Two interesting articles about the challenges of geothermal development in Chile were published by the NuevaMinería magazine.
This includes a Geothermal Special (pages 44-48 of the pdf document) in two sections, Piensa Geotermia (Think Geothermal): Challenging Path to Carbon Neutrality (where we were invited to publish this note); and a huge energy source under our feet.
When analyzing electricity markets in Latin America with similar regulation to the Chilean one, it is quickly found that the development of geothermal energy is stagnant and that existing plants, such as in Mexico, were developed when the electricity sector was controlled by the state or with aid of the state. Everything we do today for geothermal energy will be realized in 5 to 10 more years.
The Geothermal Development Fund for Latin America (GDF), after 4 rounds of risk financing, with more than 50 geothermal projects reviewed in 10 countries in the region, recently addressed this issue and concludes that “the lack of compression of the attributes positive aspects of geothermal energy in Latin America, is a key aspect in the little support that energy policies have in the region ”, thus delaying the development of geothermal energy. Furthermore, this is reflected in the actions of governments, since in general, they do not have a policy that differentiates between the firm and intermittent power of renewable energy, which can also be extrapolated to differentiate in the total cost of operating the system. Reflection of this, is that in Chile the “costs of 1 MWh” in supply tenders for regulated customers does not deal with either the origin, the emissions, the impact on the operation of the electrical system, or even if it is required build more than 1,000 kilometers of network to bring this 1 MWh to the consumption centers of regulated customers, located in Santiago to the south.
At the international level, geothermal energy took another course after the Paris Agreement, as a key technology to enable the transition to carbon neutrality. Cities such as London, Paris, Munich, Amsterdam and many others in Europe are developing geothermal energy in cities, in order to take advantage of the remaining heat (cogeneration), reduce emissions by replacing fossil fuels, improve people’s quality of life and improve the local economy. The classic concept of geothermal energy that we know in Chile is far from this new concept. Here we have a tremendous opportunity with future generations: we can decontaminate cities, replace firewood and improve the quality of life.
The extraction of lithium from geothermal fluids is a matter that must be urgently addressed in Chile. The Geothermal Law does not allow the extraction of minerals from the geothermal fluid and with this we are losing a tremendous opportunity and market position as a leading country in the production of lithium with low water footprint, low CO2 footprint and not drying salt flats. In Chile, we are currently detained.
Finally, Chile’s geothermal potential is underestimated, as it is limited to certain very specific places in the mountain range between Arica and Pto Montt and with insufficient information, consistency in the development of energy policy is lost.
A Huge Energy Source Under Our Feet
Diego Morata, Director of CEGA, together with Jerónimo Carcelén, President of the Geothermal Council of Chile, refer extensively to the geothermal potential of 3,500 MW and the challenges in its development. This potential to be exploited represents about 20% of the total installed capacity globally and with it Chile would become a leader in the industry.
The most memorable milestone in the sector and in South America, is the commissioning of Cerro Pabellón in 2017, the first plant on the continent, with 48 MW of installed capacity and which is currently under construction in the expansion of 33 Additional MW. The industry has invested nearly $ 500 million over the past 10 years, and projects with advanced exploration include Mariposa from the Energy Development Corporation; and Peumayén from Transmark Renewables.
Diego Morata states that although 6o0 MW could be developed by 2030, there is still no certainty that this milestone can be met, the main obstacle being the lack of a public policy that favors this technology.
Jerónimo Carcelén complements the above, indicating that “there are geological and financial risks that hinder the initial stage of these projects, related to the high costs of exploration and the low probability of finding the geothermal reservoir.”
In the last public account in Chile, he noted the pending amendment to the Geothermal Law that seeks to modernize it, including direct uses other than electricity generation such as heating, greenhouses, tourism projects, fish farms, among others.