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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Security of tenure | 
This refers to the security of title, the right to transfer the title to any eligible
third party, and the right to mortgage the title to raise money; as well as to the transformation
of exploration licenses into exploitation licenses once the presence of economic resources
has been confirmed.

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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 
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Security of title |
Licenses and geothermal rights should not be revoked or suspended except
under specific circumstances clearly established in the legal framework.
 
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auctions or tenders |
A country’s legal framework may include provisions to allow for auctioning
of specific rights when geological knowledge about a specific geothermal reservoir is
strong, either due to the government’s own exploration campaign or through other activities.
Otherwise, the cost of the auctioning process exceeds its benefits given the risks.
Legally ensuring the security of tenure is fundamental since it would otherwise be difficult to attract 
investors to geothermal exploration. If there is a risk that the discoverer of the resources will not be 
granted exploitation rights when in compliance with certain predefined technical and economic 
conditions, the recovery of his capital investment will be jeopardized. It is also important to ensure that 
exploitation and exploration rights are given for a sufficiently long period of time and that they can be 
renewed as appropriate, based on compliance with pre-established conditions.
Security of title/tenure, however, does not mean the license for the developer to allow the resource to 
idle. The pre-established conditions noted above should include all the necessary requirements for the 
developer to put the resource to productive use within a reasonable time frame. This means that: (a) 
the conditions for granting the geothermal concession rights should be sufficiently rigorous with regard 
to the timetable for exploration and development to make sure that developers expand/develop the 
field where they have concessions; and (b) the government should include sufficient exit clauses that 
enable it to claw back the fields and reissue them if the developers are unable to expand development 
(at least with respect to greenfield areas).
Granting of geothermal rights is usually independent of water rights. This implies that, if the use of 
the geothermal resource requires the evaporation or consumption of water, specific rights may have 
to be obtained from a different government agency. Additional permits will also be required for the 
construction and operation of electrical generation facilities, direct-use steam plants, and related 
facility and well field operations.