Green Green:  Financing News for the U.S. Geothermal Industry

Volume 5, Number 1
31 March 2004


GeoFund to be launched Sept. 2004

World Bank geothermal assessment raises issues for U.S. industry

Asian Development Bank adopts new contracting system


Around the World

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GeoFund to be launched Sept. 2004

The Regional Fund for Geothermal Energy (GeoFund) to promote geothermal development in Europe and Central Asia (ECA) is expected to be operational by September 2004.

Created by the World Bank and the Global Environment Facility (GEF), the US$200-million GeoFund's objective is to build sustained market capacity to develop and finance geothermal projects on commercial terms using local private capital. The GeoFund will provide:

  1. A technical assistance window,
  2. A partial risk guarantee window to mitigate against geological risks, and
  3. An investment funding window with contingent grants, low cost funding, or in exceptional cases straight grants, to help monetize the externalities of geothermal projects.

The GeoFund is part of the World Bank-GEF Geothermal Energy Development Project in Europe and Central Asia (GE-P078277). It will be open to all ECA countries that have ratified the United Nations Climate Change Convention.

Geothermal energy's potential for district heating and, to a lesser extent, for electricity generation, is great in the ECA. Potential geothermal energy resources in the ECA countries represent 17% of the world’s resources. It is estimated that Hungary and Turkey could generate about 10% of their total present electricity needs from geothermal energy.

For more information, see the GEF Project Brief (April 2003) in PDF format, or contact Helmut Schreiber, Lead Environmental Economist, World Bank, at Tel: (202) 473-6910, or email at


World Bank geothermal assessment raises issues for U.S. industry

The Geothermal Energy Association (GEA) believes that the "Geothermal Energy : An Assessment" posted recently on the World Bank website misstates capital and other costs of geothermal and fails to present geothermal's environmental benefits.  The GEA has sent a letter to the World Bank outlining its concerns.

In its letter, GEA urged the World Bank to consider:

  • Beginning its presentation on economic and financial considerations with a discussion of life-cycle cost-effectiveness.

    Geothermal energy, like other renewables, is capital intensive. So, the first cost tends to be high, but over the life-cycle of a project the cost of energy is often equal to or even less than alternatives.

  • Rewriting the 'Assessment' to highlight geothermal energy's positive environmental impacts rather than focusing primarily on the negative impacts.

    Although every form of energy production has environmental impacts, geothermal energy has far fewer than fossil-fired plants.

For more information, contact Karl Gawell, Executive Director, GEA, at Tel: (202) 454-5264, or email at; or Diana Bates, Research Associate, GEA, at Tel: (202) 454-5261, or email at


Asian Development Bank adopts new contracting system

The Asian Development Bank (ADB) approved a new market-based remuneration system for international independent individual consultants in October 2003. The new system will be market-based, linked to the assignment, and matched to the job level. The following factors will be considered to determine consultants renumeration:

  • Expertise required for the assignment,
  • Level of job responsibility, and
  • Qualifications.

With the new system, the ADB hopes to significantly improve the cost-effectiveness of consulting services, shorten recruitment time of consultants, and promote fairness and transparency in its consultants' compensation policy.

The ADB spends about US$127 million a year for consulting services, of which US$47 million goes to individual consultants. For more information on ADB consulting procedures, visit the ADB website.


Around the World world

  • Citigroup announced in January its New Environmental Initiatives to promote higher environmental standards through its business practices, including increased investment in renewable energy. Citigroup will identify experts to evaluate investment funds dedicated to renewable energy, and explore existing programs to offer consumer financing for clean energy or energy efficiency for residential consumers.
  • Mizanur Rahman, Chief Hydrogeologist of the Institute of Water Modeling, sent an email to the International Geothermal Association newsgroup on 30 December 2003 requesting costs for a feasibility study of the Piedmont area, and for a 10 MWe geothermal plant. Piedmont's projected down hole temperature is 210°C at 1,500 meters. Information will be used to prepare a project proposal in accordance with the desire of top-level policy makers. For more information, email Mizanur Rahman at
  • According to a resource report issued by independent consultants, GeothermEx, Inc., the most likely capacity of Western Geopower Corp.'s South Meager Geothermal Project is 192 MWe.

