Chile – a hotspot for investment into geothermal energy?

What does a country do when it has almost 108 active and dormant volcanoes?

It drills down for steam.

Chile’s abundant geothermal potential provides a good renewable energy option to further diversify the country’s power generation mix – something consistent with Chile’s Energy Policy, which aims for at least 70% of national electricity generation to come from renewable sources by 2050.

Chile has long been the leader of Latin America’s renewable energy market. In 2015, investment in renewables, (including small hydropower projects of <50 MW) was around $2.6 billion.

The rate of growth of investment in renewable energy has increased in the past few years, and competition has lowered electricity costs.

“Chile has enormous potential, more than 1,865,000 MW of wind, solar and hydro energy and about 2,120 MW of geothermal power and an additional 2,000 MW of biomass. This represents about 100 times Chile’s current total installed power generation capacity.”, Chile’s Ministry of Energy

But geothermal energy is lagging. Chile’s only geothermal plant, Cerro Pabellón, which opened earlier this year, is South America’s first operating plant. The Government has tried to develop geothermal energy, but despite a promising start, several issues are preventing further investments in exploration.ESMAP’s Global Geothermal Development Plan (GGDP) was instrumental in mobilizing a US$50 million grant though the Inter-American Development Bank from the Clean Technology Fund (CTF) to stimulate additional investments in the sector. In addition, the CTF approved a grant of US$3 million through the Bank – of which US$1.78 is Bank-executed to provide technical assistance to the government in addressing key legal, social and market barriers and contribute to the development of tradeable geothermal resources.

In October 2016, renewable energy producers in Chile had won more than a 50% share of Chile’s power tender, with falling costs for renewables driving the average bid price down. This results will have an impact on Chile’s electricity system starting in 2022 and positioning geothermal energy to enter the electricity market will be crucial.

A key aspect of the project is bringing together the government and the geothermal industry to discuss the technical and economic impact of geothermal energy within the unified electricity system in Chile with an increasing intake of non-conventional renewable energy. To ensure that the government and the private sector remained committed to geothermal efforts, ESMAP supported a geothermal roundtable with the objectives of: (i) estimating the cost of geothermal energy in Chile; (ii) analyzing the impact of geothermal energy on the Chilean electricity sector, in the short and long term; and (iii) identifying potential policies to promote geothermal development. The results of the roundtable will be critical for the continued support to geothermal energy in terms of investment and policy.

Another main challenge Chile faces is garnering public support for energy projects. In the past, Chile has relied on imported fossil fuels and hydroelectric plants, sources that have proved both expensive and unpredictable and expensive in recent years and have been subject to public scrutiny. Communities have increasingly opposed energy projects based on their expected environmental and social impacts. Several large projects have generated public debate and large community protests. Even though geothermal energy could have important benefits, such as help stabilize and secure supply, and minimize environmental and social costs, public trust in its development still needs to be built to move geothermal projects forward.

“Developing geothermal technology allows Chile to meet its growing energy demand, provide energy security, in an environmentally sustainable manner, boost the country’s economic competitiveness and promote investments in remote rural areas, where poverty is more concentrated.”, said Alberto Rodriguez, World Bank Director for Bolivia, Chile, Ecuador, Peru and Venezuela. 

ESMAP also supported a study tour where Chilean government officials and indigenous communities visited Nicaragua to learn about the country’s experience with geothermal development. Discussions focused on how those living in geothermal project areas, including indigenous populations, can benefit from industrial services, employment and better connectivity, and other gains associated with the sector’s development. The exchanges with peers helped communities shift their mind-sets about geothermal and support its development.

  • To add to this, an ESMAP-funded study helped identify the main barriers to geothermal development and understand the magnitude of the challenge, and aims to help Chile to create a favorable enabling environment to boost investment in the geothermal sector. The study analyzed the measures required to stimulate the geothermal drilling market, with a focus on risk reduction in drilling activities for geothermal developers. The actions identified include:
  • Higher non-conventional renewable energy goals to include higher percentages of geothermal energy before 2025
  • Fiscal incentives in the first phases of project development as well as loan guarantees
  • Risk mitigation funds that provide capital during first phases of project development
  • Direct injection of capital during first phases of project development
  • Cost reductions due to reductions in rig crew and standby days of drilling operations
  • Regulation reform to shorten project development time
  • Increase in human resources in all relevant institutes that handle actions within the regulation processes, such as in the procurement of licenses and developing EIAs
  • Public aid to infrastructure in remote mountain areas
  • Information dissemination to all stakeholders within the geothermal industry, including private developers, the public, regional governments and agencies

Learn more about the ESMAP Renewable Energy Program.

