Government support crucial to move Chilean development forward
In an interview the CEO of New Zealand's IESE, stressed the important role of the government in geothermal development through support particularly in the early and drilling stages of projects.
It has now been almost a decade since Chile started talking seriously about geothermal. Exploration areas were tendered, development studies conducted and some companies have actually drilled wells and measured its potential, there was even a regulatory adjustment, but so far no power generation from geothermal has been realized in the country.
In an interview with DF.cl Gary Putt, CEO of the New Zealand based Institute of Geothermal, Earth Science and Engineering (IESE) explained that the main reason for the lack of progress is the missing support from the Chilean government.
Mr. Putt recently visited Chile as part of a framework vist organized by New Zealand Trade and Enterprise, which is the promotion and development agency of New Zealand. New Zealand is a leader in the use of geothermal energy, with over 50 years of experience and development. It is also the country in focus of the first issue of the Think GEOENERGY Magazine.
Mr. Putt gave the following interview to , translated here.
What is your view on the potential of (geothermal energy) in Chile?
Chile has a lot of geothermal potential, as well as high energy prices and a high dependence on imported fuels. Chile should consider renewable resources to ensure its energy independence and reduce costs. Although geothermal energy as a source of energy is complicated and challenging to develop, we must make every effort to ensure that exploration risks can be minimized.
Why do you think that despite exploration efforts and a general interest to invest there still is yet no geothermal power generation in Chile?
We worked in geothermal exploration in several countries allied with New Zealand and developing them would not have happened without governmental support to reduce the risk of commercial exploration for geothermal developers. New Zealand for example, does not offer subsidies, but the government took the initial risk to begin geothermal development, invested in exploration and drilling, and has continued geoscience and geothermal research. Due to the high cost and complexity of drilling, it is difficult to develop a geothermal resources market approach without government support.
What do you think it takes to get projects off the ground in Chile?
Every country is different, but with the support of the government, industry and experts are needed, that can help in targeting and reducing investment risks during the exploration. To justify the high investment, which is several million dollars in exploration and tens of millions in drilling tests, you also need to think about safety in mining issues, for example, as well as long term power purchase agreements. For a company, the cost and development risks must be balanced by the financial return on investment. Here the government’s role is to ensure these balances. Geothermal energy can not be treated in the same way that generally helps wind, solar, hydro or gas projects to develop and to generate electricity.
According to the Chilean Geothermal Energy Association (ACHEGEO), it takes about five years from the initial start on the work on geothermal project until a plant has been built and can generate electricity. During a decade in the 1970s, first formal explorations were performed by CORFO in the north of the country. It has since been estimated that the potential of geothermal energy in the country, allow the installation of around 10,000 MW of generating capacity, while worldwide there are 11,000 MW in operation.