Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

Notable Country Cases
Countries with extensive inventories of identified geothermal fields will stand to benefit most from 
the application of portfolio management concepts, such as benefits from diversification, reducing 
the overall risk of developing the geothermal resources in the country. The country’s geothermal 
development company could, for example, have an investment portfolio consisting of multiple projects 
to develop geothermal fields and construct the first geothermal power plant in each (or some) of them. 
Provided that the probabilities of successfully tapping into a commercially viable geothermal resource 
are independent across the geothermal areas included in the portfolio (that is, the probabilities have 
little or no correlation), disappointing drilling results in some areas would tend to be offset by superior 
results in others. As a result, the portfolio in aggregate may be financially sustainable even if some of 
its individual projects fail.
Examples of countries which may enjoy potentially significant benefits from a portfolio approach 
are not hard to find. Kenya is one of them. At Naivasha, north-west of Nairobi, installed geothermal 
generation capacity was 198 MW in April 2010, putting Kenya among the top 10 nations with 
developed geothermal resources developed for power production. However, there are many 
additional sites in the Rift Valley (Figure 3.10) where exploratory drilling can be carried out. A group 
of international consultants retained by KenGen has determined that the Menengai and Longonot 
geothermal prospects are ready for drilling exploratory wells, with the aim of confirming commercial 
resources at each site. On the basis of surface exploration and field modeling in about 13 sites, it 
is reasonable to expect reserves of several hundred megawatts at each of these fields (World Bank 
2010a).
Indonesia, as the country possessing the world’s richest geothermal potential and where the 
geothermal exploration and development activities are decentralized to districts and provinces, has 
an even greater scope for applying a portfolio approach. The government of Indonesia has identified 
C h a p t e r 3

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G e o t h e r m a l H a n d b o o k : P l a n n i n g a n d F i n a n c i n g P o w e r G e n e r a t i o n 
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around 250 working areas (geothermal fields) and about 50 projects (for a total of 9,076 MW) that are 
ready for detailed exploration or exploitation (CIF 2010). Indonesia’s geothermal resources are diverse, 
in terms of the size and quality of a particular reservoir, as well as in the available knowledge about the 
characteristics of a given prospect (Castlerock Consulting 2011).
In addition to exploration risks, operational risks can also be reduced by utilizing a portfolio approach 
during the operation and maintenance phase. Plant output will continue to vary depending on the 
performance of the production wells and other factors.
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As a result, poor operating results of one 
plant may be at least partially offset by the superior performance of another.