Key Components of Legal Framework

• 1. Ownership and access to geothermal resources

• 1.1 What are the rules on ownership of geothermal resources? Can private parties hold ownership of geothermal resources?

  The Law No. 19,657 provides that geothermal energy belongs to the State but may be explored and extracted by private parties holding a geothermal concession. Only under a geothermal exploitation concession, the geothermal concessionaire is entitled to use, produce and sell geothermal energy existing within the relevant geothermal concession area. Under a geothermal exploration concession, the geothermal concessionaire may only undertake studies and other research or exploration activities.

• 1.2 Who can grant access to geothermal resources, only state or also landowner?

  The application for a geothermal concession has to be filed before the Ministry of Energy, either directly or through an offer filed in a public tender process.

  The geothermal concessionaire does not need tenure on the land that covers the geothermal project because it has the right to impose the necessary easements for the development of its project. The constitution of easements and the compensation for any damage caused by the concessionaire to the owner of the surface land, or any other person, is determined by agreement among the parties and, in subsidy, by courts. In the latter case, during the judicial procedure the concessionaire may request to the judge a provisional authorization to use the surface land as a provisional easement, provided that it secures the payment of compensation that may rise.

  However, in the case of houses and their appurtenances, or lands where vineyards and fruit trees are planted, only the owner may grant the permit to obtain easements and surface rights.

• 1.3 Is exploration/exploitation open to foreign investment?

  Both exploration and exploitation is open to foreign investment through a legal entity duly incorporated in Chile.

  As a general rule, investors wishing to bring foreign currency into the country shall do it through an entity member of the Formal Exchange Market (FEM), comprised of commercial banks operating in Chile and other entities expressly authorized by the Central Bank.

  In general terms, there are no currency controls restricting the repatriation of capital, the repayment of debt, or the making of profit distributions or other payments to a non-Chilean shareholder, member or partner of a local joint venture.

• 2. Involvement of administrative bodies

• 2.1 Which administrative bodies (ministry and/or governmental agencies) are involved in the licensing of geothermal resources, including licensing and developing?

  The Ministry of Energy is the administrative body that issues geothermal concessions, but it may require a report from other administrative bodies (i.e. Water Bureau, National Forest Corporation, National Indigenous Development Corporation, National Geology and Mining Service, among others) to inform about the geothermal concession within their scope of power.

  On the other hand, the exploitation of a geothermal project is likely to require, in addition to the geothermal concession, other administrative permits such as an environmental approval resolution and sectorial authorizations, such as construction permit, sanitary permits and so on. These permits are granted by different administrative bodies such as the Environmental Authority, the Municipality and the Sanitary Authority.

• 2.2 Do administrative bodies assign any of their respective roles to a third party, including but not limited to a peer review, during the period of exploration, exploitation and/or production of geothermal resources?

  As it was explained, prior to granting or denying a geothermal concession, the Ministry of Energy may request reports from diverse administrative bodies. Such reports may back or not the granting of the corresponding geothermal concession.

  There are other administrative bodies that may assign part of their roles related to geothermal projects to a third party, as the environmental inspection activities (i.e. the Superintendence of Environment may assign part of their inspection faculties to companies certified for those purposes).

• 2.3 Is there a government policy in place concerning geothermal resources? If so, what is the object and to what end?

  An initiative called “Mesa de Geotermia” was launched at the end of 2016 by the Ministry of Energy together with the World Bank. The aim of this initiative is to identify all relevant actors, both from the public and private sector, involved in geothermal environment. In addition, this initiative is addressed to review, analyze and propose alternatives to make the geothermal industry viable in Chile and incorporate geothermal power supply to the Chilean energy matrix.

  The horizon of analysis covers up to the year 2050 and the short-term operation is focused on years 2025 and 2035.

• 3. Allowed Exploitation

• 3.1 Is exploitation of resources subject to licensing? Do landowners have the right to exploit recourses without a license? If yes, to what extent?

  The only way to exploit geothermal resources is through an exploitation concession (in addition to environmental approval, construction permits, and other necessary permissions). These requirements are also obligatory for the landowner. 

• 4. Role and voice of landowner or “project affected people” in the licensing procedure and land lease agreements

• 4.1 Does the landowner or any “project affected people” have a role in the process of granting a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  Within the process for granting a geothermal concession, there is a specific term in which the landowner can file claims or comments to the Ministry of Energy about the damage caused by the geothermal project to him/her. This right is not applicable for the granting process of an exploitation concession that has been preceded by an exploration concession.

