The Role of Public Finance in Deploying Geothermal: Background Paper

The report identifies geothermal energy as a cost-competitive, low-carbon baseload power source, but notes that its deployment is hindered by high resource risks and long development timelines. It finds that 76-90% of geothermal project investments rely on public debt or equity, as the private sector is generally unwilling to fund the high-risk exploration phase. The document argues that while current policy support often focuses on the operational phase, public finance should be redirected toward the early stages of project development to attract more private capital.

• Geothermal electricity is cost-competitive with fossil fuels and is among the cheapest renewable options, with a levelized cost of electricity (LCOE) typically between 9-13 USDc/kWh.
• Geothermal project development is significantly slower than other energy sources, taking an average of 5.5 years from permitting to commissioning, compared to 1.5 years for solar and wind and 3.5 years for oil and gas.
• The public sector is critical to geothermal financing, with 76-90% of project investments utilizing some form of public debt or equity support.
• Private sector investment is heavily concentrated in later stages of development; only 7.5% of utility-scale projects in the study's database were entirely financed by the private sector across all stages.
• Resource identification and exploratory drilling is the highest risk phase, with global well success ratios estimated at 50-59% and costs reaching up to 15% of total project capital.
• Most current policy support mechanisms, such as feed-in tariffs and renewable portfolio standards, are focused on the operational phase rather than the high-risk exploration phase.
• Public-private partnerships (PPPs) currently play a limited role in geothermal development despite their potential to attract private capital.
• Binary plant technology is the fastest-growing geothermal type, particularly in the U.S., as it allows for the exploitation of medium to low temperature resources.

APA

Micale, V., Oliver, P., & Messent, F. (2014). The Role of Public Finance in Deploying Geothermal: Background Paper. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/10/Geothermal-Background-Final.pdf

Chicago

Micale, Valerio, Padraig Oliver, and Fiona Messent. The Role of Public Finance in Deploying Geothermal: Background Paper. Climate Policy Initiative, 2014. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/10/Geothermal-Background-Final.pdf.

Wikipedia

{{cite report |last1=Micale |first1=Valerio |last2=Oliver |first2=Padraig |last3=Messent |first3=Fiona |title=The Role of Public Finance in Deploying Geothermal: Background Paper |publisher=Climate Policy Initiative |date=October 2014 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2014/10/Geothermal-Background-Final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{micale2014role, author = {Micale, Valerio and Oliver, Padraig and Messent, Fiona}, title = {{The Role of Public Finance in Deploying Geothermal: Background Paper}}, institution = {Climate Policy Initiative}, year = {2014}, month = oct, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2014/10/Geothermal-Background-Final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }