Please find the GRMF POWER Background Documents here.
The objective of the Facility is to encourage public and private investors as well as public private partnerships to develop geothermal prospects for power generation in Eastern Africa by providing grants for two types of activity:
- Surface studies to determine the optimal location of reservoir confirmation wells at the most promising geothermal prospects.
- Drilling and testing of reservoir confirmation wells at the most promising geothermal prospects to assist Developers secure financing for subsequent reservoir confirmation and/or well field development wells.
Herewith GRMF will provide financial support to assist in mitigating the geothermal exploration risk. It is thus expected to improve access to equity or other funding source and thus play a catalytic role in establishing geothermal energy as a strategic option in power expansion planning of the participating countries of Eastern Africa. As a result, reduced risks and costs for early stage geothermal development are expected to encourage the development of further geothermal investments.
Finally, we wish all developers to reach the following stage, after finalizing their surface study and drilling programme projects:
Eligible activities for the Facility comprise the following:
- Surface studies to determine the optimal location for reservoir confirmation wells at geothermal prospects that have previously been identified. Surface studies can include geophysical surveys (e.g. seismic, gravity, magnetic or magnetotelluric surveys) including supplementary geological, hydrogeological and/or geochemical surveys if necessary for siting reservoir confirmation wells. In addition a surface study programme may include infrastructure required for conducting surface studies (e.g. access roads). Surface studies shall include an integrated resource report interpreting and summarising the results of the surface studies in terms of a conceptual model of the resource and identifying high priority drill sites.
- Drilling projects at geothermal prospects once the optimal locations for the drilling and testing of reservoir confirmation wells have been determined. An exploration drilling programme for funding by the Facility may comprise up to two full size reservoir confirmation wells (≥ 5” diameter of the last casing or liner) or up to three slim hole wells (< 5” diameter of last casing or liner) or a combination of two slim holes and one full size reservoir confirmation well. In addition, a drilling programme may include: infrastructure required for exploration drilling (e.g. access roads, water supply, if applicable: grid-connected power supply); mobilisation and demobilisation of drilling rigs; and well-testing. Furthermore, a drilling programme may incorporate a feasibility study that has the explicit aim of securing finance for subsequent reservoir confirmation wells. As such, it is expected that a feasibility study would combine exploration drilling results and reservoir engineering together with market, regulatory and technical considerations.
- Continuation Premium (complementary to the initial grant funding). Eligible activities for the CP – to be undertaken for the same site as the initial drilling and testing programme, comprise the following: Additional full size well, well-head unit(s) installation, long term discharge testing (minimum six months), reservoir evaluation update, feasibility study (after the successful well drilling and testing, there is a new informational base, which can lead to an updated, bankable documentation of the project to support acquiring further financing).
The upper limits for financial support of the allowable field expenditure at the time of proposal submission (as stated in the eligible activities), in the form of a Grant Contract, to winning Applicants for surface studies and exploration drilling and testing programmes, are as follows:
- Infrastructure grants: 20% of approved allowable costs for infrastructure required for eligible surface studies and eligible drilling programmes (e.g. access roads, water supply, etc.)
- Surface studies grants: 80% of approved allowable costs (excluding infrastructure costs)
- Drilling grants: 40% of approved allowable costs for the exploration drilling and testing programme for reservoir confirmation wells (excluding infrastructure costs)
- Continuation Premium: up to 30% of the approved eligible and expended costs of continuation activities, or up to 30% of the developer’s share of the eligible and expended costs incurred during the initial drilling and testing programme – whichever is lower.
The disbursements will be based on actual costs up to the limits stated above.
The GRMF will provide grants to Developers through a competitive, transparent and rigorous two-stage Application processes. This encompasses a pre-application (Expression of Interest) as well as a full application phase.
The first stage of the Application procedure is an open prequalification process inviting potential Applicants to submit their Expressions of Interest (EoI) within a specified period. It is allowed to provide multiple EoI for eligible activities on different sites. Companies whose surface studies were funded in one Application round can apply for exploration drilling programmes in one of the next Application rounds. EoI that score over a certain threshold (70%), successfully pass the pre-qualification and will be short-listed. Short-listed Applicants will be invited to participate in a mandatory pre-bidding workshop and to submit an Application.
The 5th application round pre-qualification phase has to date been finalised.
The pre-bidding workshop will be held for short-listed Applicants after evaluation of the EoI. The aim is to ensure high-quality Applications by clearly explaining the Application, evaluation and procurement processes. For drilling Applications, mandatory training in the use of a GRMF custome-designed financial model is also integrated into the pre-bidding workshop.
In the second stage, Applications from short-listed Applicants will be accepted within a a specified period. Applications that score over a certain threshold (70%) will be eligible to enter into contract negotiations with the African Union Commission. The actual number of awards will be limited to available funding.
In the case of a successful negotiation, the Grant Agreements will be concluded between the African Union Commission and the Applicants. The Grant Agreements set requirements for the following monitoring and reporting phase for the surface studies and the reservoir confirmation drilling and testing projects as well as specifications on the disbursement of grants.