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EDC with plans for further studies on geothermal projects in Peru

City view of Arequipa, Peru (source: flickr/ reflectification, creative commons)
Alexander Richter 25 Sep 2019

In a recent interview with BN Americas, Energy Development Corp. (EDC) from the Philippines shares details on its geothermal development plans and concerns on the limited appreciation of what geothermal energy can offer to Peru's medium and long-term energy future.

A recent article on BN Americas looks on why there is no progress on geothermal development in Peru. The article features an interview with Franklin Acevedo, manager of Energy Development Corporation Peru, who shared his views on the current and future state of geothermal development.

The overall geothermal potential in Peru is described at around 3,000 MW, but there has been no real move since the last permit for geothermal exploration was issued in 2013.

In the interview, he describes key reasons being an ignorance in the role that geothermal energy can play in the electrical system and the local economy, despite positive studies by the Ministry of Energy and Mines with international institutions. Another key issue is the lack of appreciation of the base-load capacity offered by geothermal energy compared to intermittent resources such as wind and solar. The lack of modelling this into medium and long-term energy policy puts a wrong emphasis on price, seemingly making geothermal more expensive. Price must be compared to other base-load options, such as diesel or large hydropower plants.

The other issue he describes is the availability and demand of energy by regions. The southern part of Peru provides for the largest geothermal and mining potential, while tapping currently mostly diesel-fuelled power generation. With a lack of sufficient transmission infrastructure the overall focus on power generation is on the central part of the country creating availability problems for the northern and southern part of the country.

Diversity is therefore needed not only where electricity is generated, but also by what sources. With regular dry seasons, hydropower generation regularly fluctuates.

The regulatory and legislative framework for geothermal energy is a positive element, as it is the only specific legislation for renewable energy utilisation.

In the interview, Franklin Aceved, also shares details on pricing and the role of the Ministry of Energy and Mines. Diversification would be a key element of any activity and approach for the longer term by the Ministry with better use of current promotion mechanisms for geothermal energy.

EDC entered the market in Peru in 2012 as part of its international growth strategy, including plans for Chile, Indonesia and beyond. With an investment of around $15 million the company identified several geothermal fields of interest. Today, the company has a portfolio of projects, with the most advanced being Achumani in Arequipa and Quello Apacheta in Moquegua. These projects would entail an investment of $1 billion combined and provide sustainable energy in areas of demand.  EDC will advance with an environmental impact study for Achumani, investing $2 million and more in the next two years. There is also hope for the fifth (energy) auction by the government.

EDC has been able to win a grant by German development KfW as part of its Geothermal Development Facility for Latin America that supports early stage geothermal development in the region. The company is also in discussions with Cofide, the financial arm of Peru’s Ministry of Economy & Finance.

EDC also describes the importance of social-environmental engagement and a social management strategy engaging with the local population to gather local support in addition to the political support by the government.

For the full interview see link below.

Source: BN Americas