Company Trend Analysis - Geothermal Competitive Landscape: IFIs & Development Funding To Remain Crucial - JAN 2018

BMI View: The ongoing involvement of development banks and international financial institutions (IFIs) will remain crucial to project development in the global geothermal sector . Their role in funding, encouraging international investors into the sector and building up institutional capacity of governments will be crucial, with Indonesia and Kenya key beneficiaries of this trend due to their elevated risk profiles.

International financial institutions (IFIs) and development banks will remain heavily involved in the development of geothermal projects globally. According to our Key Projects Database, IFIs and development banks are involved with 25% of all projects globally, ranging from regional development banks, government-backed development agencies and multilateral organisations like the World Bank.

While geothermal is increasingly seen as a desirable source of energy given its baseload credentials and low environmental impact, one of the main reasons underpinning the prevalence of these stakeholders in geothermal projects is the inhibitive upfront capital costs involved with exploiting geothermal resources for power generation. Drilling costs amount to a significant proportion of the total project development costs, which can be up to between 20-50% for high temperature plants. As such, despite governments' strong desire to develop and integrate geothermal power into domestic power mixes, the upfront costs can be prohibitively high.

Geothermal Costs Higher Than Wind And Solar PV
Unsubsidised Levelised Cost Of Energy (USD/MWh)
Source: Lazard, BMI

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