How the Department of Energy Loan Guaranty Program paved the way for the growth of the geothermal industries

The United States Department of Energy Loan Guaranty Program was created in 1974 with the objective of encouraging and assisting both the public and private sectors in overcoming the financing risk barriers to the development and operation of projects which would utilize the then newly emerging geothermal technologies. The program was to accomplish its objectives by providing for the full faith and credit of the United States government to guaranty the repayment of loans for project costs of up to $100 million per project (representing up to 75 percent of project costs for the private sector and 90 percent for the public sector), for qualified projects and sponsors. One of the most notable successes of this visionary program was the Ormat East Mesa Project, where the $50 million guaranteed loan was prepaid in full approximately 1 year after this loan was funded. This project was subsequently expanded, with private sector third party institutional financing, from its initial 24 MW in 1986 to 60 MW by 1989. The successful execution of the East Mesa project established the technical and economic feasibility of larger scale modular binary power plants, and paved the way for the growth of the geothermal industry.