    GeothermEx calculated that, using a discount factor of 8%, a 100 -MWe project will have an after tax Net Present Value of C$125.6 million (US$93.6 million) and an Internal Rate of Return of 25.4%, on the basis of the following key assumptions:

    1. The 100 MWe power plant comes on line by mid-2007
    2. Total development costs are C$270 million (US$201 million)
    3. Debt to equity ratio is 80/20
    4. Power price contract is C$70/MWh (US$52/MWh)

For more information.

  • The Government of Ontario chose NERA Economic Consulting to oversee a competitive contracting process to phase out coal-fired plants and increase the province's renewable energy supply. Ontario is seeking up to 300 MWe of renewable energy capacity to be in service as soon as possible. The government's objective is that 5% (1,350 MWe) of all generating capacity come from renewable sources by 2007. For more information: "Technical Advisor Chosen to Oversee Electricity Contracting Process," 19 February 2004).
  • U.S. companies Fedders Corporation and WFI Industries will work together to build water source heat pumps in China. Fedders will produce the units in China for sale by WFI Industries Ltd. in China and Korea under the WaterFurnace brand. The Chinese Government has mandated that all new buildings adopt renewable energy technologies (Source: "Fedders and WFI Industries Announce China Strategic Alliance," 29 December 2003).

  • The Tibetan Autonomous Region has abundant geothermal resources, accounting for over 80% of China's high-temperature geothermal resources. According to Hu Xiancai, president of the Tibet Geothermal Geological Prospecting Institute, the region has 706 geothermal areas; 53 high-enthalpy areas have a combined power generation potential of about 300 MWe. Tibet currently has three geothermal plants with 28 MWe installed capacity. Low- and medium-temperature resources are widely used for heating, the chemical industry, aquatic cultivation, tourism, and medical treatment.
  • The first ORMAT Geothermal Binary Power Plant in Costa Rica was formally commissioned on 30 January 2004. The 15.5-MWe Miravalles V binary plant consists of two cycle water-cooled ORMAT Energy Converters (OECs) that convert the unused energy contained in the hot brine discharged from the existing Miravalles plants into electric power. ORMAT supplied the power plant, construction materials, and engineering services to the Instituto Nacional de Electricidad, ICE.
  • According to a 4 November 2003 article in El Diario de Hoy, ENEL Green Power and its partner La Geo (El Salvador) expect to finish their exploration and drilling work at the Berlin field in December 2003, and at the Cuyanausul area, near Ahuachapan, in May 2004.  The construction of a third power plant of 30 MWe in Berlin and a 10 MWe plant in Cuyanausul is expected to begin in May 2005 (Source: Marcelo Lippmann, E.O. Lawrence Berkeley National Laboratory, email at
  • The Ethiopia Electric Power Company (EEPCO) issued a tender for consultancy service for the rehabilitation of the Aluto Langano Geothermal Electric Power Plant on 2 December 2003. Bids were opened on 24 February; the evaluation is expected to be completed in early May. The tender was for consultancy only. Depending on its outcome, a tender for the rehabilitation work itself will go out in a subsequent tender. For more information, email Daniel K. Balzer, Regional Environment Officer for East Africa and the Western Indian Ocean, U.S. Embassy, Addis Ababa, Ethiopia, at
  • The EU project "European Hot Dry Rock" utilizes widened natural fracture systems and injects water at high pressure. The water is heated and returned to the earth's surface via production wells. A heat exchanger transfers energy to a second circuit that drives a turbine generator to produce electricity. The European test site is located in Soultz-sous-Forêt. France, Germany, Italy, and Switzerland are working on the project. For more information.

  • According to projections issued by the European Renewable Energy Council (EREC), renewable technologies could satisfy 20% of the EU's energy demand by 2020, up from 6% in 2000. Geothermal energy is projected to provide 0.8% of the total. The briefing paper,"Renewable Energy Target for Europe–20% by 2020," is available from EREC's website.
  • A Unocal Corporation subsidiary transferred its rights and interests in the Sarulla geothermal project to PLN for US$60 million in late February. Under the terms of the transfer, PLN acquired Unocal North Sumatra Geothermal, Ltd.'s interest in the Joint Operation Contract with Pertamina and the Energy Sales Contract with PLN.