Source: ESMAP


Five Million Commercial Customers Could Cut Costs with Energy Storage

The U.S. Department of Energy’s National Renewable Energy Laboratory and Clean Energy Group (CEG) have released the first comprehensive public analysis detailing the potential size of the commercial behind-the-meter battery storage market in the United States.

IHS Increases Global PV Installation Forecast For 2017

IHS Markit has made a significant upward revision to its forecast for solar PV installations in 2017, now predicting global installations to reach 90 GW – a 14% increase from 2016.

16086_483555418 IHS Increases Global PV Installation Forecast For 2017

According to a research note from IHS Markit analyst Josefin Berg, the biggest changes are seen in China, where a combination of positive revisions to policy support, a larger-than-previously-anticipated first-half of the year, and strong installations activity continuing into the third quarter has moved IHS Markit to raise its forecast for installations in the country to 45 GW in 2017.

Based on analysis of official connection statistics, as well as inverter and module shipments, IHS Markit estimates that 26 GW of installations were completed in China in the first half of this year and a further 12 GW will be installed in the third quarter.

Previously, it was predicted that Chinese installations would peak in the second quarter before declining in the third quarter due to the grace period allowing projects to receive the 2016 feed-in-tariff ending on July 1. However, IHS Markit says recently released PV connection data from the China Electric Council (CEC) reported that 34.9 GW of PV had been connected in China by the end of July (11.3 GW in July alone), indicating that installations had in fact continued into July and the third-quarter decline will be far softer than previously anticipated. IHS Markit’s revised forecast for installations in China in 2017 assumes that this official connection figure may not include several gigawatts of projects that may have been installed but not connected at the end of that period.

However, IHS Markit says this exceptional boom in demand in China has consumed a huge proportion of the global PV module supply, leading to increased prices and lead times that now extend into 2018. The latest installation forecast implies that the PV module supply chain is at the very upper end of what it can produce within a year. In reality, the final number of module shipments for 2017 is likely to be limited by the supply of polysilicon, IHS Markit adds. As a result of the tight supply, projects are being delayed and the short-term outlook in regions such as Japan, India and Latin America has been reduced. IHS Markit has cut its forecast for installations outside of China in 2017 by 7 GW.

Notably, IHS Markit says the outlook in the U.S. is not as heavily impacted as in other regions because the current rush to procure modules ahead of any potential trade action resulting from the Suniva trade petition focuses on securing tariff-free modules manufactured outside of Taiwan and China, which are unlikely to be used to serve demand in the China market.

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Wind energy cost reductions of 50% are possible by 2030

Editor’s note: This article was written by John Hensley and comes from Into The Wind, the American Wind Energy Association’s (AWEA) blog. 

Wind Farm

NREL released a new report finding wind energy cost reductions of 50% are possible by 2030.

Fresh off the first-ever American Wind Week, the Department of Energy (DOE) National Renewable Energy Laboratory (NREL) released a new report finding wind energy cost reductions of 50% are possible by 2030. That’s on top of the 66% cost reduction since 2009.

Envisioning the wind plant of the near-future – a ‘collection of intelligent and innovative machines operating in a highly coordinated way’ – NREL expects advancements in wind turbine design, materials, and controls to unlock major performance improvements and cost reductions.

Advanced turbines will produce significantly more electricity, allowing wind to provide the lowest-cost form of electricity in many states and regions, without any policy incentives. NREL’s findings demonstrate how the federal wind Production Tax Credit (PTC) is successfully driving economies of scale and efficiency improvements, and address concerns that wind power deployment will drop as the PTC phases down.

