Regulate to Develop Geothermal Power

 

Summary: 

Development of sources of geothermal power and heat from the earth's underground is both costly and risky and therefore requires a regulatory framework that defines the rights and responsibilities of the different stakeholders involved. The Eastern Caribbean countries of Dominica, Saint Kitts & Nevis, and Saint Lucia possess rich, undeveloped geothermal resources while at the same time facing critical electricity supply challenges, with prices among the highest in the world (approaching US$0.30/kWh). A multi-year initiative (Geo-Caraïbes), funded by the Global Environment Facility (GEF), was recently launched to overcome the lack of appropriate policies and regulations in order to attract competent commercial developers.

 

The idea: 

The lack of development of indigenous energy resources is often a primary drain on the economies of many small island developing states (SIDS), including those of the Eastern Caribbean such as Dominica, Saint Kitts & Nevis, and Saint Lucia. In many of the islands, imported fossil fuel for electrical generation and transportation accounts for a startling one-third of their GDP. Despite the abundance of renewable natural resources - including geothermal - the Eastern Caribbean island states have to date been unsuccessful in transforming these resources into commercial power sources.

The objectives of the Geo-Caraïbes Project are to overcome the barriers to the development of geothermal power, and to implement a regional strategy that will create the conditions for the successful development of one or more commercially viable geothermal power plants in the Eastern Caribbean. The resulting electricity from this generation will supply the countries where the projects are located, and will offer the opportunity to supply power to the neighbouring French islands - Guadeloupe and Martinique - via submarine cable. The project is funded by the GEF and implemented by UNEP, the Organization of Amedrican States and L'Agence Francais de Developpement (AfD) and will run from 2003 till 2010.

Among the most significant barriers to the commercial development of geothermal energy has been the lack of transparent and enforceable policies and regulations. Such policies and regulations must address key issues including:

 

  • Governance of the geothermal resource;

  • Access to land;

  • Rights for Independent Power Producers in an otherwise monopolistic utility structure;

  • Arrangements for long-term Power Purchase Agreements (PPAs); and

  • Rights and responsibilities with regard to the environment, safety, and labor.

 

The Project has developed partnerships among energy stakeholders - including the government, electric utilities, energy consumers, and commercial associations - to prepare legislative measures to be adopted by the Project countries when resource assessment and financing tools are established. These regulative measures will provide for the equitable treatment of project developers, ensuring that their investments are protected and that they are provided reliable and fair compensation for their risks. Likewise the measures will ensure the protection of the environment, preservation of the geothermal natural resources, and the appropriate compensation for host governments.

So far, draft policies have been prepared for each participating country. Implementation of the comprehensive resource evaluation, establishment of the Drilling Risk Fund, and adoption of policies and regulations is pending (GEF Full Project Phase).

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