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Caribbean Islands Fight High Electricity Costs with Geothermal Energy

In recent months, a number of companies have announced plans to develop geothermal energy projects at locations across the Caribbean, including Nevis Island, Dominica and St. Vincent. Why is the Caribbean such a promising region for the development of geothermal energy facilities? And what are the prospects for the expansion of the geothermal sector across the region?

Nevis Island

The electrical supply across much of the Caribbean is generated by expensive and polluting oil- or diesel-fired generators, prompting many of the governments across the region to look for alternative sources of energy.  Although renewable energy sources such as wind and solar help to reduce carbon emissions, they are viewed by many in the region as providing a supply that is too intermittent — and have also been criticised for tending to be more expensive than fossil fuel generation methods.  

According to Bruce Cutright, chief technology officer at Nevis Renewable Energy International (NREI), the Leeward Islands and the Eastern Caribbean are all “ideally positioned” for geothermal energy development — primarily because they lie near and above two continental plate boundaries where volcanic activity has created high temperature reservoirs “at sufficiently shallow depths to make their development reasonably practical and economically competitive with some other generation methods.”

"Because of this apparently plentiful resource base, we expect some of the islands to transition to geothermal energy generation.  However, drilling and power plant construction is expensive and requires significant investment horizons.  There will be no quick transition," said Cutright.

In an effort to exploit this potential, whilst simultaneously reducing costs and emissions, the Nevis Island Administration is currently in the process of contracting with NREI to provide the island with a more reliable supply of geothermal power.  As Cutright explained, the Island of Nevis is “blessed with an attractive source of geothermal energy” that, at least at this stage, appears to be able to be developed “at a reasonable cost that will result in an electricity cost savings to the Island Government and to the population.”

Although there is still some work to be completed to define the physical characteristics of the geothermal reservoir on the island, Cutright believes that the most appropriate technology to use on the Island will be flash steam generators. 

"High temperature steam will be produced from the deep geologic reservoir, directed through a steam turbine that will turn an electrical generator to produce electrical power," he said.

Challenges

Final contracts for the Concession and Power Purchase Agreement with the Island's utility company NEVLEC are not yet complete, and Cutright stressed that it is too premature to talk about specifics. But he admitted that “it would be the intent of the Nevis Island Government and the electrical utility to work cooperatively with NRE International to produce electricity at a geothermal generating facility, distribute this power through the existing transmission network on the island, to serve the people and the industry on the island of Nevis.”  He also warned that the similar projects across the Caribbean are likely to face a number of financial, institutional and physical challenges.

"Because of the small size of the markets on each island, it is somewhat more difficult to attract the capital investment necessary to construct and operate geothermal power plants," he said.

"The institutional challenges are many and varied, but the most common issue is that many of the island electrical utilities are locked into long term contracts that have no incentive for the power producers to develop more economical methods of generation," he added.

In spite of this, Cutright said that the Nevis Island Administration “has had the forethought to see the opportunity to restructure their generation methods by already adding wind as an important renewable component.” He revealed that it now intends to add geothermal “as both a renewable component and base load power supply,” whilst also maintaining diesel generators “as peaking and standby power supplies.”

“There is still much work to be done to characterize the geothermal resource on the Island, but initial estimates are that the resource on Nevis may be large enough to attract adequate capital investments, and the geographic location close to nearby islands may allow Nevis, if the reservoir capacity were to prove large enough to supply other islands, to expand the service area. Nevis is, therefore, potentially uniquely positioned for success.  Some of the other Leeward Islands, in general, have similar attributes, and therefore similar opportunities," he added.

Ultimately, NREI believes that the Nevis Island Project is a “gateway project” for geothermal energy development in the Caribbean — and that Nevis will serve as an example for other islands to follow.

Iceland Drilling Company (IDC)

Elsewhere in the Caribbean, IDC is currently developing two exploratory geothermal energy projects on Dominica and Montserrat (image, right) to investigate the possible geothermal resource on each island — followed by a drilling program to drill production wells for geothermal electricity production.  As Sturla Birkisson, senior vice president at Iceland Drilling Company, explained, the next stage will involve the set up of a steam turbine by an independent electricity developing company.

