The exploration risk of geothermal projects remains the most significant challenge for deep geothermal ventures. Addressing this issue, the upcoming Investment in Geothermal Conference (IGC Invest), scheduled for June 25-26, 2024, in Frankfurt, Germany, will present new and existing solutions aimed at mitigating these risks.
A key session at the IGC Invest will focus on state and private sector strategies for risk-sharing in geothermal exploration. The session will feature presentations from Munich Re, the Swiss Federal Office of Energy, and the French Association Française des Professionnels de la Géothermie (AFPG).
Geothermal project development involves various risks, with exploration risk being the most critical. This risk refers to the possibility that deep water, necessary for geothermal energy, might not be found in sufficient temperature or quantity. To mitigate this, extensive preliminary studies are conducted during the exploration phase, utilizing methods like gravimetric, 2D, and potentially 3D seismic measurements to identify promising underground structures. However, these indirect geophysical methods cannot guarantee the localization of deep water at several kilometers depth.
Direct insights into these depths, whether through cost-effective slim holes or exploratory boreholes that can be later used operationally, are essential. These methods can determine the water’s depth, temperature, quantity, and chemical composition but come with costs running into several million euros, which could be lost if the exploration is unsuccessful.
This is where discoverability insurance plays a crucial role. In Germany, a state program has previously addressed this need, supplemented by private sector solutions. Many European countries, including France, Hungary, and Switzerland, have state indemnity schemes to cover discoverability risks. Germany is also planning a state-run exploration risk insurance scheme, which could cover approximately 90% of the risk. Such a program could significantly advance geothermal projects, aiding local utilities in integrating geothermal energy into district heating grids.
The fifth edition of the IGC Invest Geothermal conference will convene experts, investors, and policymakers to explore opportunities and discuss strategies for overcoming financial challenges in energy infrastructure projects. Registration for the event is still open.
