The World Bank’s Board of Directors has approved two loans worth $300 million for the Geothermal Development Project in Turkey, to support the development of renewable energy by tapping heat sources deep in the ground.
The loans are additional financing to two initial loans worth $250 million, according to a statement released on Dec. 17. The loans are complemented by a $39.8 million grant from the Clean Technology Fund as well as a $350,000 million grant from the Energy Sector Management Assistance Program.
The renewable energy sector has been growing rapidly in Turkey over recent decades, and geothermal power plants, which use subterranean heat to drive electricity-generating turbines, can provide low-carbon power to drive economic growth and boost prosperity.
The World Bank financing package, combining loans and grants, allows the Geothermal Development Project to scale up private sector investment in geothermal energy development in Turkey by reducing risks for investors through a Risk Sharing Mechanism (RSM) and by providing access to long term financing through the Loan Facility for Resource Development. The innovative RSM increases the incentives for exploring for exploitable geothermal resources in well-developed and less developed geothermal regions.
“The World Bank is pleased to be a partner of the government of Turkey in the energy transition effort and the scaling-up of geothermal capacity in particular,” said Auguste Kouame, World Bank Country Director for Turkey.
“Increasing renewable energy generation capacity is critical to achieving energy security and climate change mitigation in Turkey. In addition, attracting climate friendly investment is crucial in Turkey’s energy transition,”he added.
The additional financing will be used to finance electricity generation, capacity drilling and steam-field development and geothermal direct-use applications.
With the addition of the two new loans, the Geothermal Development Project is expected to finance a total of over 380 MW of new geothermal capacity, mobilize about $555 million of private capital, and contribute to Turkey’s climate commitments by preventing about 30 million tons of carbon emissions over the lifetime of the geothermal projects.