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

Measures for Controlling Speculative Practices
By setting the framework for granting licenses to private investors, the government can profoundly 
affect the market structure, either setting the stage for productive competition or, in some cases, for 
unproductive speculative behavior. In the mining industry, a useful distinction is sometimes made 
between active and passive speculation. Active speculation, which seeks to promote the property and 
increase its selling value by undertaking reconnaissance or exploration activities, can play an essential 
role in the development of the geothermal sector. In contrast, passive speculation, where no activity is 
developed inside a specific license that remains totally dormant, can stall development of the sector. 
Governments limit passive speculation by exploration licensees through the application of escalating 
fees, mandatory relinquishment requirements (periodic obligation to reduce the surface area of the 
exploration licenses), and minimum investment requirements and work obligations, among other 
provisions. 

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Governmental institutions granting concessions for geothermal exploration must keep in mind that 
private geothermal power companies seeking to develop geothermal power projects worldwide may 
try to accumulate as many concessions as possible and develop them simultaneously, a practice well 
known in the mining industry. It is essential for authorities to establish procedures for evaluating both 
the intent and capacity of an applicant for geothermal exploration and development to successfully 
implement the activity. At a minimum, the authorities should check the applicants’ in-house experience, 
track record in the field of geothermal energy, and capital assets. The findings should be used to 
evaluate each company’s ability to actually develop projects on the ground as well as its intentions and 
future strategies.
The government should ensure that the implementation of the principles governing the provision 
of geothermal access rights and of the measures to control speculative practices is as efficient as 
possible. To do so, the government will need to clarify whether geothermal access rights require 
special treatment. Such treatment might include setting up a legal framework specific to geothermal 
exploration or the establishment of a special one-stop shop within the government which might help 
avoid unnecessary delays linked to multiple agencies governing access to various elements of 
geothermal rights.