Risk mitigation, investment climate and experts key to geothermal push in Latin America
Miravalles geothermal power plant, Costa Rica (source: picasa/ Conrad Shiba)
Alexander Richter
26 Jan 2016
The Development Bank of Latin America (CAF) sees risk mitigation, an improved investment climate and ways to secure the best and most experienced developers for development in the region as the key to push Latin America to tap its great geothermal potential.
In a recent article, the Development Bank of Latin America (CAF) talks about the great and untapped geothermal potential of Latin America.
According to the article, Latin America has an enormous geothermal potential, which represents about 15% of the worldwide potential for geothermal energy.
In Latin America, Mexico tops the list as one of the countries worldwide with the highest geothermal capacity. Each approach to the development of the entire region differs markedly: Costa Rica and El Salvador want to increase capacity primarily through the public sector; Nicaragua and Guatemala want the private sector development, and are willing to develop and follow models of public-private partnerships.
There continues to be a need in the medium and long term to optimize and diversify energy generation. With the reduction in demand in the oil market, the geothermal industry could be the main beneficiary, explains Juan Garcia, Project Manager of the National Energy Board .
Within this context, one of the key issues discussed experts CAF in the Geothermal Congress of Central America and the Caribbean , was whether private companies will partner with governments to seize this opportunity to increase large-scale geothermal power generation in the region .
The forum was determined that geothermal energy is currently facing three major challenges:
1. Mitigate the risks: the mechanisms to mitigate exploration risks are necessary. For this, the public sector involvement through government investment is necessary, including support for exploration. To begin, World Bank Group developed an effort to reduce exploration risks, providing $250 million to countries.
2. Improving the investment climate: governments should work to streamline regulatory legal frameworks that ensure access to sufficient funding to reduce risk.
3. Improve procurement of experienced developers: countries need to attract and select financial experts and technical skills that qualify them to carry out the exploration for geothermal energy could play a critical role in diversification, cost reduction and the organic matrix of the electricity sector in Latin America and the Caribbean.
Among the main conclusions, he prevailed that despite the great potential of the region, progress has been limited. Most qualified and skilled, strong institutions and greater cooperation between the public and private sector the main need was stressed to move forward.
Source: CAF
