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The Inter-American Development Bank (IDB) has approved the modification of a US$109mn loan intended to boost private investment in geothermal energy in Mexico.
According to the bank, the change will reduce risk and diversify available financing for developers of geothermal projects, tailoring financing for the specific needs of projects at each stage of development, such as exploration, drilling, field preparation, construction and operation.
The goal of the loan program is to finance up to 300MW of geothermal capacity over a 10-year period. The IDB also hopes to leverage other public and private funds to contribute to Mexico's geothermal sector with estimated investments of some US$4.2bn in proven reserves, the IDB said in a release.
"The Program for Financing and Risk Transfer for Geothermal Energy in Mexico, structured under the global loan modality, will consist of two main components: risk mitigation for geothermal projects and financing adapted to the different phases of project exploration and execution. In addition, it will have a third component of technical assistance to support execution and other implementation costs," the statement read.
The news comes in the wake of the July announcement by Mexico's clean energy institute INEEL that it was calling a tender for drilling services for geothermal projects. The tender seeks to select two companies to drill wells up to 3,500m in depth. The deadline for receiving proposals is August 30 and the decision will be made October 1.
A second tender from the INEEL for developers with concessions or permits for geothermal projects will be receiving proposals until September 6 and it will be decided in November.
Mexico currently has 920MW of geothermal capacity and the ministry of energy expects to add another 750MW by 2029.