Geothermal presents an opportunity for many countries to diversify their power generation mix in a sustainable way. It is a clean energy source that can reliably produce baseload power on a 24/7 basis. It also provides sizable global and local environmental benefits when developed properly. Geothermal can often be a less costly option than utilizing fossil fuels when its environmental benefits are considered, and it helps stabilize the cost of electricity supply since it is not subject to the volatility of international commodity prices during operations. For many countries where it is indigenous, geothermal can enhance energy security as well.
Despite over 100 years of development and an estimated global potential of 70 to 80 GW, only about 15 percent of the known reserves are presently exploited and producing electricity.
While there are many reasons, in various countries, for the slow pace of geothermal development, one widely recognized and unique obstacle that is globally applicable is the high resource risk during the early stages of the multistage geothermal development process. The real or perceived uncertainty regarding the steam resource capacity during the early stages of geothermal field development makes it very difficult to mobilize the required risk capital, especially through the private sector, for the exploration drilling required to confirm the size, temperature, pressure, chemistry, and potential production rate of the resource.
Addressing this challenge is even more relevant given that the majority of sites suitable for development around the world are green fields (i.e., new fields), where the resource risks are often perceived to be especially high. A common theme that is apparent when reviewing global experience is that successful scale-up of geothermal development has benefited from some form of government facilitated support. While such support can come in many forms that can improve the overall profitability of geothermal projects, there are some schemes that specifically incentivize mobilization of risk capital into geothermal exploration drilling. The approaches that have been implemented in various countries to scale-up geothermal development through public support include the following:
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