(Regional) GEOTHERMAL GROWTH … or how demand and availability of finance drives development

Alexander Richter!!ThinkGeoEnergy.com!@thinkgeoenergy!!19 September 2012 – 2nd Global Geothermal Energy Summit 2012, Reykjavik/ Iceland! 1  

THE NEW !THINK!GEOENERGY!!to come:!- Supplier Directory!- Plant Map!- Publications

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Geothermal growth – global vs. regional

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DRIVERS OF DEVELOPMENT

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Effects on international development !last 2-3 years

Economic situation

Energy demand

Industry

•  Interest vs. Capabilities •  Growth & standstill

•  Growing economies •  Policy & competitiveness

•  Technology, R&D •  Export initiatives

•  Feed-in-tariffs, risk mitigation •  IPP vs. Public utilities Policy support

•  Development Bank financing •  Export initiatives & vendor financing Availability of financing

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BUSINESS MODEL GEOTHERMAL

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Business Model - Development

Start-up Exploration/ Pre-Feasibility

Feasibility

Detailed Design & Construction

Start of Operation

= Rationale of how!a company/ an industry!

creates, delivers, and captures value!7  

EUROPEAN DEVELOPMENT & ACTIVITIES

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European development!and international activities of European companies

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GLOBAL DEVELOPMENT

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Africa, Asia-Pacific, Caribbean & Latin America

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OUTLOOK

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Capacity additions by country

•  …..

31 October 2011 GEOTHERMAL – MARKET OUTLOOK

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targets, resource potentials and electricity market dynamics allowing us to extend our forecast beyond the current pipeline, country by country, to 2030.

Project announcements in Japan, Turkey and East Africa should drive up our forecast estimates in Q4. These markets are not alone, but they are some of the most notable movers of late. New project announcements are coming out of these markets almost weekly, with Marubeni now planning projects in Japan; Enel announcing it owns 142 concessions in Turkey with 26 more up for auction soon; and Kenya, Ethiopia, Djibouti, Rwanda and others in the Rift Valley revealing plans to tap geothermal resources to meet growing electricity demand. Right now we forecast these countries adding an aggregate 435MW by end-2017, but as announced intentions transition to projects we expect this number will actually be much higher.

We still expect most growth to occur in Indonesia, with the country adding another 1.1GW by end-2017 and growing at an average of 11% per year. We are hesitantly optimistic that the federal and provincial governments will arrive at workable solutions to facilitate companies in obtaining necessary permits. Pertamina Geothermal Energy (PGE) has told Bloomberg New Energy Finance it expects to be the trailblazer on this as it seeks to advance development on its 15 concessions. And beyond the red tape, the incentives being pushed by the Indonesian government – the drilling risk fund, relaxed import duties, pending $120–130 feed-in tariff (FiT), and others – are all steps in the right direction to encourage investment.

Figure 2: Historical and expected global capacity additions by country, 2006–15 (MW)

Source: Bloomberg New Energy Finance

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rest of world

Philippines

Mexico

Kenya

New Zealand

US

Indonesia

701

381427

337 310

245

421

497

751715

-46% 12% -21% -8% -21% 72% 18% 51% -5%

Source: Bloomberg New Energy Finance 13  

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Summary

•  Global growth vs. regional growth •  Focus on local impact and business opportunity •  Heat vs power opportunities •  North American situation •  Role of development and export-import banks

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Contact Alexander Richter ThinkGeoEnergy.com alex@thinkgeoenergy.com Follow ThinkGeoEnergy:

Twitter: @thinkgeoenergy LinkedIn Group: ThinkGeoEnergy Flickr.com/thinkgeoenergy YouTube.com/thinkgeoenergy Slideshare.com/thinkgeoenergy

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