Drilling Down on Geothermal Potential Central America

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country’s institutional and regulatory framework and the geological conditions, location and financing, the project development time could either be reduced or prolonged by several years. 10. Each phase of geothermal project development consists of several tasks, as shown in Table 1. These tasks as well as related environmental and social impacts and best practices are discussed below. After each milestone, the relevant developer, which is usually either a project company, or the country authority, will have to decide whether to continue the project development or not. Thereby the developer limits his projects risks as much as possible. 11. The first three phases, or milestones, are part of the project exploration, from early reconnaissance initiatives to actual on-site scientific research to test drillings. This first half of the project development will either confirm or deny the existence of a geothermal reservoir suitable for power generation. If the result from the first three phases is positive and the geothermal potential is confirmed, phase 4 is initiated with the design of the power project, including the feasibility study, engineering of components and financial closure. Phases 5 to 7 illustrate the actual development of the project, including the drilling of geothermal wells, construction of the pipelines, the power plant, and its connection to the transmission system. The following paragraphs provide more details on the development phases and also give indicative figures for a costs analysis. 12. Phase 1, the preliminary survey, includes a first survey of a geothermal area based on a nationwide or regional study. If no geothermal master plan studies are available, developers usually do their own studies based upon available literature and their own reconnaissance work to select the areas for which to apply for exploration concessions. Once the concession is granted or the field is selected, pre-feasibility studies (Pre-F/S) are done to explore the likelihood of the existence of a commercial geothermal reservoir and to get a first estimate of its exploitable potential. The pre-F/S also evaluates other aspects of the project, such as the availability of the country’s power market, transmission and distribution system, availability of basic infrastructure (roads, fresh water supply, communication, etc.), and environmental issues. 13. The institutional and regulatory framework of the country would have to be studied in order to evaluate how difficult it will be to obtain permits and licenses for project development and operation, or to establish a Power Purchase Agreement (PPA) with the relevant utility company or other customers. The preliminary phase is important to establish the rationale and need for the project in question and at the time to find a justification to enter into investments induced by the following phases, the exploration and the test drillings. Costs for this first phase can vary greatly based on the available data and the size of the area being 57

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