Geothermal energy for power and heat generation in Türkiye: minimising the exploration risk
AFRY supports the World Bank in the Risk Sharing Mechanism project in Türkiye
A consortium consisting of the companies AFRY Switzerland Ltd (consortium leader), MRC Türkiye, ÍSOR and Verkís (RSM consultants) was commissioned to provide technical support to Development and Investment Bank of Türkiye (TKYB) and ensure the ongoing operation of the Risk Sharing Mechanism (RSM) project as part of the Geothermal Development Project (TGDP).
More than a dozen energy producers in Türkiye have decided to develop their geothermal projects as part of the World Bank's "Risk Share Mechanism". The third round of applications for investors is currently underway.
The Geothermal RSM project was established in Türkiye as part of the World Bank-funded TGDP, which came into force in March 2017. The aim of the project is to validate the geothermal resources in Türkiye. The RSM project is led by TKYB and is financed by a grant totalling USD 38 million from the Climate Technology Fund (CTF).
The aim of the RSM is to increase private sector investment in geothermal exploration wells in Türkiye by covering the drilling costs for exploration wells if the wells drilled as part of an RSM-supported drilling programme do not meet the criteria for economic exploitation.
The selection of exploration drilling projects for risk coverage under RSM is based on a competitive application process. The contract volume for the technical advice provided by the RSM consultants amounts to approximately USD 2.0 million.
The consortium's task can be divided into four categories, which are run through three times in total (Inverstor rounds 1–3):
- Defining the project requirements for participation in the RSM
- Search for investors; marketing activities and preparation for the call for project applications
- Evaluation of the project applications and negotiations with the selected investors. The success criteria for the exploration well are defined on the basis of the reviewed business plan.
- Monitoring the work of the exploration wells, in particular the tests of the hydraulic tests in the tapped thermal water reservoir. Based on an independent evaluation of the test data, the consortium develops recommendations for TKYB and the World Bank. If the expected energy output (in MW) of the well is below the agreed success criterion, the actual drilling costs are reimbursed up to a maximum of USD 4 million.
AFRY was involved in categories 1, 3 and 4.
Pay-out scheme from the risk sharing mechanism
Some districts can receive only 40% share:
- Ahmetli; Gölmarmara; Salihli; Alaşehir; Sarigöl.
All other districts qualify for 60% coverage from RSM
Some districts can receive only 40% share:
- Söke; Germencik; İncirliova; Kocarlı; Karpuzlu; Aydın Merkez; Köşk; Yenipazar; Sultanhisar; Nazılı; Buharkent; Kuyucak.
All other districts qualify for 60% coverage from RSM
Some districts can receive only 40% share:
- Buldan; Sarayköy; Pamukkale; Babadağ; Merkezefendi; Serinhisar.
All other districts qualify for 60% coverage from RSM
Rest of Türkiye qualifies for 60% coverage from RSM for the first 3 wells and 40% for the 4th and 5th well.
AFRY consulting services for resource validation within the risk sharing mechanism
- Define RSM participation eligibility criteria
- Invite private investors and provide support through the RSM application process
- Evaluation of the geothermal site investigation data, the exploration concept and the investor's business plan
- Selection of projects for participation in the RSM based on the previously defined selection criteria
- Monitoring the drilling work - reviewing the final well tests (exploration tests) and checking whether the result meets the success criterion
- Provide evidence for the WB to decide on the disbursement of RSM funds.
How did AFRY add value to the RSM project?
- by providing evidence of the failure or success of wells
- by supporting the private sector renewable energy developing projects in the geothermal exploration and test drilling phase through risk sharing between the geothermal developer and the Turkish Ministry of Development.
