<![CDATA[Geothermal energy has continuously received a range of government incentives in the last decades. However, the research investigating the effectiveness of those incentives, particularly the interest rate subsidy, is relatively limited. Therefore, we are interested in exploring this gap at the project level by emphasizing green-field geothermal projects. This is relevant as green-field geothermal projects are carrying high financial risks during their early development stages that limit their access to a cheaper financing market. The study is carried out by employing Monte Carlo Simulation to examine the investment of a 55 MW green-field geothermal energy project and to analyze the extent of impact of interest rate subsidy on the project viability applied to a selected greenfield geothermal project as the case study. The simulation results show that, without an interest rate subsidy, the project's mean Internal Rate of Return (IRR) is 10.31%, a level generally considered too low for high-risk greenfield investments. Introducing a 50% interest rate subsidy raises the mean IRR to 11.27% and increases the probability of achieving an IRR ≥ 10% from 79% to 98.36%. These findings indicate that while interest rate subsidies improve project financial viability, the improvement is modest relative to the 14–16% IRR typically expected by private investors for greenfield geothermal projects, suggesting that interest rate subsidy alone may be insufficient without complementary policy instruments.]]>
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