Is geothermal power losing steam in Peru?

Development of Peru’s geothermal power potential, estimated at 3GW, has experienced a setback with the planned departure of the company farthest advanced on this front in the country. 

In a regulatory filing, Philippine group First Gen said that its subsidiary Energy Development Corporation (EDC) Peru will “no longer pursue exploration and development activities in Peru due to political and market factors.” 

Read Peru: New Faces, Same Conundrum, featured in BNamericas’ May Political Risk Report

EDC’s work in Peru was focused on environmental permitting for the Achumani project in the southern region of Arequipa. The developer’s other project is Quello Apacheta in neighboring Moquegua region.

Although further information was not disclosed, and BNamericas was unable to contact EDC Peru, several factors would help add color to the company’s decision.

“Lack of experience and knowledge when modeling geothermal energy within a medium and long-term energy plan is what, in my opinion, has hindered its development in Peru,” Franklin Acevedo, who had been EDC’s country manager until recently, according to his LinkedIn profile, told BNamericas previously. 

Issues related to environmental permitting, the high upfront cost of exploratory drilling to prove the resource, and a six-to-seven-year construction period also have stymied this renewable source from gaining traction in Peru, amid calls for greater government engagement. 

Uncertainty related to the launch of a new public auction for renewable energies, and whether geothermal would be included in this process, has been another obstacle, coupled with the nation's push to tap its natural gas abundance and focus on solar and wind.

[insight#258798089]

Peru's energy and mines ministry issued the last geothermal exploration authorization in 2013. The authorizations for EDC’s projects were granted in 2011. 

Much of the geothermal evaluation that has been carried out in Peru by authorities has been conducted by metallurgical, mining and geology institute Ingemmet. 

Read: Ingemmet holds a meeting with the Minem, Regional Government of Tacna and EGESUR, to promote geothermal energy in the country and Perupetro open to geothermal ‘synergies’

 

Source: Osinergmin