Public Finance and Private Exploration in Geothermal: Gümüøköy Case Study, Turkey

The Gümüşköy Geothermal Power Plant (GPP) represents the first instance in Turkey where the private sector financed the exploration of an unproven geothermal field. Developed by BM Holding, the 13.2MW project utilized a combination of USD 15.1 million in private equity and USD 34.5 million in debt, including a USD 24.9 million loan from the EBRD-funded Mid-size Sustainable Energy Finance Facility (MidSEFF) channeled through Yapikredi. The project's financial viability was secured by a ten-year USD-denominated feed-in tariff (FiT) of 10.5 USD¢/kWh, which increased equity returns from 10% to 16%. The study finds that while Turkey's geothermal sector grew rapidly from 30MW in 2008 to 405MW in 2014, most projects relied on government-proven fields. Gümüşköy demonstrates that private-led exploration can be cost-competitive, with an LCOE of 10.3 USD¢/kWh, and can build local banking capacity for sustainable energy finance. However, the report warns that scaling the sector requires addressing high carbon emissions from non-condensable gases, suggesting binary systems and carbon capture for industrial use as solutions.

• The Gümüşköy GPP is the first project in Turkey where the private sector independently financed the exploration of an unproven geothermal field, departing from the traditional model where the government agency MTA proved resources before tendering.
• The Turkish government's feed-in tariff (FiT) of 10.5 USD¢/kWh was critical for financial viability, increasing the internal rate of return (IRR) on equity from 10% to 15% and allowing for full investment payback within eight years.
• Public finance via the EBRD's MidSEFF facility further boosted equity returns to 16% by providing long-term, low-cost debt through a local commercial bank, Yapikredi.
• The private-led development model is cost-competitive, with Gümüşköy's LCOE estimated at 10.3 USD¢/kWh, making it 12-17% cheaper than comparable geothermal plants globally and other power projects in Turkey.
• Turkey's geothermal sector experienced explosive growth between 2008 and 2014, with installed capacity increasing from 30MW to 405MW, representing a compound annual growth rate of 54%.
• To reach its full potential of 4.5GW of installed capacity by 2030, Turkey must overcome barriers to private exploration, as government drilling activity has declined, falling to 7% of total MTA drilling in 2013.
• Geothermal scale-up in Turkey faces a significant environmental challenge due to high concentrations of non-condensable gases (NCGs), which could result in emissions profiles of 0.84t CO2/MWh for new large-scale developments.
• Binary systems, such as the one used at Gümüşköy, mitigate carbon leakage by re-injecting fluids directly and allow for the capture of CO2 as a byproduct for use in greenhouses and industrial sites.
• The use of a local bank (Yapikredi) to channel EBRD funds effectively built the technical capacity of the Turkish private lending sector to assess and finance sustainable energy projects.

APA

Oliver, P., & Stadelmann, M. (2015). Public Finance and Private Exploration in Geothermal: Gümüøköy Case Study, Turkey. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/03/SGG-Report_Public-Finance-and-Private-Exploration-in-Geothermal_Gumuskoy-Turkey1.pdf

Chicago

Oliver, Padraig, and Martin Stadelmann. Public Finance and Private Exploration in Geothermal: Gümüøköy Case Study, Turkey. Climate Policy Initiative, 2015. https://www.climatepolicyinitiative.org/wp-content/uploads/2015/03/SGG-Report_Public-Finance-and-Private-Exploration-in-Geothermal_Gumuskoy-Turkey1.pdf.

Wikipedia

{{cite report |last1=Oliver |first1=Padraig |last2=Stadelmann |first2=Martin |title=Public Finance and Private Exploration in Geothermal: Gümüøköy Case Study, Turkey |publisher=Climate Policy Initiative |date=March 2015 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2015/03/SGG-Report_Public-Finance-and-Private-Exploration-in-Geothermal_Gumuskoy-Turkey1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{oliver2015public, author = {Oliver, Padraig and Stadelmann, Martin}, title = {{Public Finance and Private Exploration in Geothermal: Gümüøköy Case Study, Turkey}}, institution = {Climate Policy Initiative}, year = {2015}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2015/03/SGG-Report_Public-Finance-and-Private-Exploration-in-Geothermal_Gumuskoy-Turkey1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }