June 2012: The Energy Sector Management Assistance Program (ESMAP) of the World Bank has published a report titled “Drilling Down on Geothermal Potential: An Assessment for Central America,” which analyzes the potential of geothermal energy for electric power generation in Central America, addresses the main barriers to its development, and provides region- and country-specific policy recommendations.

The report finds that, given the high cost of competing electricity generating technologies, the cost of geothermal energy in the six countries under scrutiny – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama – is very competitive. The report mentions, however, that experience among the countries varies and depends on the development path taken.

The report further identifies the main challenges associated with the development of geothermal energy generation, including: the financial resources needed to confirm the resource potential of specific sites; the financing of exploration, production and injection wells, and power plant development; the legal and regulatory framework; the lack of a comprehensive inventory of geothermal resources with high quality data; environmental and social impacts; and power sector planning. The report concludes with country-specific policy recommendations, as well as the suggestion for the six countries of the Central American region to engage in regional power planning and risk sharing mechanisms.

The report is the fourth part of a World Bank series titled “Central America Programmatic Energy Studies,” which focuses on the electricity subsector. Previous modules of the series included: general issues and options; managing an electricity shortfall; and structural and regulatory challenges to regional power integration. [ESMAP Press Release] [Publication: Drilling Down on Geothermal Potential: An Assessment for Central America]