Interactive guide to integrated finance in geothermal energy
A questionnaire which will allow you to identify a financing model tailored to your interests and the profile of the community you want to involve. Have a look at the 8 necessary steps below and proceed with the self-assessment!
Welcome to the CROWDTHERMAL Finance and risk mitigation framework. This framework can support you in the selection of the most suitable alternative financing and risk mitigation instrument for your Geothermal project.
There can be different reasons to involve your community in your geothermal project through financing. While looking at opportunities, several social concepts are relevant. A geothermal project (and its initiators or developers) needs a Social License to Operate (SLO), Social Acceptance by the community around it, and may also need Engagement from the community. All three of these concepts have strong interdependencies and will be influenced by the financial and risk mitigation scheme that you choose. And vice versa. It is important to keep this in mind while following the steps of the framework.
Find below the key steps to be considered with regards to the finance model, community involvement goals, and risk aspects in your geothermal project:
Step 1 - Define the involvement goals
Why do you want to involve the community. What do you want to achieve by involving them?
Here are some possible motives to involve a community through community finance.
1- To tap into the added value of the community could bring to the project. This could be:
- Knowledge sharing about the area, about needed services and possible added value
- Promotion of the project to others
- Raising of funds & benefit sharing with the community
- To show commitment of the community for the project (which helps to get approval and support from the government etc.)
- To get better credit conditions for the project because the community is involved
2 – To inform the community about the project and possible benefit. To inform the community about the project and make sure their opinions and doubts are not overlooked.
3 – To overcome possible bottlenecks for the project.
- Complaints or obstruction by the community because they do not agree with the project or don’t know details.
- To prevent project delay or cancellation because the community is not on board.
Step 2 - Define your target community
In step one you have chosen your involvement goals. In this step, you determine, for and with which, community you want to reach your involvement goals.
A Geothermal project can have different target communities for different involvement goals.
After the communities have been defined, we can choose for which involvement goal and corresponding target community funding and risk mitigation are suitable. But first it is important to define target community(ies).
Step 3 - Define the community profile of your target communities
- What is the Socio-economical context of your target community(ies)?
- What is the historical context of the community(ies)?
- What is their vision concerning geothermal energy and renewable energy goals?
- What is their political context?
- What is their knowledge on geothermal/energy topics
- Are they interested in being involved?
Step 4 - Determine the risk profile of your target communities
Now we have chosen the target community(ies), the next step is to see what risk levels are best suited for this community and project developer?
Step 5 - Define finance and risk mitigation options
With the 4 steps we have completed we can define different combinations of community finance and risk mitigations options that could fit the Geothermal project and the community. We use the information from all 4 completed steps to make this analysis.
Step 6 - Compatibility regulation
In this step we determine if different community finance and risk mitigation options are compatible with local/national regulation. CROWDTHERMAL deliverable 2.2 (link to this) gives a first analysis of local regulation and its possible consequences for community funding instruments. For a detailed analysis in a certain member state, a legal council will be needed.
Step 7 - Compare possbile funding/ risk mitigation combinations
In this step we score the different combinations of community funding and risk mitigation against relevant criteria.
Step 8 - Connecting with possible funders
Now all options have been scored it is time to investigate possible funders and guarantors for a fund/risk mitigation possibility and connect them to the project.