Geothermal Development Project Risk Sharing Mechanism (RSM)
The Türkiye Geothermal Development Project, signed by Development and Investment Bank of Türkiye and the
World Bank on November 30, 2016, includes the Risk Sharing Mechanism (RSM) as an important component. This
project aims to develop Türkiye’s geothermal potential by partially covering the risks of geothermal energy
investors in drilling wells aimed to identify resources.
Within the framework of this project, 40% or 60% of the well expenditures will be paid in case of unsuccessful
well drilling, while a 5% success premium will be charged to the investor for successful well drilling. Coverage
rates have been determined on the basis of provinces and districts. Applications of companies planning to benefit
from risk sharing in the project are received, and preliminary evaluation is carried out. The RSM Consultant is
selected through an international tender and supports Development and Investment Bank of Türkiye in the execution
of the related activities.
In 2022, the first and second rounds of RSM implementation continued. Three contracts were signed in the first
round, and fieldwork was completed in two projects. Three geothermal exploration wells were drilled, and well-testing
activities were completed, but all of the wells were deemed unsuccessful according to predetermined success
criteria. In this case, a total grant payment of 5.05 USD million was made to the beneficiary from the RSM fund
for the failed wells.
Within the scope of the second round of applications, 18 geothermal development project applications were received,
and 14 projects were shortlisted as a result of the evaluations. Negotiations for the first 10 projects were
completed, and the first two projects were approved by the World Bank.
In 2022, under the RSM first round implementation, three projects were excluded from the program upon the request
of the beneficiaries. Work on the remaining two projects is ongoing. With the approval of the World Bank, it was
decided to close the RSM first round implementation as of 31.12.2022.
In 2023, it is targeted to complete four projects that are actively ongoing in the RSM second-round and two projects
transferred from the first round to the second-round implementation. At the same time, it is planned to start work
on opening the third round of implementation within the RSM budget. It is planned to start discussions with the
World Bank on the RSM third round implementation in February 2023 and to start receiving RSM third round expression
of intent (EOI) applications in March.
TKYB’s grant project under the Geothermal Development Project is financed with 39.8 million USD from the Clean
Technology Fund (CTF) to increase geothermal investments by the private sector. This project aims to partially
cover the costs of geothermal investors in case their wells for resource exploration fail. In this way, it is
aimed to encourage investors in the sector to utilize Türkiye’s geothermal potential more effectively.