Munich Re insures Traunreut geothermal project as well

2011/08/01

This week sees the start of drilling operations at the site of a geothermal power plant in Traunreut, Upper Bavaria. In early September, a 60-metre-high drilling rig will be erected and initial drilling operations will commence later that same month. Following investments to the tune of €60m, the plant will in future supply up to 5 MW of electrical and 12 MW of thermal, district-heating power from two wells approximately 5,000 metres deep. Munich Re is once again assuming the significant exploration risk that thermal heat drilling entails.

Munich. Deep geothermal exploitation involves pumping hot water to the surface from strata at depths of up to five kilometres and using it to generate heat and electricity. However, the substantial costs of drilling and development associated with this technology often constitute a major investment barrier because there is a substantial risk of not making a productive find, in which case the investment is lost. In the past, there have been cases where exceptionally deep geothermal projects have been abandoned because funding was not available on the capital market.

Now that the restructuring of the energy sector has gained significant momentum, financially viable potential in the renewable energy field will be increasingly exploited. Exploration risk insurance cover for geothermal drilling operations plays a key role in providing certainty for investors.

Munich Re regards itself as a know-how leader in the field of exploration-risk covers and has set up a dedicated geothermal energy team since developing the first policy in 2003. Munich Re Board member Thomas Blunck: “Thanks to our expertise, we can also assume out-of-the-ordinary renewable energy risks and thus help provide greater investment security.”

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