FOCUS FINANCE & ECONOMY
By Lars Andersen, CEO, Geotermisk Operatørselskab A/S
Geothermal energy is sustainable green energy source from the subsurface. Management of the exploration risk is key to successful geothermal projects. Once the geothermal resource has been confirmed in the exploration phase, the price of financing the geothermal project is crucial to producing the most cost-effective heat for the consumers. Geothermal energy is capital intensive in the exploration and development phases. The optimal financing scheme in the development phase turns out to be a combination of financing provided by the district heating companies and financing provided by industry partners. THE OPTIMAL FINANCING AND OWNERSHIP MODEL Geothermal energy production is a technical product that requires a robust financing and ownership model in order to be successful.
It all comes down to developing geothermal resources as inexpensively as possible, so that geothermal energy is competitive with alternative heat sources. This requires experienced professionals with the appropriate technical skills, inexpensive financing and a robust organization. The purpose of this article is to illustrate the considerations and parameters involved to meet the goal of supplying the consumers with the lowest heat price. BUILD OWN OPERATE VS. TURNKEY WITH A VIEW TO CONSTRUCTION CONTRACTS The different contract models support the goal of inexpensive heat to the consumers less or more. The most commonly used types of contracts, their characteristics and the pros and cons of each contract type are presented on the next page.
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