Power Up! Geothermal Energy Development in LAC

On July 31, 2012, India experienced a power outage that left 620 million people without electricity for several hours. Both a lack of power supply along with the possibility of government corruption allowed powerful Indian states to take more than their fair share of power, thus leaving poorer states with none.

Energy shortages are not a phenomenon specific to India. Many countries in Latin America also experience rolling blackouts. However, some Latin American countries are launching projects to take advantage of a renewable energy source, geothermal energy. Geothermal energy is created by mineral decay beneath the earth’s crust and is extracted in the form of hot water and steam. Geothermal energy is measured in megawatts (MW). One thousand watts is equivalent to one kilowatt (Kw) and a megawatt is equivalent to a million watts. The average American household uses 10,000 kilowatt hours of energy a year. Thus one megawatt can fuel about 100 American households for a year. In a developing country where electricity is used less, a megawatt can fuel much more.

Greater stabilization in Latin America’s energy sector could do more than ensure clean energy. The region’s energy sector is inefficient according to The Council on Hemisphere Affairs. The region faces rolling blackouts, electricity shortages and gas price spikes. These occurrences are not just bothersome, but create social imbroglio and economic instability. The council believes that the use of geothermal energy “could secure economies in the region and free the countries from their costly oil dependencies”.

Countries in South American have used hydropower in the past, but this power is not meeting demand for energy. There is no for-sure estimate for how much geothermal energy South American countries could extract, as projects to drill and make estimates have been limited. Many South American countries, including, Argentina, Chile, and Peru, want to continue in their pursuit of renewable energy forms including geothermal. It is believed that the most significant extractions could take place along the Pacific Rim and in areas on the Caribbean islands.


Estimated geothermal energy

Partners in geothermal project

Chile 16,000 MW US Department of Energy, Energy Development Corporation
Peru 3,000 MW Energy Development Corporation, Hot Rock
Argentina 1,500 MW Earth and Heat Resources
  • It is estimated that there is up to 16,000 MW (megawatts) of geothermal energy in Chile. The Chilean National Energy Commission has partnered with the United State’s Department of Energy to create the Renewable Energy Center in Chile. At The Center, specialists will gather information and gain expertise on renewable energy technologies. Currently, 38 geothermal exploration requests are under review at Chile’s Ministry of Energy
  • According to Peru’s Ministry of Energy and Mines, the country has 3000 MW of geothermal potential. The Peruvian government has SET FiTs (“feed-in tariffs” that pay those who produce their own electricity) and tax incentives to encourage use of renewable energy. By 2012, Peru plans for 5% of it energy to be from renewable sources. Peru has partnered with the Energy Development Corporation and Hot Rock to begin explorations of geothermal sites.
  • Argentina may be the first to reap the benefits of geothermal energy as it embarks on a 1,500 MW project in partnership with Earth and Heat Resources. The project is estimated to be completed this year. The study will “confirm the locations of wells, location of roads, location of potential plant sited and the transmission line locations” according to Earth Heat Resources director, Torey Marshall.

Central America and the Caribbean have been quicker to succor their geothermal potential than South America. According to the Geothermal Energy Association’s report, El Salvador derives 204 MW of its electricity (24%) from geothermal origins, Costa Rica derives 163 MW and Nicaragua derives 87 MW. For the entire Southern American region, GEA estimates that geothermal sources could measure between 3000 MW and 13,000 MW, which could supply thousands of households with electricity.

The Inter-American Development Bank has also been a player in Latin America’s steps towards geothermal energy. Daniela Carrera-Marquis, the head of the financial markets division of the IDB’s corporate finance departments said ‘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. Though the support of the Inter-American Development bank is helpful, private involvement, that brings the irreplaceable expertise of the geologists and engineers, is essential for successful geothermal exploration and access to renewable energy in Latin America.


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