The Geothermal Development Facility Latin America (GDF) aims to overcome existing barriers for the development of geothermal energy in Latin America by providing:
- tailored Geothermal Risk Mitigation Fund in order to mitigate geothermal resource risk during the exploratory drilling stage of the project;
- Geothermal Investment Financing Windows to provide anchor financing for subsequent investments during the production drilling and construction stages; as well as
- Technical Assistance Forum in order to provide a suitable venue for Policy Dialogue between donors and partner governments and to coordinate and potentially execute existing and planned TA activities and programs of the GDF members with the respective partner governments in order to ensure the implementation of appropriate regulatory and legal framework conditions.
As this program would be the first coordinated multi-donor scheme to support geothermal energy on a regional scale in Latin America, it could prove transformational in terms of a) improving framework conditions and removing existing legal barriers for the development of geothermal energy; b) further strengthening geothermal development in the Central American countries; c) providing the basis for the first commercial geothermal projects to come online in the Andean countries and therefore in creating a market for geothermal energy in these countries; as well as d) increase local capacity, assist the development of local geothermal industries and provide a significant impetus to economic growth in the partner countries; and ultimately e) significantly slowing the increase in GHG emission growth from an ever increasing share of fossil fuel-based plants in the countries considered, thereby allowing their economies to decouple economic growth from GHG emission growth and to enhance their energy security through a diversification of their energy matrices.
While already counting with the support of a large number of donors and development financing institutions, the facility is designed such as to be open to further participation of interested donors and financiers. It is expected to facilitate at the very minimum the development of up to 7 geothermal plants with a cumulative capacity of at least 350 MW and a total estimated investment volume of at the very least €1 Billion.
The overall objective of the program is to support the development of geothermal energy for electricity generation in Central America and the Andean Region in order to make a significant contribution to :
- generate significant GHG emission savings while decoupling economic growth from GHG emission growth;
- enhance energy security through contributing to the diversification of the energy matrix;
- improve the resilience of local economies and populations to external-induced fossil fuel price shocks;
- increase the competitiveness of local industries; and thereby
- via the associated direct and indirect employment effects significantly improve the basis for poverty reduction and social development in the region.
Additional LAIF contribution:
|Type of support||Lead Financing Institution||Amount||
Year of approval
KfW Entwicklungsbank (KfW)
|€5 000 000||2014||LAIF-26|