| Abstract |
The EU-funded GEORISK project (Developing geothermal projects by mitigating risks with financial instruments; www.georisk-project.eu) aims to promote Risk Mitigation Schemes (RMS) all over Europe, as well as in some third countries (including Canada, Mexico, Chile and Kenya), to cover risks associated with the development and the operation of deep geothermal projects. Geothermal risk insurance funds covering the geological risk already exist in a limited number of European countries. On this basis, the project aims to promote the establishment of new geothermal risk insurance schemes in three target-countries, namely Hungary, Poland and Greece. In this context, an important task of the project was a 10 year long-term financial and operational simulation, in order to prove the financial sustainability of a proposed scheme in each of the three target-countries. The simulation process started by establishing the RMS, involving national particular conditions, as presented below: - Making decisions on the scope of the insured projects and geological structures, as well as the contract types. - Defining the assumptions of the risk mitigation scheme, such as the insurance premium, the risk coverage and the estimated success rate. - Calculation of the fixed costs of the scheme; scheme launching, overhead, operational and project evaluation costs. The next step was the identification of planned projects for the following 10 years. They were recorded during the early stages of the GEORISK project. However, since the deep geothermal projects of the following 10 years have not been planned in detail so far, the majority of the data were based on realistic estimations of exploitation scenarios in well-known geothermal reservoirs. This process was followed by drafting the operation plan of a 10 years’ risk mitigation scheme. It is a descrption of the events of the projects as well as of the annual cash flows. Although an estimation, it represents a realistic operation of the RMS. The fixed costs, the costs of the projects evaluation, the revenues from insurance fees and the payments to the unsuccessful projects altogether provide the 10 years’ cash flow. The first draft scheme was formed with exact Hungarian suppositions and inputs of fixed costs, while averaging project data, thus making it appropriate to perform sensitivity analyses on: - insurance premium, - success rate and - the risk cover. After this analysis, three complete simulations were implemented for the three target-countries; Hungary, Poland and Greece. The paper includes the key results for all three target-countries, while focusing on the similarities and differences between them. The presented model and simulation serves as a template for any country that aims to establish a new, financially sustainable, risk mitigation scheme. |