InfraCo Africa has signed a shareholders agreement with Berkeley Energy, committing $30 million of equity investment to the ground-breaking Corbetti Geothermal Project.
This will contribute around 20% of the funding required to start construction of exploration drilling wells this year and 10-20MW pilot power plant the following year.
It is anticipated that the power plant will provide power to Ethiopia’s national grid by early 2020. Read more...
The company’s executive director Alex Katon, commented: “The $30 million commitment to Corbetti is truly a landmark deal for us, being our first in geothermal and in Ethiopia and the largest single commitment we have made to date.
“It is also the first substantial equity commitment under our expanded investment strategy, which enables us to optimise our development impact in projects, while ensuring best practice through construction into commercial operations.’
About Corbetti Geothermal Project
In 2015, the pair formed a joint venture company to jointly become the majority shareholder in Corbetti Geothermal.
At the time, InfraCo Africa committed up to $15 million to the project, with $5 million for early-stage site development and project contracts.
The balance was earmarked for the equity financing of the exploration drilling to mitigate the higher risks of a greenfield site, proving a new geothermal resource.
InfraCo Africa’s increased commitment provides the project with $25 million equity finance and $5 million as standby equity.
To manage the early stage development risks and costs associated with being a pioneer, Corbetti will be developed in multiple phases.
The first phase, wholly equity funded, will drill up to six exploratory wells and build a small power plant.
This initial phase will demonstrate the viability of the geothermal resource and the Power Purchase Agreement, enabling the project to raise further investment.
The second phase will raise debt financing to drill a further 9-13 wells and construct a 50-60MW commercial-scale power plant and facilities.
If successful, subsequent phases could see Corbetti increase its installed capacity to 500MW, mobilising approximately $2 billion in foreign direct investment over the next 8-10 years.
Featured image: Stock