  • PT PLN and Mitsubishi signed a contract on 9 February to build a 740-MWe geothermal power plant in Cilegon, Banten province. The Japan Bank International Corporation (JBIC) will finance 85% of the US$340-million project; PLN will finance the balance. PLN`s director for primary energy and power plant, Ali Herman Ibrahim said the plant will be online by 2005, and sell electricity at 3.3 US¢/kWh.

  • PT Amoseas Indonesia plans to build a new geothermal power plant in Darajat, West Java. The company is currently negotiating with Pertamina and PLN.

  • Indonesian coal producer PT Tambang Batubara Bukit Asam (BBB.JK) will issue US$150 million worth of Eurobonds to help finance the development of its Banjar Sari geothermal power project in West Java. With an installed capacity of up to 200 MWe, the plant is expected to be operational in 2008. The bond will be issued in the second half of 2004.

  • Japan's Marubeni Corp. will jointly develop geothermal power plants in Indonesia with Pertamina and the Philippine National Oil Co., the Nihon Keizai Shimbun reported on 18 December 2003. The three partners will create a special-purpose company to conduct feasibility studies in three locations in Indonesia. As early as fiscal 2004, the new company will begin construction of the new plants. Total investment for the three new plants is estimated at US$750 million.

  • PT Pertamina Geothermal will invest US$200 million to increase geothermal production capacity. According to company general manager Sukusen Soemarinda, the investment will be used to:
    • Increase geothermal production in Lahendong, Sulawesi by 40 MWe,
    • Expand the power generating capacity of the Kamojang plant by 60 MWe, and
    • Build a new geothermal plant in Wayang Windu with a capacity of 110 MWe.
  • Kenya more than doubled its installed geothermal capacity with the commissioning of the 64-MWe Olkaria II plant in December 2003. The country produces a total of 121 MWe of geothermal power from Olkaria I and II and Orpower. The US$163.4-million Olkaria II project was funded in part by the World Bank.

  • The Kenya Electricity Generating Company (KenGen) has obtained a Sh1.37 billion credit (US$17 million) to drill six more wells to evaluate the Olkaria IV geothermal project. If the six wells are successful, the next step is steam field gathering and reticulation at a cost of Sh4.6 billion (US$60 million). The 70-MWe Olkaria IV project is expected to be complete in 2007.

  • Kenya has begun a Sh208 million (US$2.7 million) geothermal project to explore new sites in Rift Valley Province. Exploratory tests at the Menengai Crater in Nakuru have been conducted since mid-January, and are expected to end by 30 July. The exploration project is part of the larger US$250-million East African effort funded by the Global Environment Facility, the Federal Institute for Geo-sciences and Natural Resources of Germany, and KfW Bank of Germany. The Rift Valley has an estimated 2,700 MWe of geothermal power generation potential.

  • At a workshop on the National Energy Policy in early February, Energy minister Ochillo Ayacko said that the Government will allocate more funds for geothermal resource assessment in order to reduce the cost of geothermal power development and decrease investor risk.

  • The Government of Kenya announced draft policies to restructure the energy sector. The Government will create a special purpose company to finance geothermal resource assessment and steam development. The company will sell steam to independent power producers and KenGen upon winning power development contracts in an open bidding system. In addition, tax holidays are proposed for investors in the geothermal power sub-sector.

  • Kenya's largest cut-flower exporter, Oserian Company, plans to build a 2-MWe geothermal power plant using two existing wells. The geothermal plant will produce power for cold storage and increase heat capacity in the greenhouses. Construction of the plant is expected to cost Sh1.3 billion (US$16.9 million)."We expect this expansion job to generate up to 2,000 additional skilled jobs at Oserian," said Ron Fasol, managing director.
  • The Secretaria de Energia has determined that electric power generation capacity in Mexico must increase by 27,360 MWe by 2010, an average yearly growth of 6.3%. Installed geothermal capacity is expected to increase by 103 MWe by 2010. Currently geothermal installed capacity is 750 MWe or 1.9% of the country's total.
  • Contact Energy signed a new agreement in December 2003 with Top Energy to purchase all of the electricity generated at Top Energy's Ngawha geothermal power station for the next three years. Top Energy plans to increase the plant's installed capacity from 9.5 MWe to about 25 MWe. Contact has the right to buy the additional power.
  • The Asian Development Bank (ADB) has defined the Renewable Energy Development Project (PAK 34339-01) for Pakistan. Half of the population lives in rural and mountainous areas with no access to electricity. Renewable energy sources could provide electricity in these areas. Pakistan has several geothermal springs (Bakht, 2000). Recruitment of a consultant is expected to take place in August 2004. For more information, email Samuel Tumiwa at
  • Reno, Nevada-based Geothermal Development Associates (GDA) signed a contract in December 2003 with Lihir Gold Limited , a subsidiary of Rio Tinto, to build a 30 MWe geothermal power plant. It is anticipated that the plant will be completed and commissioned in early 2005 (Source: Geothermal Energy Association (GEA), GEA Washington Update, March 2004).


