Geothermal Development Facility for Latin America (GDF) Technical Assistance Forum (TAF) Workshop

A Presentation for GEOLAC 2021

Warren T. Dewhurst, PhD, PE, Managing Member w.dewhurst@dewhurstgroup.us

301 916 8996 Phone - Main Office

Date: 2021-08-09Version: 3.1

GDF is an early-stage risk mitigation fund to help offset the disproportionate risk involved at the early stages of geothermal development.

• IDA Fund Management, LLC

• Dewhurst Group, LLC• Interlink Geothermal, LLC

First Thing First: What is GDF?Overview

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Risk Mitigation Fund Overview

➢Approve at least 14 grants

for exploratory drillings

➢ Fund at least 8 surface

studies

➢ Private companies➢ Public institutions

➢ Public-private partnerships➢ 11 Eligible countries

➢ Follow – Up Financing Lines provided by GDF

Stakeholders➢ Technical Assistance Forum

GOAL➢ 350 MWe in Latin America

➢ Climate mitigation

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Eligible Countries

Region Country

South America

BoliviaChile

ColombiaEcuador

Peru

Central America

Costa Rica

GuatemalaHondurasNicaraguaEl Salvador

North America MexicoTotal 11

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GDF Application SummaryResults to date

• Over 3.3 Million Euros allocated on surface studies

• Over 16 Million Euros allocated on confirmation drillings

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GDF Application SummaryResults to date

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Cumulative (#)

2017 2018 2019 2020 2021

Awarded 8 15 18 23 26

Allocated 0 1 4 4 8

Disbursed 0 0 0 1 3

Cumulative Grant Activity by Funding

2017 2018 2019 2020 2021

Awarded € 20,009,890 € 33,287,412 € 36,584,271 € 38,463,052 € 63,532,237

Allocated € - € 226,013 € 1,349,239 € 1,349,239 € 18,802,542

Disbursed € 120,000 € 643,225

GDF Application SummaryImplementation Process

*Awarded, under grant agreement negotiation

• 6 Active GDF projects• 4 Surface Study grants and• 2 Confirmation Drilling grants*

Region Country# of selected

ProjectsActive GDF

projects

South America

Bolivia 2 1Chile 4 2

Colombia 3 -Ecuador 2 1

Peru 1 -

Central America

Guatemala 5 1Honduras 1 1Nicaragua 1 -

North America Mexico 6 -

Total 25 6

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Surface Studies• ESIA work• Usual exploratory work done from ground

level and above including gravity, Magnetotelluric surveys, LIDAR, etc.

• Infrastructure work, modelling and well targeting

Funding level: 40% of eligible costs of the project or up to 600,000 EUR

No repayment – strict grant

Grant Agreements

Courtesy of: Geotermia Centroamericana

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Grant Agreements

Confirmation Drilling• Include well-testing programs to help

confirm and update the conceptual model• Funding by the GDF may comprise up to

three full-size wells (≥ 5” diameter of the last casing or liner) suitable for production

• Embraces temperature gradient holes

Funding level: 70% of eligible costs of the project or up to 9,800,000 EUR

Securitization for repayment, No repayment in case of failureCourtesy of: Geotermia Centroamericana

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• The program is specifically designed to work in parallel with any other development banks

• Both grants encourage co-financing of development banks to get up to 80% of total cost by combination of GDF and any other DFIs

• Potentially the developer/owner could have only 20% of their own capital in the game

Ultimate Risk Mitigation Scheme

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• Adherence to KfW procurement and sustainability guidelines

• Know your client (KYC) matters

• Environmental and Social Impact Assessment (ESIA) requirements

• Coherent work and business plan

• Financial solvency

• Surface studies program and drilling program require similar documentation

Compliance CriteriaLegal, financial, environmental

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• Key aspect from the first moment of any application

• IFC Environmental and Social Performance Standards

• Environmental and Social Impact Assessment (ESIA)

• Environmental and Social Management Plan (ESMP)

• Stakeholder Engagement Plan (SEP)• Gap analysis submitted and confirmed

Environmental And SocialConsiderations

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The GDF will provide grants to developers through two-stage application process with an Expression of Interest (EOI) and Call for Proposal (CFP)

Application ProcessStages

Estimated timeline

Pre-EOI Sign Up EOI CFP Contracting

Application submitted all online

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• Open prequalification process inviting potential applicants to submit their EOI within a specified period of time

• As an applicant you can submit multiple EOIs for different projects

• EOIs that score over (70%) successfully pass the pre-qualification phase and will be short-listed and invited to submit a full proposal in the CFP phase

Expression Of Interest (EOI)Overview

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• The estimated time to fill the online form is 30 minutes – IF PREPARED!

• You will need the following documents

• Copy articles of incorporation• Cover letter• Project Narrative • Know Your Client (KYC) information

EOI StageOnline application

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• Existing information narrative• Completed cost input sheet• Proposed work plan• Proposed anticipated well costs* (Only for Confirmation Drilling)

• Project organization chart, staffing and personnel• Procurement plan• Copy of all permits and licenses• Business/Financing plan• Market viability narrative• Completed LCOE calculator* (Only for Confirmation Drilling)

• Financial statements from previous 3 years (unaudited)• Certificate of registration• Declaration of no objection from tax authorities

CFP StageDocuments that you need to submit

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• In the case of a successful application, the Grant Agreements will be concluded between GDF and the Applicant

• The Grant Agreements set requirements for the follow-up monitoring and reporting of the activities as well as specifications on the disbursement of grant funds

• Contingency Grant Agreements also include payback criteria

Acceptance And MonitoringGrant Agreements

Courtesy of: Transmark, GCA

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Unsuccessful drilling projects will not be required to repay these contingent grants

Successful drilling projects must be repaid at a minimum level of 80% - grant agreement terms

Surface studies are grants without repayment!

Grant Agreements Re-payment conditions

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