"Iceland drilling is not offering that part of the project, only the 'well construction' part of it.  We will drill further wells if needed for further steam harvesting and for fluid injection," he said.

According to Birkisson, each project is being developed as a way for the communities on the islands to utilize local resources “to become independent of the import of fossil fuels to produce electricity from diesel generators.”  

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If sufficient geothermal resources are found to be present at the sites, he believes that each project could eventually save the local population valuable money — but warned that, in order to maximise these benefits, government's will need to develop resources themselves, or negotiate a fair price with a responsible developer “that puts some value to the community and supports the growth of it and stimulates its development.”

"Geothermal is different from other renewable energy [like] solar and wind because in runs 24/7, [and] not as the wind blows or the sun shines," he added.

Local Ownership

Both the Dominica and Montserrat projects went out to tender on the international market, but Birkisson pointed out that IDC came up with the best offer.   In his view, this was largely due to its ability to develop an “integrated project management solution," which involves the company "bringing in rig and crew,” sourcing and delivering all the necessary materials to the project and drilling the complete well, as well as carrying out the individual services needed for this type of project, such as cementing, casing running, logging and finally erecting well testing equipment to test the outcome.  However, although the projects rely heavily on IDC expertise and equipment at these early stages, Birkisson stresses that the ultimate aim is to transfer ownership to the island's themselves.

"These islands are in need of electricity from the renewable resources they seem to have. They should be guided to develop it and keep the ownership of it to use this to support the community on these islands and possibly neighbouring islands," he said.

"Imagine when they can cool the day's catch of fish — that will eventually open up the opportunity to process and export fish and create value.  Something that is not possible with current electricity made from expensive diesel.  [Other] examples of community’s that benefit from cheap local geothermal electricity [include] Iceland and the Azores," he added.  

For Birkisson, a key advantage of the Caribbean for geothermal energy developers is that it is located near an area where continental plates either drift apart or crush into each other, which can create an exploitable geothermal resource. 

"The Islands can be self sufficient with local power, and power independence is the biggest issue of all nations.  I sure hope Iceland Drilling can, with its geothermal expertise, contribute to the economic development of this best form of renewable energy," he said.

Although he believes that there is a brighter future for the exploitation geothermal energy than many people realise, he admited that the biggest hurdle “is the exploration cost to prove the resource.”  In this light, he argued that government money and international funds are needed to mitigate the financial risk and cover the initial costs in the form of soft loans in case exploratory projects prove unsuccessful. 

"Given the significance of the exploration phase, one should be careful in selecting reservoir and geological advisors.  Also, an experienced drilling contractor can be of value, especially if the expertise of one is allowed as part of the team," he said.

Reykjavik Geothermal

In another Caribbean project, Icelandic company Reykjavik Geothermal, alongside Canadian power company Emera, is currently evaluating the possibility of developing a 10– to 20-MW geothermal power plant in St. Vincent. Gunnar Örn Gunnarsson, chief operating officer at Reykjavik Geothermal, explained that the island “has a very active volcano and there is a high probability of developing a geothermal power plant there successfully.”  

Surface exploration work has just been conducted and although it will take several months to analyze the data to be able to predict the quality and size of the resource, the company is optimistic that the results will be positive.

"Today, St. Vincent & the Grenadines (SVG) is relying on diesel generated energy — and the cost is very high.  The aim of this project is to get a reliable, sustainable, renewable geothermal energy that will have some cost benefits.  But for SVG it remains to be seen if such a project is viable as it is too early to tell," said Gunnarsson. "The technology to be used in the project has not been decided on, something that is only done after you have steam on the ground after drilling, when you know more about the resource.  But the usual solution for high enthalpy resource is a single flash condenser unit."

Looking ahead, Gunnarsson is convinced that the future of geothermal energy in the Caribbean “is very bright,” and he believes that there is a “high probability that a good portion of all energy needs on the islands could come from geothermal resources, which with interconnection could benefit many of the islands.” 

Images courtesty IDC

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