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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company, with some nominal supervision from SERNA, the natural resources secretariat. Geothermal studies have acquired a higher profile within SERNA, which is seeking funds to increase the available information in the country. The government has shown its intention to diversify its energy matrix and increase the share of renewables. It has passed a renewable energy law which provides a set of fiscal incentives for renewables, including a 10 percent premium based on a feed-in tariff equal to marginal cost. However, there is no budget allocated for enforcing this law and ENEE, the single buyer in the country, doesn’t have the will nor the ability to bear the costs incurred. 128. To develop an inventory would require strengthening the managerial capacity of both SERNA (which operates as an ad-hoc energy ministry) and ENEE in order to be able to process the required information. An inventory of domestic resources would likely be managed within SERNA, with actual inputs coming from contracted consulting companies. 129. Currently, there is very little understanding of the size of the available geothermal resources so a thorough overview of desirable surface manifestations would be imperative. Funding for gauging the capacity of potential fields would have to come through Government investments, to be followed by the required exploratory drilling if the available information so justifies, much like Guatemala. Private sector participation could be established in a manner similar to that recommended for Guatemala through PPPs, by auctioning off promising fields and recycling the resulting monies into an exploration fund. 130. The regulatory framework in Honduras through the National Energy Commission is still very weak and requires strengthening in order to set the rules for eventual PPAs with ENEE. It should be noted that despite this weakness, Honduras put together an auction for renewable energy (in which the private Platanares geothermal project was included). However, the auction process itself has flaws as it allocates excessive risk to ENEE as the buyer of power. 131. Honduras’s public resources are extremely scarce and sustaining a full geothermal program in the public sector would not be a wise use of them; the realistic alternative consists of implementing a PPP model. The way forward would consist of (a) strengthening the capacity for SERNA to manage geothermal development, together with cooperation from ENEE; (b) conducting a review and evaluation of potential fields, to be financed through public funds; (c) putting in place a development model for geothermal energy, including the conditions for private sector participation; and (d) implementing a public/private development strategy for the more promising options identified in (b). Nicaragua 132. The Nicaraguan government is committed to geothermal development as an element of its energy strategy. As noted in Chapter 3, the Ministry of Energy and Mines (MEM) maintains a geothermal unit with capable staff and basic lab facilities, thanks to bilateral assistance from Iceland and other donors. Although Nicaragua developed a geothermal inventory in 2000 it needs to be updated; and there is a solid institutional foundation for doing so. 133. The Ministry produces the power sector development plans, based, however, on limited information regarding the geothermal potential. The resources at its disposal for undertaking information-gathering activities are limited and it has oriented power sector development primarily towards its hydro potential, where information can be collected at a lower cost. It would make sense therefore to establish a Fund with Government monies, similar to the case of 48

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