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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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described here: in the case of Zunil, INDE developed the field and operates it, and a private company operates the power plant; in the case of Amatitlán, the same private company operates the field and the power plant. In both cases the private operator has a PPA with INDE. 60. The existing regulatory framework in Guatemala is based on a competitive cost-based market. Geothermal developers would be able to participate advantageously in the bidding for long-term contracts given that they can offer base load power. Alternatively, there would be relatively little risk in relying on the spot market given that the operating price of geothermal plants is very low and as such it will always be dispatched. 61. The way ahead in Guatemala is less clear, although there is great interest on the part of the Government in attracting geothermal developers. The questions revolve essentially around project risk at the exploration phase, which requires costly drillings for wells which may turn out dry. The power sector regulator envisages a bidding procedure when multiple parties express interest in a given field. At present any private sector can develop a geothermal resource and sell into the wholesale market. 62. Although this is straightforward in principle, in practice the allocation of risk is more complicated. In principle, market risk can be borne by distribution companies through PPA types of contracts, but the exploration risk is still to be borne by the developer. Under the circumstances, only large and well-backed companies are likely to undertake these investments. 63. INDE, the national power company, has studied geothermal resources since the 70s. Two fields have been developed: Zunil, with 28 MW installed, 24 MW effective capacity, is operated under a BOO agreement whereby INDE operates the field and delivers steam to the power plant operated and owned by ORMAT, an Israeli geothermal power plant producer and power company; Amatitlán, with 20 MW, is operated in its entirety by ORMAT, including steam and electricity production. ORMAT can add capacity up to 50 MW if the field can support it. 64. INDE continues to be interested in geothermal development and has built up its institutional capacity; it has a dedicated geothermal department and has hands-on experience in field development and operation based on Zunil and Amatitlán. It currently holds exploration rights for several areas, including Zunil, Amatitlán, Moyuta, San Carlos, and Tecuamburro, which is expected to yield around 44 MW. 65. INDE estimates that the country could have a potential of 1,500 MW in geothermal resources which all contain steam at temperatures above 300 °C; the Ministry of Energy and Mines considers optimistically that the country ́s potential could reach up to 4,000 MW. The current estimated capacity in identified fields amounts to around 199 MW in the fields of Moyuta (25 MW est.), Tecuamburro (50 MW est.), San Marcos (24 MW est.), Amatitlán (20 MW installed, 50 MW total est.), Zunil (24 MW installed, 50 MW est.), Totonicapán (to be determined). 66. Whatever the size of the geothermal potential may be, Guatemala is a difficult country for drillings. Though the chemical composition of the fluids usually facilitates their treatment and utilization for power generation, the highly fractured underground makes drillings difficult and risky, which could result in a high failure rate, costly cementation and therefore high investment costs required for the wells which do turn out to be productive. 31

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