What type of business venture arrangements might be best suited to advance deep geothermal exploration and development?
Is there an opportunity to learn from existing commercial arrangements to develop a multi-party consortium that shares the risk and financial burden to jointly reap the rewards from accessing the deeper, hotter geothermal resources?
We delivered a conference paper and oral presentation at the 2022 NewZealand Geothermal Workshop that overviews the current business venture arrangements of large geothermal operations, both electricity and process heat (geoheat), in New Zealand.
Government investment from the late 1940s to the late 1980s substantially reduced resource and business uncertainty in the early phases of geothermal development in New Zealand, which has been significant in facilitating the investment in the geothermal sector. Then, the Government’s exit from direct management of geothermal resources resulted in diverse venture arrangements, with multiple ownership, partnerships and benefit sharing developing.
There are a wide variety of bespoke arrangements between private companies, public companies, community trusts and Māori organisations that are now running large geothermal operations. Different types of legal and business structures have evolved in response to the development of statutes that govern land and resource use, combined with organisational expertise, experience and ethos, the organisation's risk appetite, and the ability to support the necessary financial investment.
No one business structure type meets the needs of every New Zealand geothermal energy project.
Geothermal energy can play an even greater role in the decarbonisation of Aotearoa NewZealand’s energy sector. The way in which the industry decides to work together will determine whether deeper and hotter geothermal energy utilisation is realised.
Download the NZGW2022 conference paper to learn more: Commercial arrangements underpinning Aoteoroa New Zealand's large scale geothermal operations.
You can also download a NZGW 2022 conference paper providing a progress update on GNG.