Djibouti Pays KenGen: A $1 Million Offer on a Five-Year-Old Geothermal Drilling Debt Djibouti has finally moved to pay part of what it owes Kenya Electricity Generating Company (KenGen) for drilling work done near Lake Assal. The amount is small next to KenGen's balance sheet. What it says about selling geothermal drilling services across Africa matters a lot more. KenGen's latest annual report says Djibouti's state geothermal agency, the Office Djiboutien de Développement de l'Énergie Géothermique (ODDEG), has offered a first instalment of about $1 million (Sh129 million) against outstanding invoices of $2.13 million (Sh276.03 million), according to Business Daily. "ODDEG has acknowledged the debt and has proposed an initial payment of $1 million as the first instalment towards settlement," KenGen said in the report. KenGen is Kenya's largest power producer, with about 54% of the market. The Kenyan government owns 70% of the company and the public holds t...
Geothermal Funding in August and September 2027: Investment Outlook and Intelligence Into 2028
Geothermal funding in August and September 2027 is likely to focus on projects that can demonstrate commercial resource potential, credible drilling plans, secure offtake, and a clear path to construction. The market will increasingly move beyond broad technology experimentation toward financeable geothermal assets supported by government grants, development-finance institutions, strategic investors, utilities, and corporate power buyers.
The most significant investment themes will likely include enhanced geothermal systems, exploration drilling, closed-loop geothermal, data-center power supply, conventional geothermal expansion in East Africa, and blended finance for emerging markets. By 2028, investors are expected to distinguish more sharply between companies with proven technical performance and those still dependent on laboratory results or unconfirmed resource estimates.
The 2027 Funding Environment
August and September 2027 should be viewed as an important period for funding announcements, grant awards, project partnerships, and investment decisions. Government agencies may release or evaluate funding programs designed to accelerate geothermal exploration, field demonstrations, drilling, reservoir stimulation, and commercial deployment.
The United States is likely to remain the largest source of public support for next-generation geothermal technology. The U.S. Department of Energy announced a funding opportunity of up to $171.5 million for next-generation geothermal field tests, exploration, resource characterization, and confirmation drilling. [1] In September 2026, the department also selected 21 projects for up to $99 million to advance geothermal drilling and technology development.
These initiatives establish a pattern that may continue into 2027: public money will be used to reduce early-stage technical and geological risk, while private capital will finance projects that demonstrate a stronger probability of commercial success.
Potential funding channels during August and September 2027 include:
- Federal geothermal grants and demonstration programs.
- State clean-energy and grid-reliability funds.
- National-laboratory research partnerships.
- University and industry innovation grants.
- Strategic investment by energy companies.
- Infrastructure and climate funds.
- Tax-credit transfers and clean-energy incentives.
- Commercial debt for projects with proven resources.
- Corporate power-purchase agreements.
- Development-finance loans and political-risk guarantees.
The important change is that funding will increasingly be linked to measurable milestones. Developers may need to show successful wells, reservoir performance, drilling-cost reductions, signed offtake agreements, environmental approvals, and transmission access before receiving larger amounts of capital.
Enhanced geothermal systems are likely to attract a substantial share of funding in 2027. EGS developers seek to create or improve underground heat reservoirs in areas where natural permeability or fluid flow is insufficient for conventional geothermal production.
EGS has attracted attention because it could expand geothermal development beyond naturally productive hydrothermal fields. However, the technology still faces risks involving drilling cost, reservoir stimulation, flow rates, induced seismicity, water management, and long-term well productivity. A Congressional Research Service briefing noted that the commercial viability of large-scale EGS remained uncertain in 2026, with only one operational EGS plant in the United States at that time.
Investors in 2027 will therefore focus on evidence rather than potential alone. The strongest EGS companies will likely be those able to provide:
- Commercially relevant production data.
- Repeatable drilling and completion methods.
- Stable reservoir pressure and flow.
- Transparent induced-seismicity management.
- Lower drilling costs per megawatt.
- Reliable temperature and permeability models.
- A credible construction schedule.
- A long-term electricity buyer.
The funding structure for EGS will probably remain staged. Early research and field testing may rely on grants. Exploration and appraisal drilling may require concessional finance or risk-sharing instruments. Construction will require sponsor equity, strategic investment, project debt, and a signed PPA.
Corporate Power-Purchase Agreements
Corporate PPAs are becoming a major source of geothermal funding because they provide developers with predictable revenue and give large electricity users access to firm, low-carbon power.
In September 2026, Fervo Energy announced a 396 MW PPA with Google for its Cape Station EGS project in Utah. The project is expected to begin delivering contracted capacity from 2028, making the agreement one of the clearest examples of corporate demand supporting next-generation geothermal development. [4]
The agreement is important for the 2027 funding outlook because it shows how a large technology company can help transform geothermal from a high-risk energy technology into a contracted infrastructure asset. Developers with credible projects may seek similar arrangements with:
- Data-center operators.