Wind cost projections
Prior to NREL’s report, the most recent evidence foreshadowing further wind power cost reduction came from a 2016 study funded by the DOE. Surveying experts around the world, that study found anticipated cost reductions ranged from 24 to 30% by 2030. Under more aggressive circumstances, experts predicted cost reductions as high as 40% as research and development programs and technology learning lead to additional efficiencies, as shown below.

Cost of Energy Comparison

Source: Lawrence Berkley National Laboratory

Building on these projections, NREL predicts a “SMART” wind plant of the future will be able to achieve even further cost reductions – up to 50% by 2030. The wind turbine of the future will be much larger, sit atop a taller tower, use next generation blades, and incorporate intelligent controls and remote monitors.

Towers reaching 135 meters will access more consistent wind resources, while next-generation blades stretching over 70 meters will help the wind turbine capture more of that resource as efficiently as possible. This will enable capacity factors over 50%, all while the installed cost per kilowatt falls and plant life expectancy grows.

Projected 2030

On an unsubsidized basis, these improvements and cost reductions will drive the levelized cost of wind energy from roughly $55/megawatt hour (MWh) in 2015 to $31/MWh in 2030.

Capital stack shifts to enable further cost reductions
Improvements in wind project financing structures will enable further cost reductions. Shifting away from equity to debt and using innovative financing mechanisms like yieldcos will reduce financing costs and the bottom-line cost of wind energy.

Recognizing this eventual shift to higher debt-to-equity rations, NREL estimates that the cheaper capital stack will unlock a further $8/MWh reduction in wind energy costs (falling from $31/MWh to $23/MWh on an unsubsidized basis) by 2030, as indicated below.

50% Reduction Pathway

Comparison to other findings
A number of presentations and market analyses this year confirm that the cost reductions NREL projects are achievable – and, in a few cases, too conservative.

Let’s begin with the Goldman Sachs Group Inc. In a recent report, the investment bank concludes that “the U.S. power sector already appears in the early stages of a technological mix revolution given a combination of political, technological, and now social tailwinds driving improved economics and demand for renewables.” Goldman predicts new wind and solar capacity of more than 200 gigawatts (GW) by 2030, primarily driven by economics.

Confirming the economic tailwinds for wind energy, Pattern Energy CEO Mike Garland forecasts wind energy prices will settle between $30 to $40/MWh as the PTC phases out and into the long term. The company is already seeing significant improvements in energy production and cost for wind projects the company is bidding for delivery post-2020.

Most tellingly, NextEra Energy Resources anticipates even more aggressive wind cost reductions. The largest owner of wind-power capacity in the U.S. expects wind power to be the lowest cost energy resource in the post-2020 period on an unsubsidized basis, ranging from $20 to $30/MWh.

Potential Cost

Source: NextEra Energy Resources

This aggressive cost trajectory is consistent with the industry’s history of beating even the most aggressive cost projections. In 2008, DOE predicted (page 148, converted to 2016 dollars) that the U.S. wind industry could reduce wind costs to $1,850/kW by 2030. By 2016, the industry had already beaten that projection and have driven costs down to $1,587/kW.

That 2008 DOE study also estimated that the best wind sites could reach capacity factors of 36% by 2015 and 38% by 2030. Wind projects installed in 2014 and 2015 have an average capacity factor of 42.6%, beating DOE’s 2030 target by a wide margin 15 years early.

Progress towards the wind-power plant of the future is predicted to unlock substantial additional cost reductions. In 2030, NREL expects unsubsidized LCOEs to range from $19/MWh to $32/MWh, with the central expectation at $23/MWh. At these cost levels, wind energy will be competitive with all other energy sources across much of the U.S., providing a win-win for consumers and public health.

Windpower Engineering & Development

‘Near-pefect’ solar absorber highlights bright outlook for UAE’s sun-powered future – The National

The National

‘Near-pefect’ solar absorber highlights bright outlook for UAE’s sun-powered future
The National
For example, as reported in The National in 2014, a British company called Oxford Photovoltaics found that adding a layer made from calcium titanium oxide minerals called perovskites significantly improved performance. Dr Zhang’s research was funded …