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Geothermal Development Boosts Economy

Arenal Volcano in Costa Rica

Central America ranks among the world’s top countries in terms of the share of installed geothermal energy and has the potential for 20 times the currently installed capacity. (IRENA, 2017)

Large capital expenditure is required in the early stages of any geothermal project. Where geothermal energy is extracted for electricity generation purposes, the cost of electricity is subsidized. This works well for the pockets of the end consumer.

For the implementation of any geothermal development project, job creation cannot be forgotten. Therefore, from its conception to production, a geothermal project for electricity generation includes the input and services of investors, government officials, regulatory bodies, auditors, economists, environmentalists, a management and marketing team, legal professionals, geophysicists, engineers, drilling contractors, logistics personnel, operations and maintenance crews and a utility commission. In other words, all hands on deck are required to ensure the success of such a venture.

The number of professionals employed under such a project is representative of the significant economic impact geothermal development brings to a country through capacity building, increased global presence, and partnerships, and boosted GDP via the vision of increased energy independence and a greener alternative.

Geothermal Boosts Economy - Costa Rica
A great example would be Central America, which currently ranks among the world’s top countries in terms of the share of installed geothermal energy, has the potential for 20 times the currently installed capacity. (IRENA, 2017)

Gurbuz Gonul, Acting Director of Country, Support, and Partnerships at IRENA (2017) was quoted saying, “Central America holds some of the world’s most promising geothermal resources, that if utilized can help the region secure and deliver, inexpensive electricity while stimulating low-carbon economic growth.”

For reference, the region’s leading countries with the highest geothermal capacity are Costa Rica – 207 megawatts (MWe), El Salvador – 204 MWe and Nicaragua – 155 MWe (ThinkGeoEnergy, 2018). Geothermal power could satisfy nearly double the region’s predicted electricity demand through 2020. Expansion of geothermal in the region is hampered by several barriers, including a lack of adequate policies and regulations for the use and development of geothermal resources.

“Geothermal energy has proven to provide stable and affordable electricity, and offers flexibility through the direct use of geothermal heat in domestic, commercial and industrial sectors,’ added Mr. Gonul of IRENA.

With a focus on the challenges of network integration of intermittent electricity sources, namely wind and solar, it should be of utmost importance how to integrate the various geothermal power plants of the region in El Salvador, Costa Rica and beyond – particularly with further development efforts in other countries of the region.

With geothermal power, transmission lines provide opportunities for electricity transmission covering intermittency of other sources of electricity, while creating additional income.

This concludes our top-level look at how geothermal development impacts on the economies of each country.

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Co-Author, Elizabeth Bullock and Patrick Hanson