Latin America looks to invest in geothermal energy

While Central America and Mexico lead in the use of geothermal energy in Latin America, countries along the Pacific Coast of South America have great potential to tap in to this renewable energy source, the International Renewable Energy Agency (IRENA) believes. 

“El Salvador, Costa Rica and Nicaragua have electricity generation plants based on geothermal energy, which is something that does not exist in any South American country,” Ruben Contreras, regional program officer for Latin America and the Caribbean at IRENA, recently told Latin Business Daily.

In parts of Central America, the percentage of energy derived from geothermal sources can range from 12 percent to 24 percent of the total, Contreras said.

Countries in South America are not using geothermal energy because they need support at the technical and financial level; however, South American countries along the Pacific Coast have rich geothermal potential due to volcanoes in the Pacific Ring of Fire.

Latin America would benefit from developing its geothermal capacity as well as other renewable energy resources, such as wind or solar power, rather than continuing to depend on hydroelectric power, which makes them vulnerable to weather events," Contreras said. Geothermal energy, on the other hand, has an advantage over other renewable energy sources.

“Geothermal energy can work 24 hours per day without interruption, which is not the case for wind or solar power,” Contreras said.

IRENA is currently involved in a program to help five South American countries -- Bolivia, Colombia, Chile, Ecuador and Peru --  move forward with efforts to tap their geothermal resources.

“We started two years ago a project that seeks to support these five countries,” Contreras said. 

The efforts involve generating dialogue, evaluating the legal framework and also leading a geothermal financing workshop.

The most recent meeting for that project was held a month ago in Colombia, when country representatives met regional financial institutions to study financial risk management of geothermal projects.

The initial stage of developing geothermal sources is the most difficult and risky as it involves much drilling, carrying out expensive geothermic profiles and other high-cost, high-risk activities. This is why there is fear of investing in geothermal sources. 

Consequently, IRENA is currently inviting countries and financial organizations to hold discussions that can lead to more understanding and investments in this energy source.

Central America was able to advance more because its efforts started in the 1970s and the first plants were already a reality in the 1990s, Contreras said. On the other hand, the rest of Latin America has traditionally relied on hydroelectric- and- hydrocarbon-based sources for electricity.

“In the last 10 years, we have started to see a change, and about 4 percent of biomass is used along with 3 percent geothermal, 2 percent wind and 2 percent solar,” Contreras said, adding that those rough figures are from 2013. 

Renewable energy use should have increased in 2014 and 2015, he added.

Organizations in this story

International Renewable Energy Agency Abu Dhabi - United Arab Emirates Abu Dhabi, Abu Dhabi

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