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

Facility design Options
In a donor-supported geothermal development facility, concessional finance instruments may be 
utilized through a number of possible designs. For example, to address the risks of the geothermal 
exploration/test drilling phase in a developing country, the following structures may be used.
a direct capital subsidy facility
to cost-share the drilling costs of project developers. This option calls 
for cost sharing between the developer and the government. The cost sharing arrangement could 
cover a predefined maximum number of wells (up to five, for example). In return for this cost sharing, 
the government will receive all resource data the developer collects and will own the wells drilled if the 
developer abandons the project. This approach is relatively expensive but would be reasonably easy 
to administer and should be attractive to developers. An illustrative financial return calculation included 
earlier in this chapter (with details in Annex 3) shows that a 50 MW geothermal plant costing US$ 196 
million may require a capital subsidy of about US$ 14 million, if the government absorbs 50 percent 
of the costs during the first three years of the project, including test drillings. On a country-wide scale, 
the approach has been proposed as one of the options for Indonesia, with the maximum cost for the 
government estimated at US$ 500 million (World Bank/PPIAF 2010). 
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