One of Kapok Capital’s core business areas is raising funding for geothermal energy projects. Geothermal power generation and geothermal heating are underdeveloped areas of renewable energy. Geothermal energy has the benefit of being baseload renewable energy generation and produces power at the same rate 24 hours a day, avoiding the intermittency challenges posed by solar generation and wind generation. So geothermal energy is low-cost, baseload renewable power, with typically very long project life.
Geothermal heating is another form of renewable geothermal energy, which has an even greater potential for penetration as it can be rolled out on a small scale (one residence) or for office blocks or entire municipalities. As a significant portion of the world’s energy needs is devoted to heating buildings, geothermal heating cannot be ignored as a strategy for decarbonising heat. Geothermal heat pumps have the benefit of being able to heat or cool a building, allowing them to take advantage of geothermal heat differentials year-round.
Key considerations in raising finance for geothermal energy projects are securing a grid connection of appropriate size, and agreeing a power purchase agreement (PPA) with a creditworthy offtaker for some or all of the power output of the geothermal power project.
In the case of geothermal district heating the connection and offtake issues are different, as for a multi-structure district heating project, the heat offtaker and the owner of the connection infrastructure will generally be the same organisation. Typically in this case the heat offtaker is a municipality or syndicate of proximate municipalities, or the owner of a multi-building campus like a university or government body.