The World Bank has launched an initiative to mobilise $500m of investment into geothermal energy for renewable power generation.

The Global Geothermal Development Plan was launched at the Iceland Geothermal Conference in Reykjavík by World Bank managing director Sri Mulyani Indrawati, who called on donors, multilateral banks, governments and the private sector to help better manage and reduce the risks of exploratory drilling to bring geothermal energy “into the mainstream”.

He said: “Geothermal energy could be a triple win for developing countries: clean, reliable, locally-produced power.  And once it is up and running, it is cheap and virtually endless.”

Many developing regions are rich in geothermal resources, including East Africa, Southeast Asia, Central America, and the Andean region. At least 40 countries have enough geothermal potential to meet a significant proportion of their electricity demand.

Some, such as Kenya and Indonesia, are developing their geothermal resources, but with only 11 GW of geothermal capacity worldwide, a global scale-up has yet to happen.

The World Bank says that a key obstacle is the initial test drilling phase for geothermal projects, which is expensive and risky.  Proving the viability of a single steam field can cost up to $25m, and if a site has no potential, this investment is lost.

The World Bank and Iceland are already working together to support surface exploration studies and technical assistance for countries in Africa’s Rift Valley.

Mulyani added: “Until now, our work has been at the country and regional levels. These efforts are important, and should continue.  But a global push is what is needed now. Only a global effort will put geothermal energy in its rightful place – as a primary energy source for many developing countries.  Only a global effort will pool resources to spread the risk effectively. It will let us learn from each other, from our failures and successes, and apply that learning.”

The Global Geothermal Development Plan’s initial target is to unlock $500m worth of investment. Donors can participate by helping to identify viable projects and through bilateral assistance, as well as existing channels such as the Climate Investment Funds or the Global Environment Facility. The bank will convene donors later this year to discuss the financing of specific geothermal projects.

The bank’s financing for geothermal development has increased from $73m in 2007 to $336m last year and now represents almost 10 per cent of its total renewable energy lending.