The financing marks the first transaction under a recently launched EBRD/CTF initiative to support exploratory drilling investments.

Geothermal energy projects face high risks particularly in their initial stages, including high investment costs and limited access to project finance once drilling has confirmed the resource.

The joint EBRD and CTF US$ 125 million initiative, named PLUTO after the ruler of the underworld in classic mythology, aims to provide finance and advice to private developers to help minimise these risks.

Under the programme, the private developer Prosin Enerji, a subsidiary of Guney Yildizi Petroleum, has received financing to expand its exploration of the hitherto mostly unexplored Bergama-Dikili Graben and prepare the site for drilling.

The company has successfully concluded surface, geological and geophysical surveys. If the drilling is also successful, the EBRD is expected to support the development of an initial 10 to 20 MW geothermal power plant.

The EU is providing technical assistance through its Instrument for Pre-accession Assistance to support the developer in applying best practices throughout the exploration.

Nandita Parshad, EBRD Managing Director for Energy, said: “This is a major milestone in the EBRD’s support to the development of the geothermal sector in Turkey, following a private sector-driven approach. Historically early stage geothermal development and drilling needed to be supported – if not entirely driven – by governments and public institutions. This transaction represents the first time an international financial institution has tried to bridge the geothermal equity gap at the exploratory stage on a purely private sector basis. Three additional PLUTO projects at different stages of approval in other unexplored areas will follow.”

Prosin Enerji, owned by Ecvet Sayer and Guney Yildizi Petroleum (GYP), focuses on investments in geothermal and solar power plants. The parent company, Guney Yildizi Petroleum, has long been a leading Turkish private company in the oil and gas exploration and production sector in Turkey, along with a drilling rig contractorship, with more than 50 years of experience.

Ecvet Sayer, the founder of Prosin Enerji, commented: “Having been a rather active player in geothermal drilling in Turkey’s Aegean region since 2009, Guney Yildizi Petroleum had decided to move one step further and to explore its own licences under Prosin Enerji as part of its plans to diversify investment portfolio. The EBRD’s PLUTO programme, the first of its kind in the geothermal resource development of Turkey, is greatly appreciated. We are looking forward to extending our collaboration with the EBRD into other clean energy projects.”

Supporting investment in renewable energy is part of the EBRD’s efforts to support sustainable energy in Turkey.

The country has pledged to develop 30 per cent of its total installed capacity from renewable sources by 2023. The objective is to add 34 GW of hydropower, 20 GW of wind energy, 5 GW of solar energy, 1 GW of biomass and 1 GW of geothermal.

As of May 2017, about 851 MW of geothermal capacity has been installed in the country – equivalent to 19 per cent of the country’s potential for geothermal power production, currently estimated at 4.5 GW. These resources are mostly concentrated in the Aegean region, with significant potential also identified in Central and Eastern Anatolia.

The EBRD has been at the forefront of supporting Turkey in developing its geothermal potential. To date the Bank has financed eight geothermal power plants – directly and through commercial banks. The installed geothermal capacity supported by the EBRD stands at 350 MW or 35 per cent of the national target.

The EBRD started investing in Turkey in 2009 and currently operates from offices in Istanbul, Ankara and Gaziantep. The country is a top destination for the Bank’s finance, with €1.9 billion invested in 2016 alone. To date, the Bank has invested over €9 billion in Turkey through more than 220 projects across many sectors and has mobilised nearly €20 billion for these ventures from other sources of financing. Some 98 per cent of the Bank’s investments in Turkey are in the private sector.