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Drilling Down on Geothermal Potential Central America

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Drilling Down on Geothermal Potential Central America ( drilling-down-geothermal-potential-central-america )

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9. The geothermal potential for power generation in Central America is estimated to be between 3,000 and 13,000 MW and approximately 50 sites have been identified for eventual development, including in Costa Rica (10), El Salvador (4-13), Guatemala (8-13), Honduras (6- 7), Nicaragua (10), and Panama (5). The upper capacity estimate indicates that geothermal could supply nearly all of the region’s electricity demand. The wide range of estimated potential is due to the fact that only a small fraction of the identified sites has been validated by actual drillings, and because different groups have used alternative methodologies to estimate the potential. This underscores the large uncertainty of resource estimates in the absence of drilling information and indicates the need for increased exploration and test drilling to fill the information gap. In comparison to the current installed capacity of less than 500 MW, the regional potential is significantly underexplored and underdeveloped. 10. Given the high costs of other competing electricity generation technologies in Central America—hydro and thermal—the costs of geothermal are particularly competitive. While the specific levelized costs of geothermal versus other technologies depends on a number of factors, this report conservatively estimates geothermal costs at between 7.2-8.9 US cents per kWh (assuming capital costs of US$4,000-5,000/kW), while with more optimistic capital costs (US$2,500/kW), levelized costs would be around 5-6 US cents/kWh. By comparison, costs for baseload power from hydro in the region are in the range of 7-8 US cents/kWh (assuming capital costs of US$2,500/kW, which may be optimistic given some recent large-scale plants in the range of $4,000/kW), HFO-powered generation can be as high as 12-15 US cents/kWh (assuming a 2010 oil price of $75/barrel (bbl) and capital costs of US$ 1,900/kW) and coal- powered generation of 10-11 US cents/kWh (assuming coal prices of US$118/ton and capital costs of US$3,000/kW; with capital costs of US$2,000/kW, the levelized cost for coal becomes around 8–9 US cents/kWh). Stated differently, the capital cost of a geothermal plant can be as high as $7,000/kW to be competitive with a plant fueled with HFO at an oil price of US$ 75/bbl and $8,000/kW at an oil price of US$ 100/bbl. At the other extreme, the cost of a geothermal plant should not be more than around $4,000 per kW to be competitive with hydro at US$2,500/kW. While varying from site to site, geothermal development costs in the region are estimated to be in the range of $4,000-5,500/kW, making it fully competitive with thermal generation and potentially competitive with large hydro. Country-specific geothermal development 11. Central America as a region is one of the world leaders in terms of installed geothermal capacity. The first geothermal plant dates back to the early 1970s. The geothermal development experience among the countries varies with different development paths and has shown mixed success. 12. Until the late 1990s, geothermal development in El Salvador was the responsibility of CEL (Comisión Ejecutiva Hidroeléctrica del Río Lempa). With power sector reform, CEL was broken up into a hydro generation company (still known as CEL), a transmission company iii

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