Electricity from Geothermal Energy: Guarantee Scheme or Investment Aid for Prospecting and Exploration

Owing to the inadequately known and developed deep sub-surface of Switzerland, the legislature has identified the high exploration risk for geothermal resources as a major technical barrier for development. In order to offset the financial implication of the high exploration risk inherent in geothermal power projects of Switzerland, up to 60% of the total sunk subsurface development cost of prospecting, finding and testing the resource may be reimbursed. Ficing comes from a small portion (CHF 0.001 per kWh) of the grid surcharge (CHF 0.023 per kWh).  Reimbursable cost includes among other things, prospecting for geothermal reservoirs, drilling of wells (production, injection, observation), reservoir and well stimulation, logging, testing, and evaluation. Project developers - usually at final investment decision - declare criteria for failure, partial success and full success in terms of adequate production rates, well head temperatures and chemistry of produced fluids. Alternatively, project developers may receive an investment aid of up to 60% of the cost for prospecting activities. Subsequently, project developers may receive another investmen aid of up to 60% for those activities that prove a geothermal reservoir (exploration). For the prospecting and exploration phase, a project developer may chose between a geothermal guarantee or investment aids. 

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