  In relation to the power plant, the environmental impact assessment considers specific participation mechanisms in which the landowner may be included.

• 4.2 Will an opposition of a landowner or any “project affected people” have a bearing on the process of granting a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  The claims and observations submitted by the landowner in the granting process of a geothermal concession can be responded by the applicant within the term of 60 days. After that term, the Ministry of Energy decides if the geothermal concession is granted or not.

  Most of the claims are rejected either because the law establishes the mechanism to resolve such disputes (i.e. compensations) or the legal requirements are not complied with. In addition, the Ministry of Energy may require relevant agencies (i.e. Water Bureau, National Forest Corporation and Indigenous Issues Agency, among others) to inform within their scope of power.

  Regarding the environmental approval of the power plant, the landowner’s and the community’s observations in the environmental impact assessment process are not binding on the authority but persons whose observations have not been duly taken into consideration within the grounds of an environmental approval resolution are entitled to challenge such environmental approval resolution by filing an administrative claim. The administrative decision of such claim may be challenged before the Environmental Court.

• 4.3 Are the terms of land lease agreements regulated and if so, (i) what is a general timeframe of land lease agreements and (ii) what are the obligations for decommissioning at the end of the term?

  Geothermal resources can only be explored or exploited under the referred concessional regime, being the land covered by the geothermal concession subject to the easements indicated in Law No. 19,657. The constitution of such easements, their exercise and the corresponding indemnity has to be agreed between the interested parties. If no agreement is reached, a judicial ruling establishes the limits, conditions and indemnity of the corresponding easement.

  Notwithstanding the aforementioned, a lease agreement, which terms are not fixed by Law, can be freely negotiated and reached between interested parties, instead of an easement. However, the beneficiary of an easement is better protected than the lessee since under Chilean Law easements are in-rem rights. easements are provides.

  Regarding decommissioning obligations, there are no specific obligations for geothermal projects. This means that the decommissioning obligations will be the ones established in general civil regulation and the ones stated in the corresponding lease agreement. Please note that there is no general regulation for the closure of projects under Chilean Law. Mining is the only activity that has its specific closure regulations. Other industrial activities are subject to general regulation and to the obligations and conditions stated in the corresponding environmental approval resolution, if applicable.

• 5. Criteria for granting of a license

• 5.1 Which documents need to be submitted and what is the criteria for obtaining a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  In order to obtain a geothermal concession, the application must contain: (1) the identification of the applicant; (2) financial and commercial information of the applicant; (3) the background of the applicant in similar projects; (4) the identification of the applying concession (exploration or exploitation, or exploitation preceded by an exploration concession); (5) the location, extension and dimension of the geothermal concession, and a map with the corresponding geographical information; and (6) the general, technical and economic information of the geothermal project, as well as the planned investment for its execution.

  The Ministry of Energy may grant, partially reject or totally reject the geothermal concession according to the fulfilment of the geothermal concession with the legal and regulatory requirements.

  In order to participate in a public bidding process for obtaining a geothermal concession, the bidder must have a minimum capital of 5,000 UF if it is a person, or a minimum capital of 10,000 UF if it is a legal entity (UF is a unit of account adjusted to inflation. Currently, one UF is equal to USD 38 approx.). In addition, the bidder must include the requirement (6) aforementioned.

  The power plant may require several permits (i.e. environmental, sanitary, municipal), depending on its features (capacity, location, construction, and so on).

• 6. Duration of Licenses and Renewal

• 6.1 What is the maximum duration of a license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) power plant (generation license)?

  The maximum duration of an exploration concession is two years, extendible for another two years if the 25% of the investment for the project is materialized. Exploitation concessions are indefinite; and power plants’ environmental authorizations are restricted to the term established in the specific permit. 

• 7. Terms of License

• 7.1 What are the general terms of the license for:
     (i) exploration,
     (ii) exploitation, and
     (iii) exploration drilling and other drilling,
     (iv) power plant (generation license)?

  The exploration concessionaire will be entitled to develop exploration activities within the concession area, considering perforation and measurement of gradient wells and deep exploratory wells.

  The exploitation concessionaire will be entitled to develop exploitation activities within the concession area, considering perforation, construction, commissioning and operation of an extraction, production and transformation system of geothermal fluids into thermic or electric energy.

  Geothermal concessions may be transferred to third parties, totally or partially, and granted as security. They are also transmissible due to death.