- Cloud-computing companies.
- Semiconductor manufacturers.
- Industrial facilities.
- Utilities seeking firm clean power.
- Hydrogen and desalination projects.
- Large commercial and institutional electricity users.
Data centers are especially important because artificial-intelligence computing is increasing demand for electricity that is reliable around the clock. Solar and wind remain essential, but their variable output creates a need for firming resources. Geothermal can potentially serve this role where resource conditions, transmission, and project economics are favorable.
A corporate PPA can improve a geothermal project in several ways. It can support debt financing, reduce revenue uncertainty, demonstrate market demand, and encourage investors to accept the risks associated with first-of-a-kind technology.
However, corporate contracts will not eliminate technical risk. Investors will still examine whether the developer can construct wells and generating units on schedule, whether the buyer is creditworthy, and whether the contract provides sufficient protection against delays and underperformance.
Closed-Loop Geothermal
Closed-loop geothermal systems may also attract increased attention in 2027 and 2028. Unlike conventional hydrothermal systems and many EGS designs, closed-loop concepts circulate fluid through sealed underground pipes or engineered well systems.
Their major attraction is the possibility of reducing dependence on naturally permeable reservoirs. This could make geothermal development possible in regions where conventional exploration has failed. The technology may also reduce some water-management and reservoir-stimulation concerns.
The main investment challenge is commercial validation. Investors will want to know whether closed-loop systems can achieve adequate heat extraction, competitive drilling costs, acceptable surface footprints, and commercially attractive output.
The U.S. Energy Information Administration has identified closed-loop projects expected to progress toward commercial operation around 2028, while also reporting planned expansion of next-generation geothermal capacity supported by power-purchase agreements.
During August and September 2027, closed-loop companies may seek funding for:
- Demonstration wells.
- Heat-transfer testing.
- High-temperature materials.
- Downhole heat exchangers.
- Drilling optimization.
- Monitoring and control systems.
- Commercial pilot plants.
- Industrial heat applications.
The most attractive closed-loop projects may initially target direct heat rather than electricity. Industrial heat, district heating, greenhouse operations, and thermal storage could offer earlier revenue opportunities because they may avoid some of the efficiency limitations associated with converting underground heat into electricity.
Kenya and East Africa
Kenya should remain one of the most important geothermal markets in Africa during 2027 and 2028. The country has substantial geothermal resources, an established development base, experienced institutions, and a national strategy that places geothermal energy at the center of electricity-sector growth.
Kenya’s National Energy Compact includes several geothermal developments scheduled for 2027 and 2028. The program identifies Baringo-Silali Paka Phase I with a planned 100 MW capacity in 2027, Menengai II with a 10 MW modular phase, and additional Olkaria developments scheduled for 2028.
The country’s geothermal funding opportunities may involve a combination of:
- Government support.
- KenGen investment.
- Geothermal Development Company participation.
- Independent power producers.
- Development banks.
- Export-credit agencies.
- Climate funds.
- Public-private partnerships.
- Commercial project finance.
Kenya’s most important financing need is not simply the construction of power plants. It is the reduction of exploration and drilling risk. Geothermal projects require substantial capital before developers can confirm whether a resource will produce commercial quantities of steam or hot water.
Public institutions can help attract private capital by funding surface studies, exploratory wells, access roads, transmission infrastructure, and resource confirmation. Once the resource is proven, private investors may participate through build-own-operate structures, wellhead projects, leasing arrangements, and utility partnerships.
The Baringo-Silali and Menengai areas may receive particular attention because they support Kenya’s strategy of expanding geothermal generation beyond the traditional Olkaria field. New regional developments could also stimulate local manufacturing, drilling services, engineering firms, and technical employment.
Development Finance in Africa
Across Africa, geothermal funding will depend heavily on development-finance institutions. Commercial lenders often remain reluctant to finance early-stage geothermal exploration because unsuccessful wells can result in large losses and provide little recoverable value.
Risk-sharing instruments are therefore essential. These may include:
- Partial-risk guarantees.
- Political-risk insurance.
- Contingent repayment facilities.
- Concessional loans.
- Exploration grants.
- First-loss capital.
- Currency-risk protection.
- Viability-gap funding.
- Results-based financing.
The World Bank, African Development Bank, MIGA, Climate Investment Funds, and bilateral development agencies are likely to remain important participants. MIGA has supported geothermal development in Africa, including the Tulu Moye project in Ethiopia, illustrating the role of guarantees in attracting private investment to high-risk markets.
