI2.499707 Project Duration: 09/2008 - 02/2011

GEOFAR

Geothermal Financeand Awareness inEuropean Regions


GEOFAR - Overview

Project summary

� GEOFAR will support the fostering of the deep geothermal sectoracross Europe by providing new financing and funding schemes and raise awareness among the target group

� GEOFAR aims to

– reduce financial barriers hindering the initial stages of geothermal

energy projects

– raise awareness of industrial geothermal applications

– improve the know-how and awareness on geothermal energy among

regional decision makers


GEOFAR - Overview

Project summary

� Outputs and results:

– A set of new financing schemes

– Financial institutions checking due dilligence of the proposed financial

scheme

– Involvement of financial experts

– Awareness seminars in key countries for raising awareness of regional

stakeholders

– Documentary film on geothermal energy

– Stimulating investment in geothermal energy


GEOFAR - Overview

Situation of geothermal energy

� A renewable energy source with extremely high potential.

� One important building block towards sustainable use of energy.

� Multiple usage: electricity generation, heating & cooling, desalinationand process heat.

� Limited exploitation of deep geothermal energy fields.

� Technology for the exploitation of geothermal energy is proven.

� Lack of exploitation mainly due to non-technical barriers during theearly stages of geothermal energy projects:

– Inappropriate funding schemes

– Inappropriate legal frameworks

– Ignorance of local decision makers regarding the potential of geothermal energy


GEOFAR - Overview

Vision

� Combating and overcoming non-technical / financial barriers via

– developing and proposing appropriate and innovative financing and

funding schemes

� Boosting the exploitation of geothermal energy via

– promoting (industrial) geothermal applications, and

– raising the awareness / knowhow among local and regional decision

makers.


GEOFAR - Overview

Objectives

GEOFAR aims to

� reduce financial barriers hindering the initial stages of geothermal energy projects through the development and proposal of appropriate financing and funding schemes.

� promote and raise the awareness of emerging (industrial) geothermal applications. The awareness raising activities are mainly directed towards local and regional decision makers and other potential stakeholders.

� improve the know-how and awareness among regional decision makers by exchanging experience and know-how among the target group.


GEOFAR - Overview

Main steps

� Identify and describe the non-technical barriers in selected countries

� Describe and present existing and emerging industrial applications suitable to increase the profitability of geothermal power plants

� Develop (new) appropriate and tailored financing and funding schemes

� Discuss and validate funding schemes with experts

� Outline constitutive elements for the modification of existing and/or new dedicated EC Directives or communications.

� Disseminate industrial applications and financial schemes to key stakeholders


GEOFAR - Overview

Geographical coverage

� Geographical coverage: Germany, France, Greece, Spain, Portugal, Bulgaria, Slovakia, Hungary


GEOFAR - Overview

Expected Result

Direct outcome

� Financial scheme – validated by experts – and checked for due dilligence

by financial institutions

Reports and fact sheets

� Non-technical barriers and the respective situation of the geothermal energy

sector in selected countries - Report

� Case studies for selected operations - Report

� Innovative geothermal technologies - Factsheet

� Financial instruments for the support for the exploitation of geothermal

energy - Report

� Emerging financing scheme for fostering investment in the Geothermal

Energy sector - Report


GEOFAR - Overview

Dissemination

Media

� GEOFAR-Website www.geofar.eu

� Documentary Film on geothermal energy

Dissemination

� 5 Awareness Seminars in target countries

� 1 Europe-wide large-scale Conference

� 10 Newsletters available under www.geofar.eu


GEOFAR - Overview

Partners

BRGM, France

Energo Group, Greece

Erlangen AG, Germany

IENE, Greece

IGME, Greece

IGME, Spain

Rödl & Partner, Germany

ARENA, Portugal


GEOFAR - Analysis

Analysis

� The GEOFAR consortium analysed

– the respective situation of the geothermal energy sector concerning

direct use of geothermal water and electricity production and non-

technical barriers for the target countries Germany, France, Greece,

Spain, Portugal, Slovakia, Bulgaria and Hungary. – Output: Non-technical barriers and the respective situation of the geothermal

energy sector in selected countries - Report


GEOFAR - Analysis

Main non-technical barriers in geothermal


GEOFAR - Analysis

Main non-technical barriers in the target countries


GEOFAR - Analysis

Non-technical barriers - Conclusion

� The development of geothermal energy ranges from one country to another. This historical development and the current trend are naturally linked to the available resources, but there are otherreasons that boost or hinder development of deep geothermal energy.

� The main identified barrier is the geological risk of the non discovery of the resources in adequacy of the expectation of the project: money has to be spent meanwhile success of the project has not been proven.


GEOFAR - Analysis

Non-technical barriers - Conclusion

� Globally, the current approach for the decision to launch or not a geothermal energy project is mainly economic and financial.

