SAN VICENTE PACAYA, Guatemala (Reuters) - Dotted with active volcanoes, Central America is seeking to tap its unique geography to produce green energy and cut dependence on oil imports as demand for electricity outstrips supply.
Sitting above shifting tectonic plates in the Pacific basin known to cause earthquakes and volcanic eruptions, the region has huge potential for geothermal power generated by heat stored deep in the earth.
Geothermal power plants, while expensive to build, can provide a long-term, reliable source of electricity and are considered more environmentally friendly than large hydroelectric dams that can alter a country’s topography.
Guatemala, Central America’s biggest country, aims to produces 60 percent of its energy from geothermal and hydroelectric power by 2022.
The government is offering tax breaks on equipment to set up geothermal plants and electricity regulators are requiring distributors buy greater proportions of clean energy.
Some 1,640 feet below the summit of Guatemala’s active Pacaya volcano, which exploded in May, pipes carrying steam and water at 347 degrees Fahrenheit (175 degrees Celsius) snake across the mountainside to one of two geothermal plants currently operating in the country.
Run by Israeli-owned Ormat Technologies Inc, the plant harnesses energy from water heated by chambers filled with molten rock deep beneath the ground.
The company has been operating two plants in Guatemala for three years and wants to expand but is weighing the risks of drilling more costly exploratory wells.
“There’s a phase where you just have to drill and see,” Ormat’s representative in Guatemala, Yossi Shilon, told Reuters. “The problem is that you risk a very expensive investment and are not always satisfied with the results.”
Ormat’s project is only a 20 MW station but Guatemala says the country has the potential to produce up to 1000 MW of geothermal energy, a third of projected energy needs in 2022.
Other Central American countries are already forging ahead in this emerging technology.
More than a fifth of El Salvador’s energy needs come from two geothermal plants with installed capacity of 160 MW and investigations are being carried out to build a third.
Costa Rica, which has 152 megawatts of capacity in four geothermal plants, is due to bring a fifth plant online in January 2011 and is looking into building two more.
Nicaragua generates 66 MW from geothermal energy and in the next five years plans an increase to 166 MW.
Guatemala only produces a tiny amount of its own oil and spends about $2 billion a year on imports. The aim is to save money on energy costs and join international efforts to cut green house gas emissions, issues that will be on the table at global climate change talks this November in Cancun, Mexico.
Central America, heavily dependent on agriculture, is feeling the effects of extreme weather. Tropical Storm Agatha killed nearly 200 people in the region earlier this year.
The largely poor countries are highly reliant on hydroelectricity, the number two source of energy after oil, but environmental activists and energy experts say harnessing geothermal energy has distinct advantages over dams.
Hydroelectricity depends on rainfall and is vulnerable to hurricanes that can wash mud and debris into rivers and clog dams. Such storms are expected to increase in the frequency and intensity as the planet warms.
“With climate change there’s uncertainty over the future behavior of water resources,” said Eduardo Noboa, a renewables expert at the Latin American Energy Organization, or OLADE. “We’re going to see a vulnerability in hydroelectric systems.”
Dams, which can flood vast areas of land during their construction, are unpopular in rural areas where families rely on farming and have trouble finding arable land.
In Guatemala, hydroelectric projects have a haunted past after hundreds of Mayan villagers protesting the building of a dam on the Chixoy river were massacred by security forces in 1978 at the height of the country’s civil war.
The dam and its reservoir, which now generates around 15 percent of Guatemala’s electricity, displaced thousands of people in the country’s central highlands.
Geothermal plants by contrast are compact and companies, learning from the mistakes of the past, say they are making an effort to provide nearby towns with easy power access.
Additional reporting by Leslie Josephs in San Jose, Ivan Castro in Managua and Nelson Renteria in San Salvador; Editing by Mica Rosenberg and Missy Ryan