International Best Practices for Geothermal DevelopmentWed, 02/19/2014 - 15:55
The International Geothermal Association (IGA) has created partnerships with 33 associations worldwide, the Mexican Geothermal Association included, to ensure that these new technologies reach the main geothermal energy markets. “Our task is to spread expertise and knowledge on the latest technologies, projects, regulatory issues, investment opportunities, capacity building options and on how geothermal energy contributes to mitigating climate change,” says Marietta Sander, Executive Director of the International Geothermal Association. “We also offer a networking platform for academia, private companies, international development partners, and public entities on both a national, global and individual level.” Organizations that strive to promote the development of geothermal activities and institutions, such as the World Bank and the International Renewable Energy Agency, also participate with the IGA in initiating regional projects. Raising awareness in the financial sector about the need to develop insurance schemes for the geothermal industry has also become one of the IGA’s priorities.
The biggest challenges that the global geothermal industry faces today include the relatively high investment costs for drilling operations and the risks that are inherent in the exploration phase. “Pre-feasibility studies are crucial when developing a project, and they require interdisciplinary teams to work on the reservoirs, test the conditions and thereafter design the power plant,” states Sander, who thinks that providing financial institutions with technical expertise would allow them to create tailored solutions for these projects. “For example in East Africa, the EU Infrastructure Trust Fund and the German Development Bank (KfW) promote the development of geothermal projects through an insurance scheme and a comprehensive technical development aid program.”
The IGA has researched, analyzed and compared the different regulatory frameworks and best practices in Germany, Iceland, Kenya and the Philippines, among other countries. Germany created a feed-in tariff system for geothermal energy in the early 1990s that provided a guaranteed price at which the electricity would be purchased for a defined period, guaranteeing a safe return for investors. In Iceland a very comprehensive monitoring and planning system for geothermal sites was developed. This was part of the country’s master plan for geothermal and hydropower development that ranks each project according to its economic and preservation value, taking into consideration the impacts, benefits, energy needs and nature of the project. A complex interdisciplinary monitoring scheme involves different public entities with the aim of preventing any damage to the geosphere, air, sea or any other area of the environment. The initiative started by Kenya’s government for the reform of the country’s geothermal sector is noteworthy. Through the program Kenya Vision 2030, 4GW of geothermal energy capacity is planned, which will be achieved by drilling 20 wells annually and putting 15 rigs into operation. This looks possible, given Kenya’s track record for training staff overseas, as well as inviting foreign experts to train on site. In the Philippines, incentives are oriented more towards creating tax and fiscal benefits for the private sector. “Foreign staff, as well as the import of specific equipment, does not incur any surcharge or import tax,” explains Sander. The government has also declared geothermal energy as being a priority sector for investment under the Philippine Geothermal Service Contract Law, with the aim of incentivizing the development of this industry in the country.
Looking at these examples, Sander concludes that in order to successfully develop geothermal energy in Mexico, capacity building is required. “As seen in Kenya, the initiative taken by the government to advance skills was a critical success factor,” she says. “The United Nations University Geothermal Training Program in Iceland has also been crucial in providing geothermal training to many sector professionals. Due to their geographic position, neighboring countries in Central America could easily work together and share technology and expertise. Mexico could play a leading role among Spanish speaking countries, since geothermal facilities have already been developed here.” Technology and expertise sharing in the region would go a long way towards increasing the competitiveness of the geothermal sector in Mexico. The Mexican government has played a key role in the development of the country’s geothermal sector during the past thirty years. The expertise that the country has accumulated and the implementation of best practices in Mexico combined can open up new areas of opportunity and position the country as a leader in development, as well as installed capacity. “I would like to encourage Mexico and the AGM to further share their geothermal expertise within Mexico and with the country’s neighbors in Central and South America,” advises Sander.