Lessons on the role of public finance in deploying geothermal energy in developing countries

This report by the Climate Policy Initiative (CPI) analyzes the role of public finance in accelerating geothermal energy deployment in developing countries. Based on case studies from Turkey, Kenya, and Indonesia, the report demonstrates that public risk-mitigation measures can reduce the levelized cost of electricity (LCOE) and allow governments to achieve electricity generation goals while spending only 15-35% of the resources required for sole public ownership.

• Public policy and finance measures that mitigate risks—including resource exploration, political instability, and currency fluctuation—along with access to lower-cost debt, reduced the levelized cost of electricity (LCOE) by 35-48% in the studied case studies. Without these measures, the private sector's requirement for higher returns could necessitate a tariff increase exceeding 60% if the private investor bore all risks.
• To reach deployment targets of 23GW by 2030 in developing countries, public finance for geothermal must increase 7-10 fold, rising from the current USD 7.4 billion to between USD 56-73 billion. This represents 42-55% of the estimated USD 133 billion in total additional financing required, primarily for exploration, drilling, steamfield development, and power plant construction.
• The report recommends that policymakers set ambitious deployment targets and utilize feed-in tariffs (FiTs) that balance private sector incentives with public costs. Additionally, it suggests implementing closed database systems for centralized data-sharing on geothermal resources to reduce exploration risks and prevent legal disputes over ownership.
• Development finance institutions (DFIs) are encouraged to increase concessional finance and grants, as concessional loans can lower power tariffs by up to 25% in countries with high debt costs. The report also suggests increasing the share of public finance allocated to the earliest, riskiest stages of project development from 11% to 17% and developing standardized political and partial-risk guarantees.
• Geothermal development in Indonesia has the potential to reduce emissions by 54MtCO2e per year. However, the report notes that carbon leakage risks should be considered in specific locations, such as Eastern Turkey, where geothermal fluids contain high levels of non-condensable gases.

APA

Climate Policy Initiative (2015). Lessons on the role of public finance in deploying geothermal energy in developing countries. https://www.climatepolicyinitiative.org/publication/lessons-role-public-finance-deploying-geothermal-energy-developing-countries/

Chicago

Climate Policy Initiative. Lessons on the role of public finance in deploying geothermal energy in developing countries. 2015. https://www.climatepolicyinitiative.org/publication/lessons-role-public-finance-deploying-geothermal-energy-developing-countries/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Lessons on the role of public finance in deploying geothermal energy in developing countries |date=20 August 2015 |url=https://www.climatepolicyinitiative.org/publication/lessons-role-public-finance-deploying-geothermal-energy-developing-countries/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2015lessons, author = {{Climate Policy Initiative}}, title = {{Lessons on the role of public finance in deploying geothermal energy in developing countries}}, institution = {Climate Policy Initiative}, year = {2015}, month = aug, url = {https://www.climatepolicyinitiative.org/publication/lessons-role-public-finance-deploying-geothermal-energy-developing-countries/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }