If any part of the
world should be concerned about the effects of climate change, it
is South America. Despite contributing some of the lowest
emissions globally, many of the countries in the region are
As South America’s population is expected to rise
72% by 2035, the impact of climate change grows more significant
each day. Governments are reacting with renewable energy
development — and geothermal power has several major
South America has largely relied on hydropower, but
its capacity is weakening. Though many regions have further
untapped potential, most is located in remote regions with
limited access to the grid, according to Meeting the Electricity Supply/Demand Balance
in Latin America & the Caribbean, a report released by
the Energy Sector Management Assistance Program (ESMAP).
Geothermal presents a major opportunity throughout
South America, but exploratory drilling has been limited.
According to the ESMAP report, the range of geothermal capacity
estimates is quite broad. Though expectations may be uncertain,
many regions are hopeful that exploration will reveal something
‘Extrapolating from the experience in the US, where
there has been a large amount of exploratory drilling, the
potential of conventional geothermal resources in Latin America
might be as much as 300 TWh per year,’ the report states.
The most viable resources are thought to be located
along the Pacific Rim, which ranges from Mexico to Chile. Key
spots in the Caribbean islands also carry some potential,
according to researchers.
Several South American countries have spearheaded
policy incentives to move renewable energy plans forward.
Countries of note include Argentina, Chile and Peru, according
to the 2012 Geothermal International Market Overview
Report released by the Geothermal Energy Association
Argentina implemented a feed-in tariff (FiT) plan
for geothermal projects, with a 15-year entitlement period after
the plant is brought online. The plan also includes a goal to
reach 8% of renewable production by 2016.
According to the GEA, ‘Though a 1998 law supported
wind and solar generation, geothermal did not become eligible as
a renewable energy source until 2007. ... In May 2009, the
Genren Program was launched, aiming to purchase and incorporate
1000 MW from renewable energy plants, 30 MW of which is to come
from geothermal energy.’
With geothermal potential of up to 16,000 MW, the
Chilean government is ready to take advantage of its untapped
renewable sources. To drive renewable development, the Chilean
National Energy Commission partnered with the US Department of
Energy (DOE) to create the Renewable Energy Center in Chile.
According to its website, the DOE uses the facility to compile
global renewable energy best practices and techniques to then
use in the region.
‘The Chilean center will serve as a clearinghouse of
information and analytic tools and a leading source of expertise
on renewable energy technologies and policies for Chile
and, once it is up and running, for the region. It will also
help research, develop and promote non-conventional renewable
energy projects, and will serve as a source of information for
investors and policymakers.’
Chile’s non-conventional renewable energy law
enforces all utilities with a total capacity of 200 MW and
greater to demonstrate that at least 10% of their energy comes
from renewable sources. After 2014, this enforcement will
increase by 0.5% annually until 2024, when it finally reaches
10%, according to the GEA report. Chile also enforces its law of
geothermal concessions, established in 2000, which regulates
exploration and permitting of geothermal projects. In response
to this favorable policy, a total of 83 geothermal exploration
concession requests are under review as of June 2012 at
Chile’s energy ministry, according to Business News Americas.
Peru is thought to have nearly 3000 MW of geothermal
potential, none of which has been exploited. The country
currently draws most of its energy from natural gas, hydropower
and fossil fuels. Recognizing its need for energy development,
the Peruvian government has set FiTs and tax incentives for
renewables. It has also held auctions for contracts, including a
recent 500 MW tender. Its goal is to generate 5% of its
electricity from renewables by 2014.
Other South American countries have also recognized
the need for clean energy and have implemented favorable
policies. According to the International Energy Agency (IEA),
Bolivia began its efforts in 1999 with grant incentives for
rural renewable projects, and in 2000 passed a rural
electrification project. In 2005, Bolivia passed the Rural
Electrification Decree that promotes collaboration between
private energy companies and government agencies to establish
Where is the Investment?
Though much investment has come from private
funding, the Inter-American Development Bank has been a key
player in South America. It has a five-year target to invest 25%
of its loans toward climate-related projects, and it recently
established the Emerging Energy Latin America Fund II.
According to its website, ‘IDB’s participation will
consist of a senior A loan of up to US$30 million with a tenor
consistent with the life of the fund (expected at 10 years),
including a five-year commitment period. The repayment structure
and the scope of security will be defined during due-diligence.’
The fund, a successor of the $25.2 million CleanTech
Fund, is expected to reach $150 million. According to Andres
Ackerman, an IDB project team leader, the fund was created due
to major expected energy demand increases in the region
— 75% by 2030 — half of which could be generated by
‘This financing is part of the IDB’s commitment to
develop mechanisms to support long-term funding of renewable
energy and clean technology projects in the region, which
stimulate innovation, job creation and green economic growth,’
said Daniela Carrera-Marquis, head of the financial markets
division at the IDB’s structured and corporate finance
Race To Be the First
Though there are no plants currently online in South
America, several projects are nearing completion. Argentina
could technically claim groundbreaking fame with its
demonstration project built in 1988 in the volcanic Copahue
region — a site that has been explored for geothermal
development since the 1970s. Decommissioned in 1996 due largely
to high electricity prices, the 670 kW project used 171°C
sources at depths of 800 to 1200 meters.
