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FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION

REIA2000 Conference Renewable Energy in the Americas Organization of American States Washington DC, USA December 4, 2000. FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION. Lucien Y. BRONICKI ORMAT International Inc. P17a (spl) 0012. 1962.

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FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION

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  1. REIA2000 Conference Renewable Energy in the Americas Organization of American States Washington DC, USA December 4, 2000 FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION Lucien Y. BRONICKI ORMAT International Inc. P17a (spl) 0012 1962

  2. Installed Geothermal Capacity (~8,000 MWe)(**) and Worldwide Potential* (~60,000 MWe)(*) COUNTRY INSTALLED ELECTRICAL POTENTIAL FOR GENERATION CAPACITY ELECTRICAL GENERATION MWe MWe USA 2,300 12,000 The Philippines 1,900 6,000 Mexico 850 1,500 Canada -- 250 South & Central America 360 2,000 Western Europe, incl. Iceland 970 1,200 Other European countries 40 500 Indonesia 590 16,000 Japan 550 2,400 P. R. China 30 6,700 New Zealand 440 1,200 Africa, incl. Kenya 60 6,500 Others 10 3,700 * Hot Fractured Rock Excluded ** As of August 2000 SOURCE: US DOE and World Geothermal Congress 2000 1396

  3. 1. RESOURCE DISTRIBUTION Worldwide Geothermal Energy Distribution Areas where Geothermal Projects are in Operation or Planned Geothermal areas where ORMAT plants are in operation Geothermal areas where ORMAT plants are planned 1949

  4. 3. COSTS Active Solar Air & Water Heating Average Capital and Delivered Costs 22000 Capital Cost (US$/kW) Solar Photovoltaic 4000 Solar Thermal Power Biomass - Energy Forestry Energy Crops 3000 Geothermal Land-based Wind Energy 2000 Nuclear Hydro Power Coal Wind Waste Heat 1000 Cost of delivered energy (US$/kWh) Biomass - Landfill Gas from Wastes Gas 0 0.16 0.18 0.86 0 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.20 0.88 1587 SOURCE: SHELL and DOE

  5. 2. TECHNOLOGY Conventional Geothermal Steam Power Plant ORMAT Geothermal Power Plant All Fluids Reinjected: Sustainable, No Power Reduction No Emissions (No Abatement Needed) No Plume (Air Cooled Condensers) Low Profile Not Sensitive to Quality of Brine & Steam Consumes Water: Aquifer Depletion, Power reduction Effluents or Expensive Abatement Plume Visual Impact Water Treatment Needed: Use and Disposal of Chemicals 1391

  6. 5. ORMAT EXPERIENCE: A MATURE TECHNOLOGY Distributed Renewable Energy and Resource Recovery 700 MW of ORMAT Power Plants in operation in 20 countries During the last decade, ORMAT’s power plants have already avoided the emission of 12 million tons of CO2 and saved 4 million tons of fuel THAILAND, since 1989 Geothermal, Heat Recovery, Biomass, and Solar 1470

  7. Applications of ORMATEnergy Conversion Technology GEOTHERMAL SOLAR Wabuska, USA 1987 Ein Boqeq, ISRAEL 1979 WASTE HEAT BIOMASS Lengfurt, GERMANY 1999 Minakami, JAPAN 1998 1953

  8. ORMAT Geothermal Power Plants In Developed Countries USA 1984 Azores Islands 1994-1998 600 kW New Zealand Wabuska Power Plant 1989 Iceland Phase I: 5.5 MW Phase II: 8.5 MW 1989 Sao Miguel Power Plant 2.6 MW Bay of Plenty Power Plant 3.9 MW Svartsengi Power Plant 1955

  9. Private Geothermal Power Generation Makes Good Business Sense: • Large Scale Projects are supplying commercial electricity to national power grids. • The technology is Field Proven in industrial and less developed countries • Geothermal is competitive with fossil fuels • The projects work economically with private financing in the industrial countries • Private/Public partnership in developing countries • Work with governmental and multilateral agency support • Smaller scale plants are providing power to national and local, as well as to rural “mini-Grids 1759

  10. ORMAT Modular Geothermal Power Plants In Developing Countries Leyte Optimization, The Philippines 1997 Olkaria, KENYA 2000 49 MW 1st phase: 8 MW Financing: Equity ORMAT 80% , EPDCI (Japan) 10% & Itochu 10% Term Loan: US Exim Bank Financing: all equity by ORMAT Insurance: MIGA 1957

  11. CASE HISTORY: Financial Structure of the ZUNIL Project 24 MW 1999 1933

  12. LESSONS FROM PUBLIC-PRIVATE PARNERSHIP PROJECTSIn Developing Countries • Project Hurdles • Commercial and financial barriers • Credit issue barriers • Institutional barriers • Power legislation barriers: changes after contract signature such as • dispatchability • Standards, specifications and lengthy and costly reviews: • Fixed soft costs disproportionate to small project size • Micro-management of the project rather than • enforcement of specifications 1959

  13. Project Opportunities Accelerating renewable energy deployment by public-private partnership Public Sector Role: Now: 1. Subscribe to political risks, streamline and unify procedures 2. Assure correct and stable institutional framework 3. Assist developing countries in assessing local & rural needs 4. Provide performance specification Future: 1. Reduce subsidies for fuel and unnecessary grid 2. Level the playing field: internalize renewable external benefits or use market mechanism for carbon trading Private Sector Role: 1. Provide all or part of equity investment 2. Provide the construction loans 3. Guaranty specifications performance and electricity prices 4. Provide technology transfer, O&M training and supervision 1960

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