From The World Bank

Overwhelmed by oil prices, could exploring geothermal energy help the small islands of the Eastern Caribbean to reduce their electricity costs.

Instead of scaring people, the energy released by earthquakes and volcanoes could soon jump-start cars, power lamps and fuel machinery.

This is especially true on the small islands of the Caribbean where, in addition to paradisiacal beaches, they may also be sat on an underground source of energy which could prove to be an answer to the expensive and unsustainable consumption of fossil fuels.

Seven Eastern Caribbean countries have a huge potential for geothermal energy generation, which could be confirmed by more detailed exploration, according to a study by the World Bank. For example, on the island of Guadeloupe, for example, the La Bouillante power station is already generating 15MW by means of geothermal energy.

Resources in this region remain unexplored, but experts suggest that the exploitable commercial potential could reach a combined total of 850MW. Although estimates vary considerably.

Once developed, this energy could really offer the islands an alternative energy source, one which is clean, economical and less vulnerable to external elements like climate change. What’s more, it could offer a reliable energy supply at stable prices – a highly sought after advantage for Caribbean businesses, who bear the burden of the large, monthly fluctuations in their electricity bills.

At the mercy of oil

Today, electrification goes hand in hand with development, but in many parts of the Caribbean and Central America, this access to this basic service is becoming increasingly costly due to their dependence on oil. More than 90% of their primary energy needs come from fossil fuels, a third higher than the regional average and twice the global level.

And while countries like Brazil and Mexico enjoy large and diverse renewable energy sources to satisfy their electricity needs, the small countries in the Eastern Caribbean are increasingly at the mercy of the unpredictable oil market.

The first challenge for the OECS countries is their high dependence on oil to generate electricity. In St Lucia 100% of the supply comes from oil,” explains Migara Jayawardena, Senior Infrastructure Specialist for the World Bank

On average, island states like those in the Eastern Caribbean collectively spend over US$67 million a day on oil tp supply all their energy needs. But with prices in constant flux, any increase is passed on to the customer, raising the price of an already expensive utilities, eating into businesses’ bottom line and reducing quality of life for Caribbeans.

The result: some of the highest electricity prices in the world and economy which is losing competitivity.

An energy gold mine

This method of extracting energy from volcanoes and movements in the Earth’s crust, has already had success in seismic and volcanic zones where the resources are available like Indonesia, and it has the potential to revolutionize the energy sector in Latin America and, in particular, the Eastern Caribbean.

Globally, the potential for geothermal energy is over 75 times the global electricity consumption in 2011 according to figures from International Energy Agency.

On average, each Latin American used 2045.5 kwh of electricity in 2010 according to the World Bank, almost 4 times more than in Sub-Saharan Africa but a mere fraction (15%) of the per capita consumption in the United States. Geothermal energy is already proving to be a viable alternative in countries like Mexico and Nicaragua, where they are already taking advantage of the steam which surges from the beneath the Earth’s crust generate electricity, with the support of the World Bank.

It’s enough to see a geyser shooting steam into the air, to understand just how much energy lies dormant under our feet. Geothermal power stations aim to harness these powerful jets.

By drilling in highly seismic areas, like the Eastern Caribbean, underground water reserves are heated by the magma to create steam, which then drives the turbines and generates electricity. Later, the water is injected back in to the reservoir to keep the cycle alive.

Balancing the books

“In Central America and the Caribbean, renewable energy sources, investment in energy efficiency, and increased regional integration with countries endowed with a more diversified supply, would amount to an average improvement in the current account balance of approximately 1.6 percent of GDP,” highlighted Ariel Yepez, Senior Energy Specialist for the World Bank.

But as much as it appears to be the perfect solution, geothermal energy isn’t a free pass. Unlike an oil well, which can be detected before digging down, the only way to know whether geothermal energy is viable is to drill through the Earth’s crust.

And unlike oil powered power stations, which require regular fuel purchases, almost everything is paid up front with geothermal energy. . From the consumer’s point of view, this is a great advantage and clears the path for lower and more stable electricity prices, since you only need to pay back the initial investment and costs don’t vary.

On average, a 10mgw geothermal plant costs between US$ 60-70 million. After decades of growth below the regional average, such a large initial investment is far beyond the reach of the highly indebted economies of the Caribbean, especially since there is no guarantee that the resulting boreholes will be useable or not.

One of the solutions that the World Bank report proposes to take these big investments to the next level is the creation of alliances between the public and private sector in the Eastern Caribbean along with more studies to determine how much investment is needed to successfully develop this technology.

IMAGE: View of the Soufriere Hills volcano on the island of Montserrat