Geothermal energy in Latin America, a wasted potential?
With the demand reduction in the oil market, geothermal energy could become the main energy supplier
Latin America has an enormous geothermal potential
which represents close to 15 percent of the world's total
geothermal capacity. Mexico leads the list, as it is
one of the countries with the highest geothermal capacity in the
world. There is a notorious difference between each approach for
the development of the region: Costa Rica and El Salvador want to
increase capacity mainly through the public sector; Nicaragua
and Guatemala want the development of the private sector, and are
willing to develop and establish public-private association
models.
The medium and long term need to optimize and diversify energy
generation remains current. With the demand reduction in the oil
market, geothermal energy could become the main beneficiary,
explains Juan García, Project Manager at the National Council
of Energy.
In this context, one of the key issues debated by CAF experts in the Congreso Geotérmico de Centroamérica y el Caribe (Geothermal Congress of Central America and the Caribbean) was whether private companies will associate with governments to take advantage of this opportunity to increase geothermal energy in the region on a large scale.
The forum established that geothermal energy currently has three large challenges to face:
1. Mitigate the risks: the mechanisms to mitigate exploration risks are necessary. For this, the participation of the public sector is necessary through state investments, including support for exploration. To start, the World Bank Group made an effort to reduce exploration risks by providing USD 250 million to the countries.
2. Improve investment climate: governments must work to rationalize the legal regulatory frameworks so that they guarantee access to sufficient financing to reduce risks.
3. Improve public contracts of experienced developers: countries need to attract and select experts with financial and technical skills that enable them to carry out the explorations, as geothermal energy could play a critical role in the diversification, cost reduction, and the ecological matrix of the electric sector in Latin America and the Caribbean.
Among the main conclusions stands out the fact that despite the region's great potential, progress has been limited. The main needs to advance highlighted in these conclusions are to have more qualified and expert people, strong institutions, and greater cooperation between the public and private sector.
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