Geothermal energy already accounts for 7.5% of the Central American electricity mix, with installed capacity still far below the estimated potential.

Central America's volcanic activity and tectonic movements offer optimal conditions for the region's small countries to take advantage of an alternative energy source to imported hydrocarbons or an ever more polluting coal. At the moment, the installed capacity -largest in Costa Rica and El Salvador- is barely 15% of the most likely estimated potential.

▲ San Jacinto-Tizate geothermal plant in Nicaragua [Polaris Energy Nicaragua S. A.] [Polaris Energy Nicaragua S. A.].

article / Alexia Cosmello

Central America currently has an installed geothermal capacity of 645 megawatts (MW), far from the potential attributed to the region. This may reach, in the highest band of estimates, almost 14,000 MW, although the most likely estimates speak of around 4,000 MW, which implies a current utilization of approximately 15%, according to data of the World Bank published in 2018.

The energy obtained constitutes 7.5% of the total electricity generation in Central American countries: a not insignificant figure, but one that still needs to grow. Forecasts point to an expanding sector, although attracting the necessary foreign investment has so far been limited by the risks inherent in this industry and national legal frameworks.

Geothermal energy is a clean, renewable energy that does not depend on external factors. It consists of harnessing the heat of the earth's interior - high temperature resources in the form of hot subway fluids - for electrical and thermal generation (heating and domestic hot water). It is governed by the magmatic movement of the earth, which is why it is a scarce resource and limited to certain regions with a significant concentration of volcanic activity or tectonic movement.

Latin America

These characteristics of the American isthmus are also shared by Mexico, where the geothermal sector began to develop in the 1970s and has reached an installed capacity of 957 MW. The friction of the tectonic plates along the South American and eastern Caribbean coast also gives these subregions an energy potential, although less than that of Central America; its exploitation, in any case, is small (only Chile, with 48 MW installed, has really begun to exploit it). The total geothermal potential of Latin America could be between 22 GW and 55 GW, a particularly imprecise range given the few explorations carried out. Installed capacity is close to 1,700 MW.

The World Bank estimates that over the next decade, Latin America would need an investment of between US$2.4 billion and US$3.1 billion to develop various projects, which would add a combined generation of some 776 MW, half of which would correspond to Central America.

Attracting private capital is not easy, considering that since the 1990s the Latin American geothermal sector has had less than US$1 billion in private investment. Financing difficulties are partly related to the very nature of the activity, as it requires a high initial investment, which is high risk because exploration is laborious and it takes time to reach the energy production stage. Other aspects that have made it less attractive have been the policies and regulatory frameworks of the countries themselves and their deficiencies in the local and institutional management .

Geothermal energy, in any case, should be a priority for countries with high potential such as Central America, given that, as the International Renewable Energy Agency (IRENA) points out, it constitutes a low-cost electricity generation source and also stimulates low-carbon economic growth. For this reason this organization has order to the governments of the Central American region to adopt policies that favor the use of this valuable resource , and to develop legal and regulatory frameworks that promote them.

The World Bank and some countries with particular technological expertise are involved in international promotion and advice. Thus, Germany is carrying out since 2016 a program of development of geothermal potential under the German Climate Technology Initiative (DKTI). The project cooperates with the development Geothermal Fund (GDF), implemented by the German development bank KfW, and the Central American Geothermal Resource Identification Program, supported by the German Federal Institute for Geosciences and Natural Resources (BGR). goal The initiative is also supported by the German Agency for International Cooperation (GIZ), which has organized technical courses, together with business LaGeo, located in El Salvador, for geothermal plant operators, teachers and researchers at subject, with the aim of achieving a better management of the installations and a more efficient development of the energy projects.

By country

Although Central American countries have shown a high dependence on imported hydrocarbons as energy source , in terms of electricity generation the subregion has achieved an important development of renewable alternatives, put at the service of all members of the Central American Integration System (SICA) through the Electrical Interconnection System for Central American Countries (SIEPAC). The executive director of the administrative office General of SICA, Werner Vargas, highlighted at the beginning of 2019 that 73.9% of the electricity produced at the regional level is generated with renewable sources.

However, he indicated that in order to cope with the growing electricity demand, which between 2000 and 2013 increased by 70%, the region needs to make greater use of its geothermal capacities. Greater integration of geothermal energy would save more than 10 million tons of CO2 emissions per year.

The share of geothermal energy in the electricity mix varies from country to country. The highest share corresponds to El Salvador (26%), Nicaragua (15%) and Costa Rica (12.5%), while the share is small in Honduras (3%) and Guatemala (2.5%).

In Costa Rica, the Costa Rican Electricity Institute (ICE) delivered last July the Las Pailas II geothermal plant, in the province of Guanacaste, at a total cost of US$366 million. The plant will contribute a maximum of 55 MW to the electric network , so that when it is fully operational it will raise the total installed capacity in the country from 207 MW to 262 MW.

Costa Rica is followed by El Salvador in electricity generation from geothermal energy. The national leader in production is business LaGeo, manager of almost all of the 204 MW installed in the country. This business has two plants, one in Ahuachapá, which produces 95 MW, and the other in Usulután, with a production of 105 MW. With lower electricity consumption than Costa Rica, El Salvador is the Central American country with the highest weight of geothermal generation in its electricity mix, 26%, double that of Costa Rica.

Nicaragua has an installed capacity of 150 MW, thanks to the geothermal interest of the Pacific volcanic mountain range. However, production levels are clearly below, although they account for 15% of the country's electricity generation. Among the geothermal projects, the San Jaciento-Tizate and Momotombo projects are already being exploited. The first one, exploited by business Polaris Energy, was built in 2005 with the initial intention of producing 71 MW, to reach 200 MW by the end of this decade; however, it is currently producing 60 MW. The second, controlled by business ORMAT and the participation of ENEL, was promoted in 1989 with a capacity of 70 MW, although since 2013 it has been producing 20 MW.

Guatemala is slightly behind, with an installed capacity of 49 MW, followed by Honduras, with 35 MW. Both countries recognize the interest of geothermal exploitation, but have lagged behind in promoting it. And yet the Guatemalan government's ownprograms of study highlights the profitability of geothermal resources, whose production cost is US$1 per MW/hour, compared to US$13.8 in the case of hydroelectric power or 60.94 percent for coal.