Latin America’s geothermal potential remains mostly untapped and with few exceptions progress has been sluggish, reports the Inter-American Development Bank (IDB).
The report states that Latin America and the Caribbean has a geothermal potential of between 55GW and 70GW. However, at present only Mexico, Chile and some countries in Central America and the Caribbean have operating power generation plants with an installed capacity of about 1.8GW.
Moreover, with geothermal development a costly, long-term process approaching $4 million per megawatt – and one of the main barriers – the region would require up to $3.1 billion to finance the cost of developing even 0.1% of this potential.
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Nevertheless, the geothermal market in the region remains one of the key potential growth opportunities for the global geothermal industry. Approximately 150 geothermal projects are at various stages of development across the region and if all were to be completed they could provide up to 2,500MW to the power markets, according to the report.
The IDB report is aimed to summarise recent actions and initiatives in Latin America and Caribbean since geothermal energy became a key strategic area for the Bank in mid-2018.
Since then the Bank has constituted a special group to focus on the promotion and development of geothermal projects and initiatives for power generation and for other uses that support decarbonisation.
The report states that geothermal energy is a robust, reliable and renewable source of baseload available at a competitive cost to society and stakeholders.
Geothermal infrastructure also is relatively resilient in an era of climate change and increasingly severe weather events.
Global trends highlighted include the role of feed-in tariffs as a crucial element in the success of geothermal deployment. Another is the implementation of modular approaches to geothermal development, which may help to overcome the cost barrier and allow for staggered scaling of power generation or provision of local power without the need for an extensive transmission infrastructure.
The report points out that as geothermal development requires a long term view, short-term political will needs to be institutionalised into supporting policies and concrete support.
Funding programmes that consider regional challenges and tailor country specific approaches are essential for the development of geothermal in the region. Financing programmes that mitigate the risk of upstart costs combined with public-private partnerships are most successful.
The report points out that concrete support for projects, e.g. the drilling in St. Vincent and the Grenadines, are very important. Projects in South America for the sector, such as the 33MW Cerro Pabellon expansion in Chile and the 10MW Laguna Colorada pilot in Bolivia, will hopefully push development across the region. Their success is and will be crucial for further political support.
Last but not least, the geothermal industry needs to advocate robustly to regional stakeholders for geothermal as a source of renewable baseload and one which is a useful complement to natural gas and intermittent renewables.