October 2014: A background report prepared by the Climate Policy Initiative (CPI) for the Climate Investment Funds (CIF) finds that, overall, geothermal is cost competitive with its fossil fuel alternatives, even in the absence of a carbon price. At a levelized cost of electricity (LCOE) of 9-13 US cents per kilowatt-hour (kWh), it is among the least expensive renewable sources of power. However, the publication points out that more deployment is needed for geothermal to achieve its full potential.

The report, titled ‘The Role of Public Finance in Deploying Geothermal: Background Paper,’ is part of a series CPI is producing to study the effective use of public finance to accelerate the deployment of geothermal energy in developing countries. According to the Background Paper, geothermal has expanded at a slower pace than other renewables over the last 30 years. Currently, 76-90% of project investments use some type of public debt or public equity support.

The authors suggest that geothermal, being a low-cost, low-carbon, reliable and flexible source of power generation, would be a good option for developing countries to meet their future energy needs. They find that, with most public finance focused on the operational phase of projects, directing more resources toward lowering risk in the earlier, exploration phase might serve to increase the rate of geothermal expansion. Noting that the private sector is wary of taking on the risk of the early phases, the public sector has an important role to play in getting past this initial barrier, according to the authors. [CIF Publication Webpage] [Publication: The Role of Public Finance in Deploying Geothermal: Background Paper] [CPI Publication Webpage]