A proposed geothermal resource-risk facility could become particularly important for emerging markets. Such a facility would help absorb part of the financial loss if exploratory wells fail, making it easier for private investors and lenders to enter the sector. International development-finance institutions have increasingly recognized that the exploration phase is one of the largest barriers to geothermal expansion.
For African developers, the strongest applications in 2027 will likely connect geothermal projects to national development goals. These include industrialization, regional electrification, reliable power supply, reduced fuel imports, local employment, and improved grid stability.
What Investors Will Examine
Investors assessing geothermal opportunities in August and September 2027 are likely to focus on several fundamental questions.
First, is the resource sufficiently understood? A developer should provide geological, geochemical, geophysical, and drilling data. Resource estimates based only on surface evidence may not be sufficient for large-scale investment.
Second, can the project deliver electricity or heat at a competitive cost? Investors will examine drilling costs, well success rates, plant efficiency, financing costs, operating expenses, transmission requirements, and construction contingencies.
Third, is there a credible buyer? A signed PPA or heat-supply agreement may be critical, especially for EGS and closed-loop projects that have not yet established long operating histories.
Fourth, does the project have the required permits and grid connection? A technically strong geothermal project can still fail if it lacks environmental approvals, land access, water rights, transmission capacity, or community support.
Fifth, can the technology be replicated? Investors are more likely to support a platform capable of developing multiple projects than a single experimental plant without a clear expansion model.
Capital Allocation Into 2028
By 2028, geothermal investment may become more selective and more infrastructure-oriented. The market could divide into three broad categories.
The first category will include conventional geothermal projects with proven resources and established technology. These projects may obtain debt finance more easily because their technical risks are relatively well understood.
The second category will include advanced geothermal projects with commercial demonstrations, signed PPAs, and credible drilling records. These projects may receive strategic investment from utilities, oilfield-service companies, technology firms, and data-center operators.
The third category will include early-stage companies developing unproven drilling, stimulation, heat-extraction, or closed-loop systems. These companies will continue to depend largely on venture capital, government grants, strategic partnerships, and demonstration funding.
The shift into 2028 will therefore favor project developers that can move from innovation to execution. Investors will increasingly ask whether a company can deliver power on time, within budget, and at a cost that supports long-term returns.
Priority Funding Opportunities
The strongest geothermal funding opportunities for August and September 2027 are likely to involve:
- Resource confirmation and exploration drilling.
- Commercial EGS field demonstrations.
- Closed-loop geothermal pilots.
- Geothermal projects serving data centers.
- Conventional projects in Kenya and East Africa.
- Industrial heat and district-heating systems.
- Geothermal lithium extraction linked to power production.
- Drilling technologies that reduce well costs.
- Reservoir monitoring and stimulation controls.
- Transmission infrastructure connected to geothermal zones.
Geothermal lithium extraction may also attract funding where brine chemistry, production volumes, and processing economics are favorable. However, investors will require evidence that mineral recovery does not reduce power output, damage the reservoir, or introduce additional permitting and environmental risks.
Funding Preparation for Developers
Developers seeking capital in August or September 2027 should prepare well before the funding window opens. A strong financing package should include:
- A technical resource report.
- Exploration and drilling results.
- A reservoir-development plan.
- A detailed capital budget.
- Construction and procurement schedules.
- Environmental and social assessments.
- Grid-interconnection documentation.
- An offtake strategy.
- A project-risk register.
- A proposed financing structure.
- Evidence of experienced technical partners.
- A plan for local employment and community benefits.
Funding proposals should also separate the project into clear stages. Exploration capital should not be presented in the same way as construction finance. Grant providers may focus on innovation and risk reduction, while banks will prioritize cash flow, security, contracts, and repayment capacity.
This distinction is important because geothermal projects often fail to attract financing when developers request construction-scale capital before proving the resource. A staged approach can improve credibility and allow each source of funding to address the risk it is best equipped to manage.
Outlook Into 2028
The geothermal sector is entering a period in which public and private funding will increasingly reinforce each other. Government grants can support exploration and technology development, corporate PPAs can create predictable revenue, and development-finance guarantees can unlock commercial investment.
The most important funding test in 2027 will be whether next-generation companies can convert technical demonstrations into bankable projects. Fervo’s 396 MW Google PPA illustrates the importance of corporate demand and long-term contracting for EGS development. Kenya’s pipeline demonstrates the continued importance of public-private partnerships and development finance for conventional geothermal growth.
By 2028, the most investable geothermal projects will likely share four characteristics: proven or highly credible resources, repeatable drilling or reservoir technology, secure offtake, and a financing structure that allocates risks among governments, developers, lenders, and corporate buyers.
The market will not finance every geothermal concept equally. Capital will move toward projects that can prove performance, manage subsurface risk, obtain permits, connect to the grid, and deliver reliable electricity or heat at a predictable cost.
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