REIA 2000 Conference Renewable Energy in the Americas

REIA 2000 Conference Renewable Energy in the Americas Organization of American States Washington DC, USA December 4, 2000 FINANCING OF PRIVATE GEOTHERMAL POWER GENERATION Lucien Y. BRONICKI ORMAT International Inc. 1962 P 17 a (spl) 0012

Installed Geothermal Capacity (~8, 000 MWe)(**) and Worldwide Potential* (~60, 000 MWe)(*) COUNTRY INSTALLED ELECTRICAL GENERATION CAPACITY USA The Philippines Mexico Canada South & Central America Western Europe, incl. Iceland Other European countries Indonesia Japan P. R. China New Zealand Africa, incl. Kenya Others MWe 2, 300 1, 900 850 -360 970 40 590 550 30 440 60 10 POTENTIAL FOR ELECTRICAL GENERATION MWe 12, 000 6, 000 1, 500 250 2, 000 1, 200 500 16, 000 2, 400 6, 700 1, 200 6, 500 3, 700 * Hot Fractured Rock Excluded * * As of August 2000 1396 SOURCE: US DOE and World Geothermal Congress 2000

1. RESOURCE DISTRIBUTION Worldwide Geothermal Energy Distribution Areas where Geothermal Projects are in Operation or Planned Geothermal areas where ORMAT plants are in operation 1949 Geothermal areas where ORMAT plants are planned

3. COSTS Average Capital and Delivered Costs 22000 Capital Cost (US$/k. W) Solar Photovoltaic 4000 Solar Thermal Power 3000 Biomass - Energy Forestry Energy Crops Geothermal 2000 Nuclear Land-based Wind Energy Hydro Power Coal Wind Waste Heat 1000 Gas Cost of delivered energy (US$/k. Wh) Active Solar Air & Water Heating Biomass - Landfill Gas from Wastes 0 0 0. 02 15/06/2021 1587 0. 04 0. 06 0. 08 0. 10 0. 12 0. 14 SOURCE: SHELL and DOE 0. 16 0. 18 0. 20 0. 86 4 0. 88

2. TECHNOLOGY Conventional Geothermal Steam Power Plant Consumes Water: Aquifer Depletion, Power reduction Effluents or Expensive Abatement Plume Visual Impact Water Treatment Needed: Use and Disposal of Chemicals 1391 ORMAT Geothermal Power Plant All Fluids Reinjected: Sustainable, No Power Reduction No Emissions (No Abatement Needed) No Plume (Air Cooled Condensers) Low Profile Not Sensitive to Quality of Brine & Steam

5. ORMAT EXPERIENCE: A MATURE TECHNOLOGY Distributed Renewable Energy and Resource Recovery 700 MW of ORMAT Power Plants in operation in 20 countries During the last decade, ORMAT’s power plants have already avoided the emission of 12 million tons of CO 2 and saved 4 million tons of fuel THAILAND, since 1989 Geothermal, Heat Recovery, Biomass, and Solar 1470

Applications of ORMAT Energy Conversion Technology GEOTHERMAL Wabuska, USA SOLAR 1987 BIOMASS Minakami, JAPAN 1953 1998 Ein Boqeq, ISRAEL WASTE HEAT Lengfurt, GERMANY 1999 1979

ORMAT Geothermal Power Plants USA In Developed Countries 1984 Azores Islands 1994 -1998 600 k. W New Zealand 1989 Wabuska Power Plant Iceland Phase I: 5. 5 MW Phase II: 8. 5 MW 1989 Sao Miguel Power Plant 2. 6 MW Bay of Plenty Power Plant 1955 3. 9 MW Svartsengi Power Plant

Private Geothermal Power Generation Makes Good Business Sense: 1759 • Large Scale Projects are supplying commercial electricity to national power grids. • The technology is Field Proven in industrial and less developed countries • Geothermal is competitive with fossil fuels • The projects work economically with private financing in the industrial countries • Private/Public partnership in developing countries • Work with governmental and multilateral agency support • Smaller scale plants are providing power to national and local, as well as to rural “mini-Grids

ORMAT Modular Geothermal Power Plants In Developing Countries Leyte Optimization, The Philippines 1997 Olkaria, KENYA 2000 49 MW 1 st phase: 8 MW Financing: Equity ORMAT 80% , EPDCI (Japan) 10% & Itochu 10% Financing: all equity by ORMAT Term Loan: US Exim Bank Insurance: MIGA 1957

CASE HISTORY: Financial Structure of the ZUNIL Project 24 MW 1933 1999

LESSONS FROM PUBLIC-PRIVATE PARNERSHIP PROJECTS In Developing Countries Project Hurdles • • Commercial and financial barriers Credit issue barriers Institutional barriers Power legislation barriers: changes after contract signature such as dispatchability • Standards, specifications and lengthy and costly reviews: • Fixed soft costs disproportionate to small project size • Micro-management of the project rather than enforcement of specifications 1959

Project Opportunities • Accelerating renewable energy deployment by public-private partnership Public Sector Role: Now: 1. Subscribe to political risks, streamline and unify procedures 2. Assure correct and stable institutional framework 3. Assist developing countries in assessing local & rural needs 4. Provide performance specification Future: 1. Reduce subsidies for fuel and unnecessary grid Private Sector Role: 2. Level the playing field: internalize renewable external 1. Provide allbenefits or part of investment orequity use market mechanism for carbon trading 2. Provide the construction loans 3. Guaranty specifications performance and electricity prices 1960 4. Provide technology transfer, O&M training and supervision