The European Bank for Reconstruction and Development said it presented its innovative financing scheme in support of geothermal energy projects at a three-day IGC Turkey conference.
The Pluto initiative, worth USD 125 million (EUR 110 million), 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, EBRD 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,” said Natalia Khanjenkova, EBRD’s managing director for Turkey and Central Asia.
The conference in Izmir, city at the heart of the country’s geothermal resources, brought together over 180 local and foreign developers, suppliers, investors and policymakers, the bank’s report adds. Participants 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. Mayor Aziz Kocaoğlu said the local authority is keen to realize 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.
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 minimize these risks, according to the bank. The new initiative combines EUR 88 million from the EBRD with EUR 22 million from the Clean Technology Fund, a window of Climate Investment Funds. The programme is part of a global push by multilateral development banks to scale up geothermal energy production, the statement adds.
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.
Turkey was globally ranked first in new geothermal power capacity last year, according to the Renewables 2016 Global Status Report.
The EBRD has financed over a third of 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 Pluto, the bank aims to develop at least five 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%, thereby making a substantial contribution to reaching the country’s renewable energy targets.
EBRD said investing in sustainable energy is a strategic priority for Turkey, as the country aims to diversify from imported fuel. The bank has already committed around EUR 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.
Under Pluto initiative, EBRD aims to develop at least five geothermal power plants with a combined capacity of at least 60 MW.
The international financial institution said it has also helped the Ministry of Energy and Natural Resources to develop the National Renewable Energy Action Plan to attract more investment in renewable energy projects.