| Title | Geothermal Costs and Policy Impacts in Chile and Latin America |
|---|---|
| Authors | B. van Campen, P. Sanchez-Alfaro, S. Puschel-Lovengreen, P. Dobson |
| Year | 2016 |
| Conference | New Zealand Geothermal Workshop |
| Keywords | GEOTHERMAL COSTS AND POLICY IMPACTS IN CHILE AND LATIN AMERICA |
| Abstract | Chile (and in its wake, many of the other Andean countries) has one of the largest unexploited geothermal potentials in the world. Geothermal exploration in Chile has been going on for more than 100 years. Although more than 60 geothermal exploration concessions have been granted, many fewer projects have progressed to receive exploitation concessions, and no project has achieved commercial production. At present the first project in Apacheta (Cerro Pabellón) is being developed for commissioning in 2017 (48 MWe). Costs and regulation/policies are among the main barriers mentioned regularly. In contrast to countries like Indonesia (see Darma et al., 2016), Chile and Latin America have very liberal, market-oriented (geothermal) policies, with an emphasis on NCRE-credits, drilling insurance, and lowering of ‘red tape’ barriers. Little systematic modelling has been done on what the impact of these could be on geothermal costs. This article provides detailed look at cost factors for geothermal in Chile, building on an economic model to calculate geothermal Levelized Costs of Energy (LCOE) against different scenarios of electricity prices and expected rates of return on investment. The main aim is to estimate the impact of policies at different levels of geothermal project development through a simple economic model. The model therefore incorporates the different geothermal project phases, and emulates the monetary impact of different types of policies. The resulting model is compared with preliminary data the authors have gathered for Chile. A discussion follows what this type of modelling could mean, how the model and data could be improved and what lessons from the Chilean example could be applied to other Andean countries. |