INDUSTRY WATCH

LATIN AMERICA ’ S GEOTHERMAL POTENTIAL FACES A DUAL CHALLENGE : CONTENDING WITH ESTABLISHED , LOW-COST RENEWABLES SUCH AS SOLAR AND WIND IN A DEREGULATED MARKET , WHILE GRAPPLING WITH THE SIGNIFICANT INITIAL INVESTMENT REQUIRED FOR EXPLORATION AND INFRASTRUCTURE .

Despite these favorable conditions , only a fraction of its potential has been harnessed , with a mere 2 gigawatts electrical ( GWe ) currently utilized out of a total potential of 33 GWe . government targets , with existing projects fulfilling nearly two-thirds ( 67 %) of these collective goals .

The remaining third ( 33 %) will require new , yet-to-beannounced projects . However , beyond 2030 , growth is expected to slow as government roadmaps currently lack strong prioritization for geothermal energy .

Shruti Raghuram , Senior Analyst , Rystad Energy , said :

The bulk of this utilization comes from Mexico , Costa Rica and El Salvador , which collectively account for about 75 % of the existing capacity .

Now , Rystad Energy forecasts show geothermal investments in Latin America are set to spike in the coming years , rising from about $ 570 million this year to $ 1.3 billion in 2027 .

This growth is said to be a result of an expected increase in operational capacity from about 950 megawatts electrical ( MWe ) to over 1.4 GWe – a rapid expansion is fuelled by announced projects and government targets .

“ Latin America ’ s geothermal potential faces a dual challenge : contending with established , low-cost renewables such as solar and wind in a deregulated market , while grappling with the significant initial investment required for exploration and infrastructure . Yet , amid these hurdles , a promising opportunity arises . Geothermal brine presents a cleaner alternative for lithium extraction , countering the environmentally harmful extraction methods typically employed . This presents an opportunity for the region to harness its abundant natural resources and enhance operational efficiency across the board .”

The resulting report says that despite this short-term optimism , the project pipeline in the longer term remains constrained due to conditions relating to geothermal sites , with locations often being hard-toreach , making infrastructure development difficult .

Furthermore , even if a good site is found , it may be far from power lines , requiring expensive new construction to connect it to the grid , the report says .

According to the report , Latin America ’ s geothermal capacity growth by 2030 is almost solely driven by

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