  • The Department of Energy issued its first Geothermal Bid Round on 10 March 2004 for 10 geothermal fields with an estimated total potential of 300-470 MWe. Bids are due on 30 July. Several companies have expressed interest. The country has identified 35 untapped geothermal areas with an estimated generating capacity of 4,137 MWe. The government plans to develop 1,200 MWe from geothermal fields in the next 10 years.

  • PNOC Energy Development Corp. awarded in November 2003 a 2.3-billion-peso contract (US$ 40.9 million) to Japan's Kanematsu Corp. to add 20 MWe to the Palinpinon geothermal plant's generating capacity. Under the contract, Kanematsu will build the transmission lines and develop the steam field for Palinpinon III which will operate as a merchant plant. Kanematsu beat companies from France, Italy, Germany, and Australia. Palinpinon III is funded by a 15-year loan from the Development Bank of the Philippines. The interest rate is 8% for the first 10 years and 11% for the remaining five years. The project should be completed in two years.

  • PNOC Energy Development Corp.'s 40-MWe Bacman II Geothermal Optimization Power Plant Project received funding from CPI Energy Companies, a US$2-billion energy fund established by U.S. Bancorp, Comerica Bank, Raiffeissen Banking Group, and Frontier Finance Group. The loan is guaranteed by the U.S. Export-Import Bank. Expansion of the power plant is estimated to cost about US$82 million.
  • The Geothermal Resources Council (GRC) invites you to present your latest technical work in geothermal research, exploration, development and utilization at the 2004 GRC Annual Meeting at the Hyatt Grand Champions Resort and Spa at Indian Wells, California, 29 August-1 September 2004. The deadline to submit draft technical papers is 16 April. For more information.

  • Washington, D.C.-based nonprofit Environmental and Energy Study Institute (EESI) provides a variety of timely and insightful publications for clean energy communities, including status reports on Farm Bill implementation, bioenergy fact sheets, and a newsletter.


Other Upcoming Events

  • 29-30 March
    Asian Development Bank Business Opportunities Seminar
    Los Angeles, CA
    Contact: Julieanne Hennessy at Tel: (310) 235-7206, or email at:

  • 1-2 April
    Asian Development Bank Business Opportunities Seminar
    Houston, TX
    Contact: Patricia Foley at Tel: (713) 844-3637, or email at

  • 5-6 April
    Asian Development Bank Business Opportunities Seminar:
    Demystification of the Asian Development Bank
    Washington, D.C.

  • 7 April
    Asian Development Bank Business Opportunities Seminar
    Portsmouth, NH
    Contact: Susan Berry at Tel: (603) 334-6074, or email at:

  • 8-9 April
    Asian Development Bank Business Opportunities Seminar
    Providence, RI
    Contact: Dee deHaas at Tel: (401) 232-6405, or email at:

  • 15-16 April
    Inter-American Development Bank (IDB) Procurement and Projects Workshop: How to Do Business with the IDB
    Washington, D.C.

  • 18-19 April
    European Bank for Reconstruction and Development
    Annual Meeting and Business Forum
    London, United Kingdom

  • 29-30 April
    U.S. Export-Import Bank 2004 Annual Conference
    Washington, D.C.

  • 17-18 May
    13th Annual Latin American Energy Conference
    La Jolla, CA

  • 29-31 May
    Second World Renewable Energy Forum
    Bonn, Germany

  • 17-18 June
    First Annual Conference on Latin American Sustainable Development
    La Jolla, CA

  • 18-20 October
    1st International Ukrainian Conference on Cogeneration for Industry and District Heating Systems
    Kiev, Ukraine
    Email: Dr Tetyana T. Suprun at
    Website (in Russian)

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