| Title | Financing Aluto Langano Geothermal Project Field: an Overview of LA 9D and LA10D |
|---|---|
| Authors | Makda KINFE |
| Year | 2020 |
| Conference | World Geothermal Congress |
| Keywords | Project bond ,Credit enhancement,FiT, Economics of geothermal technology |
| Abstract | The paper aims to prepare professionals who want to integrate a robust theoretical training with a strong practical knowledge of emerging trends in the Aluto Langano geothermal project for their career through several examinations of important characteristics of the project finance in the view of its future and present financial distress and the role of ARGeo. The project proclamation rules and regulations provides for the granting of concessions to the private sector and also requires that public entities also get a exploration and then a development license prior to commencing any activities on the land. The recently conducted Well LA-9D and LA-10D were both drilled prior to enactment of the Proclamation, Rules and Regulations and Directives. Even before the acceptance of the AUC Code of Practice. The US has used production tax credits successfully-Aluto Langano basically get the equivalent of about 2 cents per kWh over and above the tariff. Two cent adder for a certain number of MWe at each new field. Equity is extremely hard to come-bye and there are few sources for private investors and cost of equity is generally high-20+% expected return. Demand does not seem to be a major issue as moving to greater and greater electrification and economic growth. Price on the other hand is not making development attractive. One bad well because it was poorly sited and targeted will cost 10 times the cost of the entire data acquisition and management system. For this reason the project have planned to purchase soft ware and trainee expertise. The paper is organized as follows. Section 1 provides a general descrption of the project finance .Section 2 identifies the economic reasons for using project finance and assesses the role of the project bond market to fund project finance. Section 3 evaluates the proposed financial support .(strategies that monitor project risk as an experienced player, and the provided guarantees/sub-debt to obtain ratings uplift…).Final sections discuss policy implications and conclude. |