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International Geothermal Market Set for Development Boom but Challenges Remain

What’s the next big opportunity for geothermal? According to panelists at last week's Renewable Energy World North America international geothermal session, it’s emerging markets. Kicking off the two-hour discussion, special guest Agnes Dasewicz of the U.S. Agency for International Development (USAID) explained the Power Africa initiative, which launched in June 2013. USAID is attempting to unlock energy growth in six countries: Kenya, Tanzania, Ghana, Nigeria, Liberia, and — of particular interest to the geothermal crowd — Ethiopia.

Power Africa has committed more than $7 billion for infrastructure investment and technical assistance, and the private sector has committed more than $14 billion, which has mainly come from African financiers. Dasewicz said that investment banks such as Ex-Im and OPEC are very open to discuss and support geothermal development in resource-rich Africa.

Craig O’Connor of Ex-Im Bank confirmed that the Power Africa initiative will help move development along. “The will and the resource is there, but you've got risk elements. African governments do not like to give financial guarantees, but we need assurance from them. With Power Africa, we hope to get these guarantees in place.”

O’Connor pointed to India’s National Solar Mission as a prime example of effective market development.  “They offered a guaranteed power purchase agreement, and now they have over 1 gigawatt of solar happening. The opportunity is there, we just need to step in a put the financing together.”

Taking a broader look at the international industry, Ben Matek of the Geothermal Energy Association (GEA) discussed the vast growth opportunities that he highlighted in his recent International Geothermal Market Overview released by the GEA in October 2013. The global geothermal market has shown signs of steady expansion, and is expected to reach 12,000 megawatts (MW) of capacity by the end of 2013. This constant growth has been at a rate of about 4 percent each year, which according to Matek is considerable compared to the 1 percent growth in U.S. demand. 

Though most U.S.-based companies in 2011 and 2012 were focused on the domestic market, Matek said, many of these same companies have switched gears and are now following the emerging market trend. This has led to significant progress in developing areas such as Africa, Latin America and the Asia Pacific region. 

Despite this huge potential and gradual growth, Halley Dickey of TAS Energy noted some significant challenges that are preventing rapid expansion. 

“[These countries] want to take advantage of their unbelievable geothermal resources — the Congo alone has enough resources to power the entire globe — but they don’t have the resources to develop it. That is where we come in.” 

Suppliers and developers must be prepared to do business with these countries, however. “[Companies] need patience to go work in Africa or Indonesia and the tenacity to hang in there,” Dickey said. Many companies in these emerging markets are unfamiliar with drafting power purchase agreements (PPA) and various financial and permitting mechanisms, so it may take some time to educate all parties involved and finally accomplish deals. 

“It takes initiatives like USAID, it takes political will, it takes companies like those that are sitting in this room to join together to from a structure to support what they want to do. I want to see some kind of facilitation. We need to Come together and not have 100 companies doing their own thing,” said Dickey. “If we are slowed down here in the U.S., it doesn't matter — there is plenty to go do overseas.”

Lead image: Caution sign via Shutterstock

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