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

partial credit guarantee instruments 
to attract or improve tenor and 
terms of commercial debt
• Export credit agency financing
Source | Authors.
Reliance solely on commercial capital for geothermal development is rarely a viable option even 
in developed country markets. Although direct capital subsidies are rarely used in those markets, 
incentives such as loan guarantees and investment tax credits are often granted by government to 
geothermal developers. In developing countries, where the challenges involved in attracting private 
capital to geothermal projects are often greater, the commitment of the public sector—including the 
country government, international donors, and financial institutions—to contribute financial support is 
likely to be an essential element of success in mobilizing capital. Since the financial crisis of late 2008, 
development banks have provided 53 percent of total geothermal project financing. The financing 
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risks will still deter pure project finance solutions in many cases, making the balance sheet strength 
of the developer an important consideration. Therefore, access to commercial debt will still be mostly 
unavailable except to large developers. Public sector support mechanisms, including loan guarantees 
by government and long-term debt from IFIs, may be helpful in extending the tenor and improving the 
terms of debt and in some cases may be a critical factor in mobilizing commercial lending.