US Geothermal inks MoU on PPA for Guatemala project

Oct 29, 2012 - US Geothermal Inc (TSE:GTH) on Monday said it had signed a memorandum of understanding (MoU) to negotiate a power purchase agreement (PPA) for its El Ceibillo geothermal project in Guatemala.

The binding MoU has been inked between the company's wholly-owned unit US Geothermal Guatemala SA and an unnamed utility, described as one of the largest electricity distributors in Central America. It envisages a 15-year term for power generation of up to 50 MW annually as well as a project power price competitive with energy prices in the region, according to the announcement.

"This MOU is the framework for a PPA that will provide the necessary conditions to secure long term project finance and create attractive project economics," said US Geothermal chief executive Daniel Kunz.

The PPA is subject to several conditions precedent, including confirmation of the geothermal reservoir by an independent reservoir engineer, receipt of all permits and authorisations, as well as obtaining a project finance commitment.

The El Ceibillo project is located near Guatemala City. The plans are for a pilot 25-MW power plant using double flash steam technology. Production is expected in late 2015, contingent on successful drilling and financing.

Choose your newsletter by Renewables Now. Join for free!