Development and Investment Bank of Türkiye Supports the Development of Geothermal Investments with the World Bank

Through the Risk Sharing Mechanism, funded by a grant from the World Bank’s Clean Technology Fund, Development and Investment Bank of Türkiye supports investment in geothermal fields by partially covering geothermal investors’ risks associated with drilling for resource exploration and confirmation. All investors holding an exploration licence and planning to use geothermal energy for electricity generation or heating applications may apply to the Risk Sharing Mechanism.

Under this risk-sharing mechanism, implemented for the first time in Türkiye’s geothermal energy sector, a specified share of the risks associated with drilling for both power generation and heat applications is covered. Development and Investment Bank of Türkiye is the executing agency for the Risk Sharing Mechanism project, while the Bank’s Engineering Department serves as the Project Implementation Unit.

Providing information on the project, TKYB Executive Vice President Seçil Kızılkaya Yıldız said: “As a bank working with the mission of supporting Türkiye’s sustainable development, we support renewable energy investments through long-term loans secured from international resources. Renewable energy investments account for half of our portfolio. The geothermal sector also offers significant opportunities in this area. With the support of the World Bank, we provide the contribution needed to advance this sector. Within this framework, we participate in relevant platforms and inform investors. We also took part in a workshop organised by the Turkish Academy of Sciences at Afyon Kocatepe University, where we delivered a presentation entitled ‘Türkiye Geothermal Development Project: Risk Sharing Mechanism’.”

Support of Up to 60% for Geothermal Exploration Drilling

Through the Risk Sharing Mechanism, the World Bank aims to cover part of the risks faced by geothermal energy investors in drilling wells for resource exploration and confirmation, including projects for heat applications. By covering a portion of the early-stage risks of geothermal investments, the mechanism is also expected to increase private-sector interest in exploration-stage geothermal projects and support the development of investments in previously unexplored areas across Türkiye. While the project’s initial implementation phases are continuing, applications for the second round are planned to open in May 2020. All investors seeking to use geothermal energy for electricity generation or heating and holding an exploration licence valid for at least 18 months from the application date may apply to the Risk Sharing Mechanism.

For projects located in districts of Aydın, Denizli and Manisa where geothermal resources have previously been discovered and geothermal electricity generation is concentrated, the mechanism covers 40% of the eligible well cost if the drilled wells are unsuccessful. For projects in other regions, it covers 60%. Under the project terms, if the drilled wells are successful, the investor pays a success premium equal to 10% of the eligible well costs.

Türkiye Ranks Fourth in Geothermal Electricity Generation

Electricity generation from geothermal energy in Türkiye increased remarkably over a ten-year period, placing the country first in Europe and fourth in the world. The development that began in 1984 with the 15 MW Kızıldere-I geothermal power plant accelerated following the commissioning of the first private-sector geothermal plant in 2006 and the entry into force in 2007 of Law No. 5686 on Geothermal Resources and Natural Mineral Waters and its implementing regulation. Following legal arrangements supporting geothermal electricity generation and the support mechanism for renewable energy resources under the Renewable Energy Law, the installed capacity of geothermal power plants increased significantly over the past decade, reaching a total of 1,445 MW across 51 geothermal power plants. With new investments, this figure is expected to rise further, increasing the share of renewable energy in Türkiye’s total installed capacity.

About Development and Investment Bank of Türkiye

Since 1975, Development and Investment Bank of Türkiye has supported development initiatives in every area needed by Türkiye. Drawing on its strong international standing and the resources it secures, it supports competitive and efficient production for a stable and robust economy. In line with the 2023 objectives, guided by the 11th Development Plan and the United Nations Sustainable Development Goals, the Bank focuses on financing sustainable development. With experienced and specialised human resources possessing command of global banking standards, a dynamic structure, and innovative products and services, it will continue to stand by investors.