FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION

1
FINANCING OF PRIVATE GEOTHERMAL POWER
GENERATION

REIA2000 Conference Renewable Energy in the
Americas Organization of American States
Washington DC, USA December 4, 2000

• Lucien Y. BRONICKI
• ORMAT International Inc.
• P17a (spl)
• 0012

1962
2
Installed Geothermal Capacity (8,000 MWe)()
and Worldwide Potential (60,000 MWe)()
COUNTRY INSTALLED ELECTRICAL
POTENTIAL FOR GENERATION CAPACITY
ELECTRICAL GENERATION
MWe MWe USA 2,300 12,000 The
Philippines 1,900 6,000 Mexico 850
1,500 Canada -- 250 South
Central America 360 2,000 Western Europe,
incl. Iceland 970 1,200 Other European
countries 40 500 Indonesia
590 16,000 Japan 550 2,400 P. R.
China 30 6,700 New Zealand 440
1,200 Africa, incl. Kenya 60
6,500 Others 10 3,700
Hot Fractured Rock Excluded As of August
2000
SOURCE US DOE and World Geothermal Congress 2000
1396
3
1. RESOURCE DISTRIBUTION
Worldwide Geothermal Energy Distribution
Areas where Geothermal Projects are in Operation
or Planned Geothermal areas where ORMAT plants
are in operation Geothermal areas where ORMAT
plants are planned
1949
4
Average Capital and Delivered Costs
3. COSTS
22000
Capital Cost (US/kW)
Solar Photovoltaic
4000
Solar Thermal Power
Biomass - Energy Forestry Energy Crops
3000
Geothermal
Land-based Wind Energy
2000
Nuclear
Hydro Power
Coal
Wind
Waste Heat
1000
Cost of delivered energy (US/kWh)
Biomass - Landfill Gas from Wastes
Gas
0
0
0.02
0.04
0.06
0.08
0.10
0.14
0.16
0.12
0.86
0.18
0.88
0.20
1587
SOURCE SHELL and DOE
5
2. TECHNOLOGY
Consumes Water Aquifer Depletion, Power
reduction Effluents or Expensive
Abatement Plume Visual Impact Water Treatment
Needed Use and Disposal of Chemicals
1391
6
5. ORMAT EXPERIENCE A MATURE TECHNOLOGY
Distributed Renewable Energy and Resource Recovery
700 MW of ORMAT Power Plants in operation in 20
countries
During the last decade, ORMATs power plants have
already avoided the emission of 12 million tons
of CO2 and saved 4 million tons of fuel
THAILAND, since 1989
Geothermal, Heat Recovery, Biomass, and Solar
1470
7
Applications of ORMAT Energy Conversion
Technology
GEOTHERMAL
SOLAR
Wabuska, USA
1987
Ein Boqeq, ISRAEL
1979
WASTE HEAT
BIOMASS
Lengfurt, GERMANY
1999
Minakami, JAPAN
1998
1953
8
ORMAT Geothermal Power Plants In Developed
Countries
USA
1984
Azores Islands
1994-1998
600 kW
New Zealand
Wabuska Power Plant
1989
Iceland
Phase I 5.5 MW Phase II 8.5 MW
1989
Sao Miguel Power Plant
2.6 MW
Bay of Plenty Power Plant
3.9 MW
Svartsengi Power Plant
1955
9
Private Geothermal Power Generation Makes Good
Business Sense

• Large Scale Projects are supplying commercial
  electricity to national power grids.
• The technology is Field Proven in industrial and
  less developed countries
• Geothermal is competitive with fossil fuels
• The projects work economically with private
  financing in the industrial countries
• Private/Public partnership in developing
  countries
• Work with governmental and multilateral agency
  support
• Smaller scale plants are providing power to
  national and local, as well as to rural
  mini-Grids

1759
10
ORMAT Modular Geothermal Power Plants In
Developing Countries
Leyte Optimization, The Philippines
1997
Olkaria, KENYA
2000
49 MW
1st phase 8 MW
Financing Equity ORMAT 80 ,
EPDCI (Japan) 10 Itochu 10 Term Loan US
Exim Bank
Financing all equity by ORMAT Insurance MIGA
1957
11
CASE HISTORY Financial Structure of the ZUNIL
Project
24 MW
1999
1933
12
LESSONS FROM PUBLIC-PRIVATE PARNERSHIP
PROJECTSIn Developing Countries

• Project Hurdles
• Commercial and financial barriers
• Credit issue barriers
• Institutional barriers
• Power legislation barriers changes after
  contract signature such as
• dispatchability
• Standards, specifications and lengthy and
  costly reviews
• Fixed soft costs disproportionate to small
  project size
• Micro-management of the project rather than
• enforcement of specifications

1959
13
Project Opportunities
Accelerating renewable energy deployment by
public-private partnership

Public Sector Role

Now 1. Subscribe to political risks,
streamline and unify procedures
2. Assure correct and stable institutional
framework
3. Assist developing countries in assessing
local rural needs
4. Provide performance specification
Future
1. Reduce subsidies for fuel and unnecessary
grid
2. Level the playing field internalize
renewable external
benefits or use
market mechanism for carbon trading
Private Sector Role 1. Provide all or part of
equity investment 2. Provide the construction
loans 3. Guaranty specifications performance
and electricity prices 4. Provide technology
transfer, OM training and supervision
1960