| Title | Financing Deep Geothermal Energy: Strategies to Mitigate Exploration Risk in Europe |
|---|---|
| Authors | Nils Deissner, Benjamin Richter |
| Year | 2026 |
| Conference | World Geothermal Congress |
| Keywords | |
| Abstract | Deep geothermal energy represents a promising option for sustainable, baseload-capable energy supply in Europe. It offers not only CO₂-free heat and electricity but also energy security that is independent of weather conditions or import dependencies. Nevertheless, its economic implementation remains challenging—particularly due to exploration risk. This risk significantly affects the bankability and economic viability of projects and poses a major obstacle for investors. The presentation examines the economic planning and financing of deep geothermal projects with a special focus on this risk factor. It highlights various European risk mitigation instruments aimed at reducing exploration risk and thereby increasing investment willingness. These include government-backed exploration risk insurance, risk funds, guarantee models, and innovative approaches such as debt forgiveness in case of failure, as currently being developed in Germany. A comparison with other European countries shows that targeted risk mitigation mechanisms can significantly contribute to the expansion of deep geothermal energy. These instruments not only improve the predictability and financial feasibility of projects but also strengthen investors’ confidence in the technology. The presentation also addresses the specific characteristics of the European internal market. Due to the European Union’s state aid regulations, government interventions in the market are heavily regulated, which presents a major challenge for the development of risk mitigation instruments and can hinder the expansion of deep geothermal energy. The presentation concludes with concrete recommendations for the further development of economic and legal frameworks to establish deep geothermal energy as a key pillar of the European energy transition. |