impact of regulatory/ incentive schemes fostering tgeothermal development
DESCRIPTION
Presentation at the GeoPower Global Markets event in Istanbul/ Turkey, December 4, 2014. The presentation looks at the impact that the different regulatory and incentive schemes have had in fostering geothermal development internationallyTRANSCRIPT
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The impact of different !regulatory/ incentive schemes to foster development!An overview for geothermal development
ThinkGeoEnergy.com - @thinkgeoenergy GeoPower Global Markets, December 4, 2014
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Incentive – something that incites or tends to incite to action or greater effort.
Regulation - a rule or directive made and maintained by an authority.
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Key elements of successful geothermal development • Availability of sufficiently accurate geothermal
resource data and other relevant information • Effective and dedicated institutions • Supportive policies and regulations; and • Access to suitable financing for the project
developer ESMAP – Geothermal Handbook (2014)
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Data Effective InstitutionsSupportive PoliciesFinance
ESMAP – Geothermal Handbook (2014) 5 ThinkGeoEnergy - December 2014
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Supportive PoliciesEffective InstitutionsDataFinance
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Drivers of international development last 2-3 years
Economic situation
Energy demand
Industry
• Interest vs. Capabilities • Growth & standstill
• Growing economies • Policy & competitiveness
• Technology, R&D • Export initiatives
• Feed-in-tariffs, risk mitigation • IPP vs. Public utilities Policy support
• Development Bank financing • Export initiatives & vendor financing Availability of financing
7"
TGE Presentation in 2012
ThinkGeoEnergy"/"December"2014"
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Policy tools
• Renewable energy policies giving priority to development of certain resources
• Financial incentive schemes or government subsidies • Risk mitigation schemes or government subsidies • Feed-in-tariffs • Privileges regarding connection to grid, transmission &
distribution
Marietta Sanders, IGA
Enabling Framework Settings 8 ThinkGeoEnergy - December 2014
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Top 10 Countries – installed capacity
Source: ThinkGeoEnergy Research (2014)
1,142
410
502
597
665
812
863
967
1,339
1,968
3,386
0 500 1,000 1,500 2,000 2,500 3,000 3,500
Other
Turkey
Japan
Kenya
Iceland
Mexico
Italy
New Zealand
Indonesia
Philippines
United States
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Growth installed capacity 2000-2014
180
59
84
116
250
390
494
530
557
756
1,214
0 200 400 600 800 1,000 1,200
Other
Russia
Nicaragua
Italy
Mexico
Turkey
Iceland
New Zealand
Kenya
Indonesia
United States
10 ThinkGeoEnergy - December 2014 Source: ThinkGeoEnergy Research (2014)
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United States
• Portfolio Standards – setting demand, higher prices • Production/ Investment Tax Credits – financing incentive • Loan guarantees – financing incentive • ARRA (Stimulus) – Research funding
Main drivers: Portfolio Standards, PTC
Main challenge: temporary nature PTC, competition, lack of early stage funding
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Indonesia
• Growing economy & huge energy demand • Political will & legislation • Feed-in-tariff
Main drivers: Energy demand
Main challenge: legal framework & uncertainties, pricing, guarantees, power buyer
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Kenya
• Economic growth & power demand • Strong political will • Institutional set-up • Openness to foreign investors • International funding
Main drivers: energy demand, political will and foreign funding (Risk mitigation to be a driver)
Main challenge: capacity building 13 ThinkGeoEnergy - December 2014
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Iceland & New Zealand
• Political will • Favourable legal framework • Research & training • Power demand (now less)
Main drivers: energy demand & political will & framework, risk mitigation
Main challenge: decreased energy demand
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Turkey
• Political will & legislation • Feed-in-tariff • Energy demand • Strong corporations
Main drivers: energy demand & feed-in-tariffs
Main challenge: resource security (size of concessions)
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Financing
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Financing
• Equity (venture, private equity, strategic equity) • Debt – mezzanine/ long term, availability/ steam
output • Tax equity • Risk mitigation/ insurance • Development Bank financing • Vendor finance
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Financing geothermal projects
Start-up Exploration/ Pre-Feasibility
Feasibility/ Resource Verification
Detailed Design & Construction
Start of Operation
Venture Capital Development Equity Drilling
Equity Project Equity
Tax Equity
Mezz./ Bridge Debt, Const. Financing
Project & Vendor Financing
• Developers • IPPs (Development Pipeline) • Resource Speculators
• Venture Capitalists
• Private Equity • Public Markets • Financial Partners
• Private Equity • Strategic Partners
• Financial Players • Large IPPs with
ability to monetize PTCs
Source: Islandsbanki 18"ThinkGeoEnergy"/"December"2014"
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0%
10%
20%
30%
40%
50%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Financing of power plants
0%
10%
20%
30%
40%
50%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$4.8bn TOTAL!
Development bank !46%!
Commercial !lender !22%!
State-owned !entity!20%!
Pension fund 8%!Government 4%!
Annual new-build debt investment as proportion of total for past decade, 2002–2012!
Source: Bloomberg New Energy Finance 19"ThinkGeoEnergy"/"December"2014"
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Current market drivers • Growing economies & corresponding energy demand • Availability of financing • Supporting legal framework
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• Global news • Advisory Services • Geothermal
Power Plant Map • Social media • iPhone app • Marketing
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ThinkGeoEnergy - December 2014