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Geothermal development picking up in the Caribbean … or is it?

Drilling rig on project site, Dominica (source: Enorca)
Alexander Richter 22 May 2016

With all the news on geothermal activities in the Caribbean, we look at how real news on development really are and if things indeed are happening in the region.

An interesting article by New Energy Events, recently looked into geothermal development in the Caribbean to see if all the headlines correspond with actual development on the ground.

Here on ThinkGeoEnergy we have been covering news from development efforts on the various Caribbean islands over the past few years. We have reported on drilling being started, changes in project ownership, support by multi-lateral organisations such as development banks … but so far no project has actually been able to come as far as building a plant.

In a region that depends heavily on diesel for power generation, geothermal is a very valuable energy source if there are resources on the islands.

The article by New Energy Events looks into the various different island states, and we provide some summary here. For the full article see the link below.

Dominica

Dominica has been struggling to get a project of the ground. With an early interest by French players, the current status of the project is unclear, while Canadian Emera is said to be interested in development. We reported on Dominica several times over the last 12 months .. from a plea of the country’s prime minister for private investment earlier this month, to the investment so far into geothermal of $54 million … there is so far no concrete way forward and a private player is being sought to push things forward.

St. Kitts & Nevis

These two islands – federation is an interesting case study. From early activities with positive initial drilling results on Nevis with a developer not able to raise the necessary financing, there have been a lot of frustrations. With a new developer now pushing things forward on Nevis, things are at last moving into the right direction, even a turbine supplier has been chosen. But with a PPA that would require exporting electricity to the neighbouring island of St. Kitts, the economics seem a bit unclear, so the article by New Energy Events. Now St. Kitts seems to push forward with own development efforts … an interesting step. For an island state that continues to be in dire financial state, it is stunning to see a competitive spirit between the two island states instead of some joint effort. Clearly not helpful.

St. Lucia

We last reported on St. Lucia in April this year, when it was announced that drilling for a geothermal project could start as early as 2018, there have been – so the article – various parties associated with the project, e.g. Ormat, the Clinton Climate Initiative and the government of New Zealand through some technical support.

Clearly it will be interested to see who is pushing the project forward, which likely will determine how fast development could happen.

Grenada

Among the Caribbean states, Grenada is a bit behind the curve, but there is interest in development. The local utility is interested and various partners, incl. the New Zealand government, are ready to help explore a roadmap for future development.

Montserrat

As a U.K. overseas territories, Montserrat has been able to tap into funding from DfID in the UK for development activities. So far two wells have been drilled, with drilling of a third well under preparation, as we reported. The resource is though relatively small but so is the actual energy demand. So the project could have a large impact in securing energy for the island state. But the future will show how and if the project can attract private funding or some development under a public private partnership.

Guadeloupe

Guadeloupe, part of France, is currently the only Caribbean island state with an operating plant. With some ups and downs, Ormat recently announced having acquired a majority stake in the plant with plans to increase output by 30 MW by 2021. With an experienced player like this, things clearly seem to happen.

St. Vincent & the Grenadines

The article referred to here, does not cover St. Vincent and the Grenadines, but should be mentioned here in this context. With Reykjavik Geothermal, an experienced development team from Iceland is ready to push for a drilling start late this year and possibly a start of operation by 2018. With 10 to 15 MW the project is also on the larger side for the Caribbean and therefore quite interesting.  Funding is being made available from different sources through grants, debt and more, e.g. from IRENA and others.

Agreeing with the author at New Energy Events, the challenge continues to be finding the right private sector partner  … and actually seeing projects starting producing power. With one or two key projects showcasing the real opportunity provided by geothermal, things can happen much quicker than anybody believes.

The dire financial state of some of the island states though is a big concern as it might not provide the stability for a bankable PPA.

But one can be overall optimistic. There are various international efforts to support development in the region, banks are willing to provide funding and there is interest by experienced private sector developers.

So things are looking good, and while likely not becoming the major market with 100s of MW to be built, the impact for this region could be tremendous.

We will continue to report on the activities in the Caribbean, so stay tuned.

Source: New Energy Events