The European Bank for Reconstruction and Development's (EBRD) financing of geothermal energy projects in Turkey will be one of its focuses, according to a senior manager in the Bank's Energy Efficiency and Climate Change team on Monday.
"For this purpose, the EBRD developed the Private Sector Early Stage Geothermal Development Framework, or PLUTO, to finance exploration activities and to provide technical assistance in applying best global practices, hence reducing technical risks at this stage," Adonai Herrera-Martinez, senior manager in the EBRD's Energy Efficiency and Climate Change team told Anadolu Agency.
Turkey is a top destination for EBRD finance and the Bank supports renewable energy projects in Turkey through equity and debt financing.
"Turkey has huge potential across all renewable energy sources and the EBRD stands ready to support all of them. Geothermal energy presents specific challenges in terms of early stage development, hence the development of PLUTO, a dedicated facility to address this technology’s specific barriers," Herrera-Martinez underlined
He stated that PLUTO includes $25 million from the Clean Technology Fund to support at least five early stage projects.
"It will be combined with $100 million from EBRD’s own funds to support further drilling and the construction of power plants as the next stage. We are currently in talks with three geothermal developers, based across the Western part of Turkey," he said.
"Additionally, through PLUTO, we would like to support the development of geothermal power in the Central and Eastern parts of Anatolia," he added.
Herrera-Martinez said they expect to start talks with two more developers in the first quarter of the year.
He explained that once the money is fully allocated, the EBRD could potentially consider mobilizing additional grant-based funds to be able to look into more projects.
- Geothermal capacity grows six-fold
He noted that the geothermal sector in Turkey is expanding and the installed capacity has increased six-fold since 2009.
"The increase in the installed capacity is due to a combination of factors, starting with regulatory improvements which spurred renewable energy investment, followed by better management of risks associated with this technology," Herrera-Martinez explained.
"The EBRD’s newest initiative to promote geothermal energy generation, PLUTO, falls within these measures to mitigate risks and accelerate investments, as does the streamlining of the current renewable energy licensing regime - an endeavour in which the Bank is currently working together with the Ministry of Energy and Natural Resources," Herrera-Martinez stated.
He concluded that the Bank also intends maintaining its strong interest in renewables in 2016 through direct deals using both equity and debt loans and through partner banks.
In 2015, the Bank provided a $200 million loan for Turkey’s largest geothermal power plant, Efeler. It was EBRD’s largest investment in Turkey to date.
Previously the multilateral development bank financed, through Turkish commercial banks, six geothermal power plants; Tuzla, Gumuskoy, Pamukoren, Babadere, Alasehir and Umurlu.
At the end of last year, the EBRD agreed to take a 20 per cent stake through a capital increase in the renewables arm of Akfen Holding. The investment aims to help the newly created Akfen Renewable Energy to almost triple the size of its renewable portfolio to over 500 megawatts of installed capacity and to become one of the largest producers of renewable energy in Turkey.
By Nuran Erkul