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 I g u r E 2 . 3 
Mid-size Drilling Rig in the Caribbean 
Source | Sigurður Sveinn Jónsson, ÍSOR (Iceland Geosurvey).

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C h a p t e r 2
Again, the investments related to Phase 3 can be high, but costs are very project specific. Depending 
on the location and depth of drilling, a slim hole drilling costs between US$ 0.5 and 1.5 million, while 
a full size well would usually cost between US$ 2 and 6 million. For example, for four full size wells of 
2.5 to 3 km deep, including the related scientific work, the investment would be typically between US$ 
10 and 25 million. Depending on the location of the geothermal field and the need to build or reinforce 
access roads, mobilization costs for drilling equipment can be a significant part of the overall cost of 
this phase, since dozens of heavy full size containers, including fuel and power generators, long steel 
pipes (casings), drilling mud, and cement have to be transported to the drilling site.
As will be discussed in Chapter 3, funding support from governments to reduce developers’ 
exploratory risks associated with these first three phases is often the only way to ensure private 
participation in early geothermal project development. Governments that encourage the private sector 
to develop projects from the start, including the first three project phases, usually consider giving 
grants, subsidies, or other incentives to private companies. Risk sharing agreements between the 
public and private sector that are clearly defined before any investment is made can also facilitate the 
funding of these project phases by sharing costs and limiting the potential financial losses in case the 
geothermal reservoir is not suitable for power generation.