Developing a Sustainable Financing Model for Geothermal Projects: A Conceptual Framework

Marmelia P. Dewi, Andri D. Setiawan, Yusuf Latief

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

Geothermal is vital for sustainable energy systems development in Indonesia. The country is privileged with estimated geothermal reserves equivalent to 29 Gigawatt-electric. However, harvesting such massive potential is precarious since geothermal projects are capital intensive, complex, and sensitive to uncertainties and risks - -thus, the projects become a less attractive investment. Moreover, due to deep uncertainties, difficult decisions often have to be made regarding geothermal projects (dis)continuation for financial reasons. Additional governance measures, such as sustainable financing, are required to ensure the viability of the projects in the long run. In order to address this concern, this study proposes a conceptual framework that can be used to develop a sustainable financing model for geothermal projects. Notably, the conceptual framework is developed for exploring alternative financing schemes that are robust and attractive when faced with uncertainties and risks during the projects. For this purpose, the study employs the exploratory system dynamics modeling and analysis (ESDMA) approach and introduces the exploratory financial modeling and analysis (EFMA) approach. ESDMA analyzes geothermal project complexity and explores robust policies under deep uncertainties, while EFMA analyzes the project's financial performance and explores robust-attractive financing schemes under deep uncertainties. Aligning the results from both approaches, a sustainable financing model for geothermal projects is formulated.

Original languageEnglish
Title of host publicationAsia Pacific Conference on Research in Industrial and Systems Engineering, APCORISE 2020 - Proceedings
PublisherAssociation for Computing Machinery
Pages355-360
Number of pages6
ISBN (Electronic)9781450376006
DOIs
Publication statusPublished - 16 Jun 2020
Event3rd Asia Pacific Conference on Research in Industrial and Systems Engineering, APCORISE 2020 - Depok, Online, Indonesia
Duration: 16 Jun 2020 → …

Publication series

NameACM International Conference Proceeding Series

Conference

Conference3rd Asia Pacific Conference on Research in Industrial and Systems Engineering, APCORISE 2020
Country/TerritoryIndonesia
CityDepok, Online
Period16/06/20 → …

Keywords

  • Exploratory modeling & analysis
  • Geothermal
  • Real options
  • Sustainable financing
  • System dynamics
  • Uncertainties

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