Carlo Zorzoli - IASS Potsdam

Enel Green Power
EGP Geothermal Experience in Latin America.
Status and Lessons Learnt
IASS Workshop – Renewable Energy Perspectives in Latin America
Carlo Zorzoli – Head of Business Development – Latin America
October 1 st , 2012

Enel Green Power
International footprint as of December 31st, 2011
Operation
7,079 MW
Generation 22,480 GWh
Operation
3,583 MW
Construction 1,913 MW
Generation12,584 GWh
Construction 386 MW
Operation
Generation
Construction
1,010 MW
2,921 GWh
681 MW
Installed capacity
EGP presence in 16 countries
Operation 2,486 MW
Generation 6,975 GWh
Construction 846 MW
2,540 MW Hydro
3,541 MW Wind
769 MW Geothermal (*)
101 MW Solar
2
128 MW Other
(*) Not including strategic participation in LaGeo (204 MW installed
capacity in El Salvador

Market scenario: Technology
Global Renewables Installed Capacity – GW (2000 – 2030)
CAGR:
+5.0%
YoY:
+6.8%
YoY:
+8.5%
CAGR:
+7.3%
CAGR:
+5.9%
TOTAL
792 1,230 1,313 1,425
2,687
4.770
Geo
Biomass
CSP
745 979
1,005
1,034
1,339
1.543
1.511
PV
2000
157
58
2009
194 60
39
2010
234
71
69
2011
686
408
2020
133
1.200
181
Wind Off.
Wind On.
Hydro
2030
Ø 250 bn € of investments in over 110GW of new renewable capacity in 2011
Ø Solar PV plants accounted for 45%, wind for 25% of global investments in 2011
Source: Enerdata, WEO 2011 (World Energy Outlook published annually by the International Energy Agency), EER (Emerging Energy Research), GWEC
(Global Wind Energy Council), EWEA (European Wind Energy Association), EPIA (European Photovoltaic Industry Association), NREAPs (National
Renewable Energy Action Plans), REN 21, National targets, EGP estimates

Geothermal value chain
Enel Green Power
Project Development/
Finance
Resource Confirmation
Exploration &
Drilling
Plant
design/
construction
Plant
operation
R&D
• Land/Concessions
• Interconnection
• Low Enthalpy
• Permitting
• PPAs ()
• Drilling target
identification
• Reservoir
evaluation
• Vertical and
deviated wells
• Flow testing
• Design
• Procurement
• Construction
• Optimized georesource
management
(reservoir and
power plant) for
sustainable
exploitation
• Hybrid
system
• Plant
improvement
• Acid gas
components
abatement
• Production wells
drilling
• Standardization
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The Italian Larderello example
Italy is the only country to
generate geothermal
electricity until 1958, date of
the New Zeland’s Wairakey
power plant startup
Innovative technics:
• Deep drilling 3000-4000 m
• Reinjection / Injection
• Wells stimulation
Steady generation increase
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The US Geysers example
Source: FIFTY YEARS OF POWER GENERATION AT THE GEYSERS GEOTHERMALFIELD, CALIFORNIA – THE LESSONS LEARNED
Subir k. Sanyal, Steven l. Enedy
Thirty-Sixth Workshop on Geothermal Reservoir Engineering Stanford University, Stanford, California, January 31 - February 2, 2011
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Geothermal in LatAm
Significant potential across the
region
Significant installed capacity in
Mexico and selected Central
American countries
Lack of capacity in South America
despite significant development
activities in Chile and Peru and, to a
lesser extent in Ecuador and
Colombia
Source: IGA
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Chile
Cumulative number of concessions granted
80
70
60
50
40
30
20
Exploitation
Exploration
• Over 70 concessions granted
• Average concession extension:
• 430 km 2 (exploration)
• 50 km 2 (exploitation)
• Total concessions area:
• ~ 31,000 km 2
10
0
2006 2007 2008 2009 2010 2011 2012
An outstanding number of concessions granted in the last few years
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Chile
Cumulative number of concessionaires
12
10
8
6
4
2
Number of deep commercial size wells
4
3
2
1
0
2004 2006 2008 2010 2012 2014
0
2006 2007 2008 2009 2010 2011 2012
• Number of concessionaires increases
• Just few (2) of them drilled deep
commercial size wells
• Only 7 deep commercial size wells
drilled to date in just 3
exploitation concessions
• 5 out of 7 drilled by EGP
• Slim holes drilled to date 15
Out of 11 concessionaires, just 2 of them have actually drilled commercial size
wells in order to confirm feasibility of the resource, the so called Exploration &
Drilling phase
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Chile
1 potential project, three
concessionaires
Despite an important number of concessions awarded, the way they have
been defined does create potential conflicts and paves the way for a
repetition of the tragedy of the commons
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EGP Geo program Chile: status (I)
Deep exploration: two projects
1. Cerro Pabellón
• Drilled four exploratory wells è Resource confirmed.
• Environmental permit for power plant granted
• Environmental permit for interconnection line on going.
2. El Zoquete
• Drilled one exploratory deep well in 2009 with great results.
• Project suspended by the authorities following an accident at reinjection “Well 10”. A
subsequent investigation accredited EGP with having resolved the issue correctly and
with not having damaged either the environment or the local geysers. Development
still on hold due to expected permitting problems.
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EGP in Chile: Pioneer in Geothermal exploration
A new industry for the country
Developing a sustainable local market for
geothermal supplies …
Principle materials &
services
Wellheads
Present Sourcing …
Being an industry PIONEER
involves at the beginning higher
costs and longer time.
Casing
Casing accessoriess
Perforation equipment
… in a climatic & logistical challenge …
>350km from Antofagasta
4500 m a.s.l.

