Risk Sharing Mechanism (RSM) for Geothermal Resource Validation in Turkey – Working Processes and Experiences

A Risk Sharing Mechanism (RSM) for Resource Validation was established in Turkey as a component of the World Bank financed Geothermal Development Project (TGDP) that became effective in March 2017.

The RSM is implemented by the Development and Investment Bank of Turkey (TKYB) and is capitalized by a $38 million contingent recovery grant from the Climate Technology Fund (CTF).

A consortium of technical consultants, ÅF Consult, ÍSOR, and Verkís, (RSM Consultant) was hired under the TGDP to provide technical support to TKYB and support the day to day operation of the RSM.

The objective of the RSM is to increase private sector investment in geothermal exploration drilling in Turkey by providing partial coverage of exploration wells’ drilling costs in case that wells drilled under an RSM-supported drilling program do not meet commercially viable power output criteria. 
Exploration drilling projects are selected for coverage under the RSM through a competitive application process. Developers selected for RSM coverage can get 40% or 60% cost coverage of unsuccessful wells. Projects in the less explored provinces of the country will receive 60% cost coverage whereas the coverage for the lower projects applies in areas where extensive geothermal 
development has already taken place and the exploration drilling risk is considered lower.