Near the decommissioned demonstration plant is a new
potential frontrunner — the 30 MW Copahue project in development
by Earth Heat Resources. According to the company, the project
has the potential for massive expansion after the success of the
initial 30 MW plan. Now in its second phase of development, the
project is expected to be completed this year.
‘This second stage study will encompass many
elements of the upcoming program for this year including
drilling, civil works, other facilities, engineering and
transmission line issues,’ said Earth Heat Resources managing
director Torey Marshall. ‘This milestone will confirm the
location of wells, location of roads, location of
potential plant sites and transmission line locations; an
enormous step in our development of the Copahue Project.’
Earth Heat Resources recently signed a power
purchase agreement (PPA) with Electrometalurgica Andina SAIC for
an initial 30 MW per year. It has also signed a letter of intent
with Xtrata Pachon SA to purchase 50 MW per year, with the
potential for further expansion. Xtrata sees the potential in
geothermal and is eager to get involved with sustainable,
renewable projects in Argentina.
‘We are committed to finding the best environmental,
social and economic solutions in support of our potential future
investments in Argentina, and look forward to working with Earth
Heat in the first geothermal plant in the country,’ said Xavier
Ochoa, Pachon’s general manager.
Fast on its heels is Enel (ENLAY.PK)
Green Power’s Cerro Pabellón geothermal project located
in Pampa Apacheta, Chile. With eight geothermal concessions in
Chile — the most recent acquisitions include Colorado, San Jose
I, and Yeguas Muertas — Enel is eager to tap the nation’s vast
potential. The 50 MW project recently received environmental
approval and is ready to move forward.
‘The country’s geothermal potential is one third of
the installed geothermal capacity worldwide,’ explained Enel
Green Power CEO Christian Herrera. ‘Electricity generation
through geothermal energy not only helps meet the growing energy
demand in the country, helping to reduce dependence on imported
fuels, but [it’s] also a concrete contribution to reducing
greenhouse gas emissions, contributing to the mitigation of
In development but further from completion,
renewable energy firm GGE Chile submitted an environmental
impact assessment (EIA) for a $330 million geothermal project
planned for its San Gregorio concession in southern Chile.
Expected to break ground in 2013, the 70 MW Curacautin
geothermal project will consist of 10 drilling platforms, 14
production wells and 11 reinjection wells, and is scheduled to
come online in 2016, according to Business News Americas.
The nearby Mariposa Geothermal System owned by Alterra
Power Corp (AXY.TO, MGMXF.PK) is located near an
active volcanic region in the Chilean Andes Mountains.
Exploration for the project began in the early 2000s, when great
potential was found in the area. According to the project
website, based on the exploration results, the inferred resource
estimate is 320 MW available over 30 years. To date, slim holes
have been drilled, and 200+°C resources have been found at
the top of the wells; additional holes will be drilled to
determine further resources. A 50 MW plant is in development and
expected to be completed by 2016, and Alterra is searching for
partnerships to continue exploration and development at the
A key factor to this project is the nearby
hydropower projects. Developers are hopeful for a collaborative
effort to build transmission systems to feed the renewable
resources to the Central Power Grid.
Facing many of the same issues with climate change
and population growth, Central America and the Caribbean have
embraced their geothermal resources much more than their
southern neighbors. According to the GEA report, a majority of
the countries in Central America have developed a portion of
their geothermal resources.
‘El Salvador and Costa Rica derive 24% (204 MW) and
12% (163 MW) of their electricity production from geothermal
energy respectively. Nicaragua (87 MW) and Guatemala (49.5 MW)
also generate a portion of their electricity from geothermal
energy,’ said the GEA’s report.
The potential for further development of Central
America’s geothermal resources remains significant, and the
geothermal potential of the region has been estimated between
3000 MW and 13,000 MW at 50 identified geothermal sites.
The SIEPAC (Sistema de Interconexion Electrica para
America Central) transmission interconnection has greatly
influenced this region’s geothermal development. In an effort to
reduce electricity costs, countries are able to develop their
geothermal sources and spread the renewable wealth throughout
the region at competitive prices.
Electricity costs have influenced geothermal growth
on the Caribbean islands. Compared with current fossil fuel
production at $0.24/kWh, geothermal costs $0.05/kWh, according
to the World Bank.
In sharp contrast, South America has strayed from
transmission interconnections. According to the GEA report,
there have been recent issues regarding the flow of energy
across national borders, which have led to underdeveloped,
rarely used and cut transmission lines. This dissension has
resulted in increased blackouts and worker strikes. Though this
may have held back development, the current climate crisis and
the increased need for clean energy have spurred a government
response to develop the massive geothermal resources throughout
According to Geothermal Resources in Latin America
and the Caribbean, a report released by Sandia National Labs and
the US DOE, ‘With [gigawatts] of estimated power potential,
geothermal energy can and should supply a portion of the
additional capacity required [in Latin America].’
Meg Cichon is an
Associate Editor at RenewableEnergyWorld.com,
where she coordinates and edits feature stories,
contributed articles, news stories, opinion pieces and blogs.
She also researches and writes content for
RenewableEnergyWorld.com and REW magazine, and manages REW.com
social media. Formerly, she was an Associate Editor of
ideaLaunch in Boston, MA. She holds a BA in English from the
University of Massachusetts and a certificate in Professional
Communications: Writing from Emerson College.