IDB Funding to Boost Geothermal Energy in Mexico
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IDB Funding to Boost Geothermal Energy in Mexico

Photo by:   Tommy Kwak - Unsplash
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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Tue, 02/14/2023 - 11:13

The Inter-American Development Bank (IDB) announced it will support the Mexican government in the development of geothermal energy through the Financing and Risk Transformation Program for Geothermal Energy in Mexico (PFTRG).

According to IDB, Nacional Financiera will execute the program along with the Ministry of Energy (SENER) and the National Institute of Electricity and Clean Energies (INEEL). The goal is to increase geothermal power generation to contribute to clean energy development in the country and reduce Mexico’s dependence on fossil fuels to lower greenhouse gas emissions.

Initially, the IDB allocated US$51.5 million to drill seven exploratory wells of up to 3,500m in four geothermal areas. The agreement states that if the exploration has a positive outcome, payments will begin once the wells start to produce power. On the other hand, if works are unsuccessful, the money given for exploratory drilling will be considered a donation.

Additionally, the IDB gave the project a line of credit for the construction of the power plant and transmission lines, as well as other auxiliary services that may be needed to harness geothermal heat.

The project was launched during the latest Geothermal Congress for Latin America and the Caribbean (GeoLAC), which took place in November 2022 in Mexico City. Geothermal drilling services under the PFTRG may be contracted by Mexican or international companies with experience in drilling wells in the past decade.

Leonardo Álvarez, Deputy Director, CFE, stressed the importance of projects like PFTRG to boost renewable energy production in Mexico. “This program reaffirms CFE’s commitment to remain one of the leaders in the international geothermal industry,” he said. 

SENER recently granted 22 permits for the exploration and extraction of geothermal energy, all for commercial purposes including construction, extraction, commissioning, production and processing works. Moreover, exploration permits were granted to gain greater geological, geophysical and geochemical knowledge of key geothermal areas in Baja California, Baja California Sur, Chiapas, Guanajuato, Jalisco, Michoacan, Nayarit and Puebla.

Mexico is the fourth country in the world with the highest production of geothermal energy, with an installed capacity of 958MW. According to data from the International Energy Agency (IEA), geothermal has a projected growth of 27.9% by 2035 on a global scale. Because the heat coming from the earth is constant, grid operators can benefit from geothermal energy’s stable supply and clean footprint.

Photo by:   Tommy Kwak - Unsplash

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