� Developing a European financial support instrument could lead to a multiplication of operation, the mutualisation of competences and knowledge could have a positive impact at different level: Facilitating insurance proposal, raising awareness among financial institutions that work at European level, decreasing drilling costs…


GEOFAR - Analysis

Analysis


– 40 case studies from Germany, France, Portugal, Spain, Greece,

Hungary, Slovakia and Bulgaria to give an overview on geothermal

projects in order to raise the target groups´ awareness on what is

possible and on how projects can be realised. – Output: Case studies for selected operations - Report


GEOFAR - Analysis

Overview on selected geothermal projects


GEOFAR - Analysis

Case studies - Conclusion

� The diversity of geothermal operations across Europe is due to the needs and depends on the geothermal resources available. The resources available and their properties play a major role on the investment costs of the project.

� New projects are currently being developed all across Europe. This is indispensable to meet target concerning development of geothermal energy, expected to take part in the future energy mix.


GEOFAR - Analysis

Analysis


- innovative geothermal application to underline the multiple possibilities

of use of geothermal energy and the potential and emerging

technologies that could in the future boost the development of

geothermal energy to meet the set targets. - Output: Innovative geothermal technologies - Factsheet


GEOFAR - Analysis

Innovative geothermal applications


GEOFAR - Analysis

Innovative geothermal applications - Conclusion

� Innovative geothermal applications improve the energetic and economic profitability within the objective to develop new environment friendly solutions.

� All these new developments are ways to exploite the great potential of development of deep geothermal energy.

� The co-use of geothermal energy for the traditional electricity production and heating and cooling as well as for innovative applications will boost the profitability of geothermal energy exploitation and higher profitability will trigger new investments in geothermal energy and reduce the costs per unit.


GEOFAR - Analysis

Analysis


- 44 financial instruments from national, European and international level

on their potential to overcome the main financial barriers. - Output: Financial instruments for the support for the exploitation of geothermal

energy - Report


GEOFAR - Analysis

Overcoming financial barriers


GEOFAR - Analysis

Strength/weaknesses of financial instruments


GEOFAR - Analysis

Project stages tackled by financing instruments


GEOFAR - Analysis

Differences in tax reductions/excemptions

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GEOFAR - Analysis

Feed in tariff – most common financial instrument

Feed-in Tariffs in Target Countries (c€/kWh)

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GEOFAR - Analysis

Financial Instruments - Conclusion

� Across Europe a lack of harmonisation in financial instruments is visible and a European support environment is not given.

� The development of geothermal financial instruments at the European level can overcome this lack.

� A European solution has to solve two main aspects: the lack of financing for the exploration phase and the risk of an inappropriate quality or quantity of the geothermal resource.

� The GEOFAR project has worked out an appropriate funding scheme (“GeoRIMI”) that will be installed as European solution for supporting geothermal energy projects.


GEOFAR - Analysis

Outputs

Reports and fact sheets

� Non-technical barriers and the respective situation of the geothermal energy

sector in selected countries - Report

� Case studies for selected operations - Report

� Innovative geothermal technologies - Factsheet

� Financial instruments for the support for the exploitation of geothermal

energy - Report

� All reports can be downloaded under www.geofar.eu


GEOFAR - GERIMI

Geothermal Risk Mitigation (GeoRiMi)

� GeoRiMi will follow the hereafter mentioned principles

- Support for geothermal investment focuses on the exploratory

stage and the drilling stage.

- Private investors must provide a significant part of the total

investment in both the exploratory and the drilling stage.

- Publicly-funded support to be limited in time and total amount.

- Publicly-funded support to be provided to cover exploration and

drilling risk only.

- For all other purposes publicly-funded support uses the normal

business-financing conduits.

- Regional and local public authorities must be supported in their

efforts to understand and develop geothermal resources in their

jurisdiction.


GEOFAR - GERIMI


� The proposed GEOFAR Financial Scheme “GeoRiMi” will cover three instruments tackling different project stages and beneficiaries

- Instrument I proposes co-financing prefeasibility studies to be

commissioned exclusively by regional and local authorities in areas with

geothermal potential in which public awareness of that potential is

inadequate.

- Instrument II proposes extending partial guarantees to the exploratory

stage of qualified geothermal energy projects.

- Instrument III proposes extending partial guarantees to the production-

drilling stage of qualified geothermal energy sources.


GEOFAR - GERIMI


� Steps to go for the implementation of GeoRiMi

- Reality check with national and international financial institutions

- Due diligence of GeoRiMi

- Preparation of an EU-framework for embedding GeoRiMi

- Planned finalisation: February 2011


GEOFAR

Contact

Erlangen AG

Marco Wendel

Henkestraße 91

91052 Erlangen

Germany

Tel: 0049 – 9131 – 530 280 1

Fax: 0049 – 9131 – 530 13 92

E-Mail: [email protected] The sole responsibility for the content of this presentation

lies with the authors. It does not necessarily reflect the

opinion of the European Communities. The European

Commission is not responsible for any use that may be

made of the information contained therein.

geothermal finance

Economy & Finance