Latin America boasts rich geothermal energy resources, offering promising avenues for producing clean energy, decarbonizing industrial processes, and strengthening energy security. Despite these favorable conditions, only a small portion of its potential has been exploited, with only 2 gigawatts (GWe) of the total potential of 33 GWe currently being utilized. The bulk of this usage comes from Mexico, Costa Rica and El Salvador, which together account for approximately 75% of existing production capacity.
Rystad Energy predicts that geothermal investment in Latin America will soar in the coming years, rising from about $570 million this year to $1.3 billion by 2027. This growth is the result of an expected increase in operating capacity from approximately 950 megawatts of electricity (MWe). ) to more than 1.4 GWe. This rapid expansion is being driven by announced projects and government goals.
Despite this short-term optimism, in the long term the project pipeline remains constrained by conditions associated with geothermal fields, where locations are often inaccessible and make infrastructure development difficult. I am. Additionally, even if good land is found, it may be far from power lines and require expensive new construction to connect to the grid.
The increase in geothermal power capacity in Latin America by 2030 is largely driven by government targets, with existing projects achieving nearly two-thirds (67%) of these overall targets. The remaining third (33%) requires new projects that have not yet been announced. However, growth is expected to slow from 2030 onwards, as government roadmaps currently lack a strong priority for geothermal energy.
Latin America’s geothermal potential faces a dual challenge. It’s a fight against established, low-cost renewables like solar and wind in deregulated markets, as well as the large initial investments required for exploration and infrastructure. But even within these hurdles, promising opportunities arise. Geothermal brines offer a cleaner lithium extraction alternative to commonly used environmentally harmful extraction methods. This presents an opportunity to take advantage of the region’s rich natural resources and improve overall operational efficiency.
Shruti Raghuram, Rystad Energy Senior Analyst
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Mexico stands out as a leader in Latin America’s geothermal region, leveraging its rich reserves through initiatives led by its national power company, the Federal Electricity Commission (CFE). CFE has been at the forefront of geothermal development, overseeing impressive facilities such as the 570 MWe Cerro Prieto and the 240 MWe Los Azufres. Together, they contribute significantly to Mexico’s total capacity of 1 GWe.
Costa Rica follows closely behind, with a total of 320 MWe. Here, Grupo ICE is playing a key role in advancing geothermal projects such as the 90 MWe Las Pailas and the 185 MWe Miravalles. El Salvador ranks third, with radio-run projects such as Berlin and Ahuachapan contributing significantly to the total of 211 MWe.
Nicaragua, Guatemala, Chile, Honduras, Argentina, Bolivia and Colombia follow, with installed capacity gradually decreasing compared to Mexico. However, pilot projects such as Sol de Manaana (Bolivia), Las Maracas (Colombia) and the Caldas project (Colombia), a collaboration between Ecopetrol, Baker Hughes and Grupo EPM, are underway in these regions. It shows potential for exploration and further development. El Salvador lags behind the top two countries in the region (Mexico and Costa Rica) with a total installed capacity of 230 MWe.
Geothermal development may have additional potential beyond traditional power generation applications. The technology has the potential to revolutionize lithium production, especially in reserves-rich regions such as Chile, Argentina and Bolivia. The Atacama, Salta, and Salar de Uyuni regions are rich in lithium deposits, but current extraction methods raise environmental concerns. Geothermal brine extraction offers a cleaner alternative and has the potential to reduce land use, water consumption, and emissions issues.
Major geothermal projects such as Cerro Pabellón, Laguna Colorada and Tuzgul Tocomar are strategically located near these lithium-rich areas. This proximity not only allows access to geothermal brines but also facilitates the development of direct lithium extraction (DLE) projects. Similar to using existing highways, geothermal efforts can be seamlessly integrated with nearby lithium mining operations, streamlining supply chains and reducing costs.
By harnessing geothermal brine for lithium extraction, these countries can make the most of their natural resources and strengthen their position in the global lithium market. Additionally, integrating lithium extraction and geothermal energy production will improve operational efficiency and sustainability. Waste heat from geothermal power plants powers the extraction process, reducing energy consumption and costs.
This dual approach to renewable energy and lithium production has the potential to drive economic growth while advancing global sustainability goals. The “lithium triangle” between Chile, Argentina and Bolivia could emerge as a central player in the green energy transition. However, the ability to realize these benefits depends on technological advances, regulatory frameworks, and market trends.
by Rystad Energy
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