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

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hIghLIghTS
• A geothermal power project can be divided into a series of development phases before the actual operation
and maintenance phase commences: preliminary survey; exploration; test drilling; project review and planning;
field development; construction; and start-up and commissioning.
• Development of a typical utility size geothermal project will usually take between 5 to 10 years, depending
on the country’s geological conditions, information available about the resource, institutional and
regulatory climate, access to suitable financing, and other factors.
• Risks faced by a grid-connected geothermal power project include: resource risk and the related risk of
oversizing the power plant; financing risks due to high upfront cost and long lead time; completion/delay risk;
operational risks; off-take risk; price risk; regulatory risk, institutional capacity constraints, and
information barriers. 
• The upstream phases, and especially the test-drilling phase, are usually seen as the riskiest parts of geothermal
project development, reflecting the difficulty of estimating the resource capacity of a geothermal field and the costs
associated with its development.
• Balancing the probability of success against the costs of a failure to reach the best expected outcome can be
handled by formal techniques such as the use of a decision tree. The technique allows analyzing and adopting
choices that maximize the expected value of geothermal development by applying probabilities to various project
outcomes.
• Local environmental impacts from geothermal power replacing the use of fossil fuels tend to be positive on
balance. However, like any infrastructure development, geothermal power has its own social and environmental
impacts and risks that have to be managed. It is also crucial to consult and involve all relevant stakeholders,
presenting the trade offs and ways to overcome challenges specific to the project.