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

F O r E w O r d
Developing countries face multiple and complex challenges in securing affordable and 
reliable energy supplies to support sustainable economic development. These challenges 
can be addressed by increased access to modern energy infrastructure, enhanced energy 
security through supply diversification, and transition to low carbon paths to meet rising 
energy demands. 
There is broad consensus that renewable energy has a major role to play in addressing 
these challenges. In recent years, support for renewable energy investment has become a 
mainstream activity for multilateral development banks and their clients. The World Bank, 
for instance, has supported geothermal development in Africa, Asia, Europe, and Latin 
America. Global analytical work and technical assistance on clean energy are also one of 
the major program areas of the Energy Sector Management Assistance Program (ESMAP). 
This handbook is dedicated to geothermal energy as a source of electric power for 
developing countries. Many developing countries are endowed with substantial geothermal 
resources that could be more actively put to use. On top of the benefits stemming from its 
renewable nature, geothermal energy has several additional advantages, including the 
provision of stable and reliable power at a relatively low cost, around the clock, and with few 
operational or technological risks. 
However, several factors have hindered countries from developing geothermal resources. 
These factors are mostly related to the high upfront costs and the risk involved in 
geothermal resource exploration, including drilling. The initial exploration and confirmation 
of the resource is vital for soliciting the interest of the private sector to build and operate 
geothermal power plants. This handbook is written in an effort to assist developing 
countries around the world in scaling up the use of geothermal energy in their power sector 
development strategies. This is not an all-inclusive technical guide. The main objective is 
to provide decision makers and project developers with practical advice on how to set up, 
design, and implement a geothermal development program.
Rohit Khanna
ESMAP Program Manager, Washington, DC

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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 
viii
Acre
4,050 square meters
ADB 
Asian Development Bank
AFD
French Development Agency
AfDB
African Development Bank
ARGeo 
African Rift Geothermal Development Program
bbl
Barrel (oil)
BOO
Build, own, and operate
BOT
Build, operate, and transfer
BTU
British thermal unit = 0.29 Watt-hour
C Celsius
Capex
Capital expenditure
CDM
Clean Development Mechanism (of the UNFCCC)
CEG
Comision de Energia Geotermica
CER 
Certified emission reductions
CFE
Federal Commission for Energy (Mexico)
CIF
Climate Investment Funds
cm
Centimeters
CO
2
Carbon dioxide
CPA 
CDM project activity
CSP 
Concentrated solar power
CTF
Clean Technology Fund
DBFO
Design, build, finance, and operate
EA 
Environmental assessment
EBIT 
Earnings before interest and taxes
EBITDA 
Earnings before interest, taxes, and depreciation /amortization
ECA
Europe and Central Asia (WB region)
EDC
Energy Development Corporation (Philippines)
EGS
Enhanced (engineered) geothermal system
EIA
Environmental impact assessment
EMP 
Environmental management plan
EPC 
Engineering, procurement, and construction
ESMAP
Energy Sector Management Assistance Program
F/S 
Feasibility study
FCFE
Free cash flow to equity
FCFF
Free cash flow to the firm
FCFP
Free cash flow to the project
FI 
Financial intermediary
FIT
Feed-in tariff
FO
Fuel oil
g Gram
GDC
Geothermal Development Company (Kenya)
GEF
Global Environment Facility
GHG
Greenhouse gas
GJ Gigajoule
GoK
Government of Kenya
GRI
Geothermal risk insurance
GW
(GWe) Gigawatt (electric) =1 million kW
GWh
Gigawatt-hour
GWh/a
Gigawatt-hours per annum (year)
GWPI 
Geothermal well productivity insurance
H
2
S
Hydrogen sulfide
HDR 
Hot dry rock (also called EGS)
HFO
Heavy fuel oil
IAEA
International Atomic Energy Agency
IEA
International Energy Agency
IFC 
International Finance Corporation
IFI
International financial institution
IP 
Investment plan
IPP
Independent power producer
IRR
Internal rate of return
ISOR
Iceland GeoSurvey (Iceland-based geothermal consulting company)
ITH 
Income tax holiday
KenGen
Kenya Electricity Generating Company
KfW
Kreditanstalt fur Wiederaufbau (development banking group of Germany)
kg Kilogram
km Kilometer
kW (kWe) Kilowatt (electric) = 1,000 Watt
kWh
Kilowatt-hour
L Liter
LCOE
Levelized cost of energy
LDC
Load duration curve
LNG
Liquefied natural gas
m Meter
m a s l 
Meters above sea level
MBTU 
1 million BTUs
MDB
Multilateral development bank