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Construction and Operation Financing Options

During the construction and operation stage of geothermal power projects, financing options, such as insurance company, pension fund, and bank financing; and mini-perm loans are utilized.

Once a substantial amount of the geothermal resource has been proven project developers are able to seek project-level debt to finance construction and operation of a geothermal power plant.

Insurance Companies, Pension Funds, and Banks

Geothermal construction financing is offered by a number of insurance companies, pension funds, and a select number of banks. This type of construction financing is typically converted to term loans at the end of construction.

Mini-Perm Loans

One lending option available for the construction and operation stage of a geothermal power project is a "mini-perm" loan, which is a term loan that is longer than a typical bank debt but shorter than long-term "permanent" facilities. These types of loans are typically payable over five to seven years and include a balloon payment at the end of the loan. This structure enables the investor to reduce their risk (through the shorter loan tenor) while allowing the developer time to obtain a longer-term loan after building an operational track record, thereby lowering the "permanent" loan's cost to the developer.

Learn more about financing options for the construction and operation stage of a geothermal power project, as well as examples of "mini-perm" loans and insurance company, pension fund, and bank financing in the Guidebook to Geothermal Power Finance.