Hot Rock Limited secures promising geothermal project Achumani in Southern Peru

City view of Arequipa, Peru (source: flickr/ reflectification, creative commons)

Alexander Richter 5 Nov 2012

Australian geothermal development company Hot Rock Limited (HRL) announces that its application for an exceptionally prospective geothermal project, named Achumani and located in Southern Peru, has been formally granted. Achumani is situated 90km north of the major City of Arequipa and displays all of the signatures and characteristics of a high quality volcanic geothermal system that are commonly developed to provide electricity around the world.

The Company believes that Achumani project meets the characteristics of a promising volcanic project for large scale electricity generation with conventional steam cycle turbines and as such is a quality acquisition to the company’s project portfolio.

In the central project area at Achumani there are numerous geothermal features, including superheated fumaroles, steaming ground and boiling mud pools. These
are interpreted to be directly associated with an upflowing volcanic geothermal system. At lower elevations and peripheral to the upflow there are surface springs which are indicated to be distant outflows from the upflow. Discharge temperatures in the springs range from 45 to 80°C and geochemical indications are that deep reservoir temperatures in the vicinity of the springs are at least 200 degrees Celsius, with substantially higher upstream temperatures available within the central upflow portion of the system.

These are excellent indicators of the potential for a high temperature reservoir and we believe it will attract significant interest from potential joint venture partners.
In contrast, the Achumani project features a major 138-220 kV high-voltage transmission line that runs 20 kilometres to the east of the project area. There is also a substation 28 kilometres to the south in the town of Callalli. Furthermore, there is a local electrical grid (66 kV) that runs through the project area into which a first stage power development could be embedded and a number of mining operations and potential private customers in the district for larger power sales.

The demand for power in Peru is high and is projected to double in the next 6 years. The Peruvian government has set a 5% renewable energy target consumption until 2013, when it is then expected to be increased to 10% until 2018.

The Peruvian government passed a Renewable Energy Law in 2008 that allows for 20 year fixed price contracts for electricity generated from small hydro ( biomass and geothermal under a reverse auction system in which the lowest offered price wins a long-term 20 year contract, which is then government guaranteed and inflation
indexed. There is also a requirement for the renewable energy project to have a priority connection to grid.

The Renewable Energy Law is of considerable importance to the emerging geothermal industry in Peru in that it provides a secure market price for geothermal power generation to help develop and establish the industry.

Achumani’s proximity to major transmission infrastructure, high quality surface features and the renewable energy law are critical in minimising capex costs and being able to bring a geothermal resource into production. An important point to note is that once the upfront plant cost has been paid back there is effectively no ‘fuel’ cost for the life of a geothermal project.

Work has commenced on identifying the community groups within the Achumani concession area to discuss access for surface exploration programs aimed to start around May next year when the field season is able to commence.

HRL is currently seeking a partner(s) to help explore and develop Achumani and our other granted projects.

Source: Company release