Fréderic Sauze
Roberto Ortiz
Roberto Ortiz
View from the Top

Harvesting the Earth's Heat

Wed, 02/24/2016 - 18:33

Q: What were the drivers that led to the creation of ClusterGeo, and what are its main objectives?

FS: We created ClusterGeo in 2011 with the aim of having an organism that could help drive social and economic growth in the state of Michoacan. We knew there were several actors in the geothermal field in that state, so it was a promising starting point. CFE owns one of the most efficient geothermal fields called Los Azufres, and a number of concessions have been explored in the area. The government was interested in creating a cluster to promote the development of the local geothermal industry by strengthening the local supply chain and by fostering social integration. The cluster brings together scientists and researchers from public and private universities, as well as government agencies among other players.

Q: What role did ClusterGeo play in the creation of CEMIE- Geo, and how will it foster innovation and strengthen the available human capital?

FS: The main focus of the cluster is geothermal energy, but it is also open to other renewable sources of clean energy generation. One of the main initiatives we have seen so far was the creation of the Center of Excellence and Innovation, also called CEMIE-Geo, which was sponsored by the Ministry of Energy. In order to maximize the reach of this center, we partnered with UNAM and with a research center based in Baja California called CICESE. Together, we managed to raise around MX$950 million (US$63.3 million), which has been allocated to different engineering and research projects. The idea is to better understand low- and high-enthalpy projects, low temperature resources, and the benefits of fueling power plants with geothermal water for other industries such as agronomy. We have also fostered the implementation of an insurance scheme for geothermal drilling that is common in other countries, in which the government provides insurance mechanisms to investors willing to take the financial risk of exploration. Aside from this, we have created a special academic program in the University of Michoacan to train students in the field of geothermal power generation.

Q: How can this Exploration Risk Insurance Fund help the industry mitigate the financial risks involved in the exploration of the resource?

FS: This model is very common in European countries, like France, where most of the housing development around Paris, as well as the Orly airport, are heated by geothermal power. The authorities drill wells that deliver the thermal energy and then transfer it to the heating systems of the city. The French government understood that the high financial risks involved could not be undertaken by private investors, especially taking into consideration the size of their respective companies. If the exploration campaign is successful, the investor has to repay the government through its future revenues, but if the exploration fails, it is the government that absorbs the risk. We took this model and presented it to the Ministry of Energy and FOCIR, and since then, these two organizations have been working hard to realize the project. Geothermal generation is relatively new and small compared to other natural resource industries, so we do not always have the capital required to fast-track our projects. Now, with the help of these governmental agencies, it is possible to advance projects with a lot less complications.

Q: Which advancements or opportunities have been created for the geothermal industry with Round Zero?

FS: The first round will tender high-enthalpy projects, whereas the second round will tender low-enthalpy projects. CFE dominated Round Zero, since it has many projects of this kind in advanced exploration stages or in development. I think that the government took its time to advance the biddings to allow CFE time to analyze which projects it wanted to develop and operate.

Q: What role is ClusterGeo playing in the promotion and implementation of new technologies and processes in order to foster the growth of the sector?

RO: I believe that ClusterGeo provides the perfect opportunity to bring cohesion to our industry by reuniting academia, the government, the private sector, and society. Together we tackle the challenges the sector presents. The geothermal industry has developed because of the facilitation of the exchange of knowledge and expertise. We see a very dynamic and motivated sector; the people that work for this industry truly believe in the benefits it can bring to society. ClusterGeo is using this momentum to bring together some of the most daring and intelligent ideas to allow the sector to evolve.