Jan 13, 2021
Türkiye’s geothermal industry has taken a step forward after a landmark deal was struck this week. 3S Kale Nidge Enerji, a leading company in Türkiye in the field of research and production of renewable energy, will start exploratory drilling in April 2021, ahead of building a geothermal plant to supply 25 MW of energy to the Aydın Province in Türkiye’s Aegean Region.
This good news for clean power in Türkiye was made possible by CIF’s innovative model of concessional financing. The new agreement is part of the $38 million Risk Sharing Mechanism (RSM), which is funded by CIF’s Clean Technology Fund (CTF) and the World Bank, and in collaboration with the Development and Investment Bank of Türkiye and the Turkish Government. Seven projects involving five geothermal developers have been approved in this initial round.
RSM was launched in 2014 as one of the first mechanisms of its kind anywhere in the world. It provides concessional financing to persuade private companies to carry out the riskier exploration drilling phases which are required for large-scale geothermal development. In this particular deal, if the geothermal wells are not successful, up to 60% of investors’ costs will be covered by the RSM.
Alp Gürün, General Manager of 3S Kale Holding, said: “We hope that our efforts, which will gain strength with the funding support of the World Bank, will result in a positive result, and we will bring clean energy production with high environmental sensitivity to our country within the borders of Nigde after Aydın. ”
Mafalda Duarte, Head of CIF said: “We are delighted that the first exploratory drillings under the RSM are now in sight. This is a unique mechanism that we had to create from scratch more than six years ago, but its innovative model of concessional financing gives us the best possible chance to grow the geothermal industry in Türkiye and move the country firmly onto the path of clean energy.”
A clean future for power in Türkiye
This is only beginning for the burgeoning geothermal sector in Türkiye . Public support programs have been in place in virtually every country that has succeeded in developing its geothermal potential. A decade ago, little exploration was happening outside of Türkiye’s well-known geothermal fields. But the Clean Technology Fund and the RSM have accelerated their spread.
Türkiye has a rapidly-growing economy which brings increasing energy demands. The country is working to expand domestic renewable energy production and increase energy efficiency to ensure cleaner, greener growth that is less dependent on energy imports. CIF is playing a key role in that ambition. CIF invests in Türkiye’s geothermal potential and has agreed the bold target of expanding the Turkish geothermal market from 600MW to 1GW by 2030.
What is next for the RSM? A second round of applications for projects to develop wells will be launched by mid-2021, informed by lessons learned from the first process. The project team is confident that the geothermal sector will gain momentum in the coming year and further agreements for new geothermal fields will be struck across Türkiye.
