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21. Central America is vulnerable to high and volatile fuels prices because of its current dependence on imported fossil fuels. When planning the future power supply, it will be imperative for the region to keep in mind the lessons learned about the negative consequences of its dependence on imported fossil fuels, including increased generation costs, worsening financial viability of national power companies, and the increased burden on government budgets to bear the increased generation costs. According to the expansion plans of the six countries, electricity demand is expected to grow from around 44 TWh in 2010 to 84–99 TWh in 2023. To cover the demand growth, Central America will need to install around 8,500–11,400 MW of new power supply capacity6. If the region intends to avoid the negative effects of an oil- dependent energy market as seen before the crisis, it must diversify the electricity supply matrix and begin leveraging the most sustainable domestic energy resources the countries has to offer. 22. In particular, regional integration may offer a potential solution for a more sustainable energy sector in the region. The six Central American countries share a long tradition of regional integration, including a common market, substantial intra-regional trade, as well as coordinated commercial policies. In the energy subsector the most significant example of regional integration is the SIEPAC interconnection line. The interconnection is expected to link the six countries in full operation in 2012. The interconnection has been a long term effort, starting in the early 90s and culminating in 2010, with the support of IDB and the Government of Spain. The completion of the SIEPAC line will make regional generation plants more feasible given the access to a larger market. Current geothermal development 23. In 2008, Central America had an installed capacity of around 493 MW from geothermal plants, equivalent to 5 percent of the region’s total installed capacity. As shown in Table 5, El Salvador has the most with 204 MW, followed by Costa Rica (163 MW), Nicaragua (87 MW) and Guatemala (49.5 MW). The plant factor of most geothermal plants is over 80 percent with the exceptions of the Momotombo plant in Nicaragua (43 percent) and the Zunil plant in Guatemala (62 percent). Geothermal generation accounted for 4.9 percent of the region’s total installed capacity and 7.9 percent (3,131 GWh) of total electricity production in 2008. The higher percentage of participation in energy production is due to the fact that geothermal power has a high plant factor which is comparable to coal and higher than all generation technologies in use in the region, and is usually dispatched as base load (Table 6). Geothermal resource potentials 24. Located in the “Ring of Fire” that encircles the Pacific Ocean, geothermal resources are abundant in Central America. The regional potential for power generation is estimated to be between 3,000 and 13,000 MW (Table 7). The range is large due to the fact that only a small fraction of this potential has been validated by actual drillings and different groups have used alternative methods to estimate the potentials. For example, JBIC used the Monte Carlo method to estimate the resource potential for 34 of the 52 sites in their 2006 Plan Puebla Panama study7; since it didn’t include all 52 sites, what they offer was a conservative estimate of the actual 6 Plan Indicativo Regional, CEAC, 2009 7 Japanese Bank for International Cooperation (JBIC), the Role of Geothermal Energy in the Electric Sectors of the Plan Puebla Panama Region, November 2006. 10PDF Image | Drilling Down on Geothermal Potential Central America
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