World Bank approves $290m loan for Turkey’s geothermal development project
The World Bank has approved $290m funding for a geothermal development project in Turkey to help the country to expand its renewable generation capacity.
The funding includes $250m loan from International Bank for Reconstruction and Development (IBRD) and $39.8m from Clean Technology Fund Grant.
The project, which will help create renewable energy by tapping underground heat sources, will be implemented by the two financial intermediaries (FI) Türkiye Kalkinma Bankasi (TKB) and Türkiye Sinai Kalkinma Bankasi (TSKB).
In addition to encouraging private investment in geothermal projects in Turkey, the geothermal development project intends to reduce risks for investors through a risk sharing mechanism (RSM) and by providing access to long term financing.
The project involves establishment of a risk sharing mechanism for resource validation as well as support the exploration and test drilling stages.
It also includes setting up of a loan facility for resource development to support the power plant development phase.
World Bank Turkey country director Johannes Zutt said that the funding will help Turkey expand its geothermal generation capacity.
Zutt added: “Increasing renewable energy generation capacity is critical to achieving energy security and climate change mitigation in Turkey.
“The renewable energy sector has been growing rapidly in Turkey over the past decades, and geothermal power plants, which use subterranean heat to drive electricity-generating turbines, can provide low-carbon baseload power to drive economic growth and boost prosperity.”
The two banks will benefit from two IBRD loans including $100m to TKB and $150m to TSKB.