Consolidation in the Geothermal Market

Abstract

It is well known that the combination of capital intensity and a significant upfront risk factor associated with geothermal projects’ development makes the early stage financing a challenging yet a crucial milestone. This element is a central building block in the high barriers into the geothermal project development market. Historically, there are two main models used to try to cross the barrier from the financing point of view: the “step up” model and the “platform” model. The numerous failures to use the “step up” model created a market with a relatively large number of “one project” players, in which case consolidation is the only way to get their project pipeline to advanced development and into operation. Ram Power, Corp. (“Ram”), in its formation, chose the “platform” model. Its success in the first step in consolidating the market, while attracting enough capital through a public financing, enabled Ram to cross the barrier and position itself in the mainstream of the geothermal market. The objective of this article is to describe Ram’s formation and lessons learned.