El Salvador
LaGeo Strategic Investor
2002 EGP awarded an international public
tender to select the strategic investor
in El Salvador state owned geothermal
generator LaGeo
.
2002-2006 thanks to EGP involvement in
LaGeo management and know-how
and best practices transfers La Geo
sees an improved performance
2007 EGP delivers the Berlin III 44MW
unit in exchange of shares in
LaGeo
2008 INE/CEL does not recognize EGP
right to subscribe capitalk
increases in LaGeo – International
arbitration
2011 EGP wins arbitration, INE/CEL still
does not comply pending appeal
Production Installed
capacity
2002 740GWh 150MW
2011 1,4TWh 204MW
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How to accelerate geothermal development
q Why
- Market fails to price geothermal benefits
- Market tends to uniform capacity expansion
q How
- Appropriate mix of supporting schemes
- Not just a matter of “how much” but predictability,
stability, ease of permitting process, efficiency of public
administration, risk mitigation
q Who
- Energy mix is a strategic long term decision that should
be set at national level and have bypartisan support
- Initial support by the state helps the industry to take-off
- Private sector more efficient in implementing the national
strategy, letting market forces work
An appropriate
regulatory framework
and support policies
can promote
geothermal energy in
an effective way and
with long term benefits
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Concrete measures to accelerate geothermal development
RISK
MITIGATION/ACTIONS
Long term
remuneration
Permitting
Concessions
Selection of
concessionaires
Support
schemes
Facilitate long term PPAs to support upfront investments.
Government needs not to be the offtaker, but rules shall be in
place to allow proper diversification of energy mix (e.g. tenders
for technologies, quota for technology, etc.)
Simpler process, strategic EIA to permit a long term plan of
development of geothermal fields with flexibility in lay-out and
size in order to take into account information gathered during
drilling phase
Increase size of concessions in order to have one
concessionaire for possible reservoir
More stringent selection criteria, based on actual MW developed
and operated
Grants for the first projects in order to start a new industry
Risk sharing mechanisms, for instance via “insurance” for dry
wells during construction phase
Infrastructure public funding (roads, interconnection lines)
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Enel Green Power
Thank You!
Carlo Zorzoli
Head of Business Development – Latin America
Enel Green Power S.p.A.
carlo.zorzoli@enel.com
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