THE REPUBLIC OF PERU MINISTRY OF ENERGY AND MINES THE REPUBLIC OF PERU THE MASTER PLAN FOR DEVELOPMENT OF GEOTHERMAL ENERGY IN PERU FINAL REPORT February 2012 JAPAN INTERNATIONAL COOPERATION AGENCY (JICA) WEST JAPAN ENGINEERING CONSULTANTS, Inc. ILD JR 12-013 Map of Peru Master Plan for Development of Geothermal Energy in Peru Final Report ABBREVIATIONS Abbreviation Description Regional Conservation Area Vilacota Maure ACRVM (Área de Conservacion Regional Vilacota Maure) National Water Authority ANA (Autoridad Nacional de Agua) Enterprise for the Administration of Electric Infrastructure ADINELSA (Empresa de Administración de Infraestructura Eléctrica S.A.) Protected Natural Areas ANP (Áreas Naturales Protegidas) a.s.l. above sea level Committee for the Economic Operation of the System COES (Comité de Operación Económica del Sistema) Energy and Environment Protection Center CENERGIA (Centro de Conservacion de Energía y del Ambiente) Electricity Tariffs Commission CTE (Comisión de Tarifas Eléctricas) DEFENSORIA Customers Protection (OSINERGMIN branch) General Directorate of Environmental Affairs DGAA (Direccion General de Asuntos.Ambientales) General Directorate of Energetic Environmental Affairs DGAAE (Dirección General de Asuntos Ambientales Energéticos) Directorate General of Electricity DGE (Dirección General de Electricidad) Regional Directorates of Energy and Mines DREM (Direcciones Regionales de Energía y Minas) EIA Environmental Impact Assessment National Fund for the Financing of State Entrepreneurial Activities FONAFE (Fondo Nacional de Financiamiento de la Actividad Empresarial) Division of Tariff regulation annexed to OSINERGMIN GART (Gerencia Adjunta de Regulación Tarifaria) GOP Government of Peru Concessions and Cadastral Institute INACC (Instito Nacional de Concesiones y Catastro Minero) National Institute for the Defense of Competition and Intellectual Property INDECOPI (Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual) Institute of Geology, Mining and Metallurgy INGEMMET (Instituto Geológico Minero y Metalúrgico) National Institute of Natural Resources INRENA (Instituto Nacional de Recursos Naturales) Peruvian Nuclear Institute IPEN (Instituto Peruano de Energía Nuclear) Japan Bank for International Cooperation JBIC (Banco del Japón para Cooperación Internacional) JETRO Japan External Trade Organization Japan International Cooperation Agency JICA (Agencia de Cooperación Internacional del Japón) JICA i WJEC Master Plan for Development of Geothermal Energy in Peru Final Report Ministry of Economy and Finance MEF (Ministerio de Economía y Finanzas) Ministry of Energy and Mines MEM (MINEM) (Ministerio de Energía y Minas) Minister of Agriculture MINAG (Ministerio de Agricultura) Ministry of Environment MINAM (Ministerio del Ambiente) MT Magneto telluric Social Impact Management Office OGGS (Oficina General de Gestion Social) Organization of Supervising for Investments in Energy and Mines OSINERGMIN (Organismo Supervisor de la Inversión en Energía y Minería) Citizen Participation Plan PPC (Plan Participacion Ciudadana) Renewable Energy Resources RER (Recursos Energéticos Renovables) Electric National Interconnected System SEIN (Sistema Eléctrico Interconectado Nacional) National Service of Natural Protected Areas SERNANP (Servicio Natural de Áreas Naturales Protegidas) National System of Protected Natural Areas State SINANPE (Sistema Nacional de Áreas Naturales Protegidas por el Estado) National System of Public Investment SNIP (Sistema Nacional de Inversión Pública) SRTM Shuttle Radar Topography Mission TOR Terms of Reference UTM Universal Transverse Mercator, geographical coordinate system JICA ii WJEC Master Plan for Development of Geothermal Energy in Peru Final Report TABLE OF CONTENTS I STATUS AND TASKS FOR GEOTHERMAL DEVELOPMET .................................................3 I-1 Energy Sector ...........................................................................................................................3 I-1.1 Energy Sector and its Policy..............................................................................................3 I-1.2 Competent Organizations ..................................................................................................5 I-2 Electricity Sector ......................................................................................................................5 I-2.1 Power Sector Reform ........................................................................................................5 I-2.2 Legal Framework and Related Institutions ........................................................................6 I-2.3 Power Supply and Demand Situation ................................................................................8 I-2.4 Power Supply Structure................................................................................................... 15 I-2.5 Tariff Structure................................................................................................................ 16 I-2.6 Policies of Power Sector ................................................................................................. 18 I-3 Promotion of Renewable Energy Development ....................................................................... 21 I-3.1 Background .................................................................................................................... 21 I-3.2 Laws for Promotion of Electricity Generation with Renewable Resources ....................... 22 I-3.3 Other Laws and Regulations to Promote Utilization of Renewable Energy Resources ...... 25 I-4 Legal Framework for Development of Geothermal Resource .................................................. 25 I-4.1 Organic Law of Geothermal Resources ........................................................................... 25 I-4.2 Organizations Related to Geothermal Development......................................................... 26 I-4.3 Definition of Geothermal Activities................................................................................. 26 I-4.4 Request of Authorization................................................................................................. 27 I-4.5 Legal Framework on Natural and Social Environmental Concerns .................................. 31 I-5 Status of Geothermal Development ........................................................................................ 43 I-5.1 Geothermal Resource Assessment ................................................................................... 43 I-5.2 Current Status of Geothermal Rights Applications ........................................................... 45 I-5.3 Current Status of Geothermal Development System and Organization ............................. 49 I-6 Status of Multi-purpose Use of Geothermal Energy ................................................................ 52 I-6.1 Worldwide Direct Use of Geothermal Energy .................................................................. 52 I-6.2 Examples of Multi-Utilization of Geothermal Resources in South America ..................... 53 I-6.3 Multi-Utilization of Geothermal Resources in Peru ......................................................... 54 I-7 Issues to be Solved for Promoting Geothermal Power Developments ...................................... 54 II MASTER PLAN .......................................................................................................................... 56 II-1 Recommendations and Action Plan......................................................................................... 56 II-1.1 Target for Geothermal Power Development ..................................................................... 56 II-1.2 Legal and Organization Framework for Geothermal Power Development ........................ 81 II-1.3 Recommendations on Assistance and Incentives for Promotion of Geothermal Development .................................................................................................................. 86 II-1.4 Environmental and Social Considerations Preservation for Geothermal Power Development .................................................................................................................. 94 II-1.5 Suggestion on Multi-purpose Use of Geothermal Energy .............................................. 106 II-1.6 Action Plan for Geothermal Development ..................................................................... 111 II-2 Geothermal Development Database ...................................................................................... 115 II-2.1 Objectives of Construction of Database ......................................................................... 115 II-2.2 Specification of Database .............................................................................................. 115 II-2.3 Data and Information in Database ................................................................................. 118 II-2.4 Linkage to other Database ............................................................................................. 119 II-2.5 Management and Update of Database ........................................................................... 120 JICA iii WJEC Master Plan for Development of Geothermal Energy in Peru Final Report II-3 Geothermal Development Plan ............................................................................................. 121 II-3.1 Evaluation Criteria for Prioritization