In previous publications we have described the dynamics holding back investment into the enhanced geothermal sector—namely, that the sector’s lack of project finance slows deployment and that lack of deployment, in turn, slows the maturation of the industry required to make it attractive to project finance lenders. Project debt investors search for steady, bond-like cash flows over a long period of time. One of the signals that lenders look for when issuing project finance loans to long-term projects like these is whether the developer has guaranteed a creditworthy source of offtake for their electricity at a price that keeps them solvent. But the inadequacy and small size of the available pool of of offtakers is therefore a “capital bottleneck” for the sector. It is generally accepted that offtake commitment mitigates this portion of an infrastruture project’s risk by guaranteeing that, if a project is completed on time and budget, it will have the necessary cash flow to pay off its debts.
