Geothermal Financing Options

Abstract

Geothermal development is a capital intensive endeavor. The development of geothermal within Kenya begun in 1956 with slow growth but later accelerated from 2007. The growth was spurred after the injection of funds from UNDP, resulting in the commissioning of the first geothermal plant in Kenya in 1981. After realization of benefits of geothermal, the Kenyan government was keen to invest in geothermal. This allowed the negotiation of concessional loans and access cheap funding from various institutions. Recently geothermal companies are able to finance geothermal projects through different packaging means such as loans and grants, public private partnerships, private investments and contract packaging. These options are also specific to the different phases of geothermal development such as exploration phase, drilling phase and power plant development phase. The financing options are also based on the adverse risks that are inherent with the development of geothermal This paper will seek to discuss the available options for financing geothermal projects in various stages of development, with focus on development of geothermal within the African Rift, using geothermal development in Olkaria as a case study.