  From the effective date of the concession the surface lots where the territorial extension covered by the concession is located will be subject to occupation, electric and transit easements, whose constitution, exercise and compensation may be agreed between the parties or set by court order if no agreement is reached.

  Also, the concessionaire has the right of exploitation, consumptive and of continuous exercise, of the subterranean waters illuminated in the works of exploration or exploitation.

  If any activity for which a concession, right or permit was granted after the effective date of the geothermal concession affects the exercise of the latter, the holder of the first must carry out the necessary works to remedy such situation or compensate the patrimonial damage actually caused.

  The holder of the geothermal energy concession can defend its concession by all the means that the law passes, both with respect to the State and individuals, exercising for that purpose the actions that proceed, such as the claiming or possessory, and collect, in addition, the relevant compensations.

  The concessionaire can impetrate from the competent judge the precautionary, judicial or prejudicial measures, destined to the conservation and defense of his concession.

  The concession for the exploitation of geothermal energy will be covered by compliance with the obligations established for the concessionaire in the concession decree and the payment of an annual patent, for tax benefit.

  The terms to which a power plant is subject depend on several permits (i.e. environmental, sanitary, municipal), depending on its features (capacity, location, construction, and so on).

• 7.2 Are exploration license holders granted pre-emptive rights with regards to exploitation or do exploration licenses automatically convert into exploitation licenses if the resource has been substantiated? If so, are there any conditions?

  The concessionaire of an exploration concession has an exclusive right to obtain the exploitation concession in the respective exploration area. This right may be required to the State during the term of the exploration concession and up to two years after it expired through an app.

  The exploitation concession and the environmental approval for a power plant are separate permits (both mandatory, if applicable).

• 7.3 Is an exploitation license included in a power plant license or are these licenses separate?

  To carry out exploitation activities, an exploitation concession is required. To generate geothermal power, additional permits are required. The permits required for the construction and operation of power plants depend on the project.

• 7.4 Are there any encumbrances in place for the licence holder to keep a license, once granted?

  The concessionaire has to comply with the obligations and conditions established in the corresponding concession’s decree and pay the annual fee (tax).

• 8. Termination and revision of licenses

• 8.1 What actions by the license holder would warrant revision of exploration-, exploitation- and power plant (generation) licenses?

  The Ministry of Energy carries out an annual revision of the geothermal concession based on the report provided by the geothermal concessionaire. In addition, if the geothermal project holds an environmental approval, it may be revised if, upon execution of the project, the variables assessed and foreseen in the follow-up plan which were the base of conditions or measures, have materially changed or have not been verified, so as to adopt the measures required to remedy such situations.

• 8.2 Does the license granting authority license have the power to revoke or terminate licenses? If yes, what actions of the license holder would warrant the termination of the license?
     (i) exploration license,
     (ii) exploitation license,
     (iii) power plant (generation license)?

  The exploration concession expires after two years (extendible for another two years, if applicable), and may also terminate if the annual fee is not paid or if the concessionaire renounce totally or partially to it.

  The exploitation concession is indefinite, but it expires if two consecutive annual fees are not paid or if the exploitation concessionaire does not undertake the exploitation works although he/she could have done them under reasonable conditions of profitability.

• 8.3 Can the license granting authority set forth conditions into licenses which provide for (i) stricter terms and conditions of licensees or (ii) more lenient terms and conditions for licensees, when such terms and conditions (whether stricter or more lenient) are not otherwise provided for by law?

  The License Granting Authority grants or rejects a geothermal concession depending on its compliance to the legal and regulatory requirements. There is no space for administrative discretion in the terms under which the concession is granted.

  Before the geothermal concession is granted, the License Granting Authority may modify some aspects of the geothermal project that was filed in the geothermal concession application in order to comply with legal requirements (e.g. the size of the land applied for). Once the geothermal concession is granted, only the holder of such concession is able to apply before the Ministry of Energy for a modification of the terms and conditions of the geothermal concession, which the Ministry of Energy can accept or reject based on the framework established by law and only under founded reasons.

  Regarding the environmental permit of the geothermal project, it may be exceptionally reviewed after its approval where, upon execution of the project, the variables assessed and foreseen in the follow-up plan which were the base of the conditions of the environmental permit have materially changed, so as to adopt the measures required to remedy such situations.

• 8.4 What remedies does the License granting authority have in order to enforce compliance to the terms and conditions of a license, other than by revoking the license?

  There are no remedies to enforce compliance to the terms and conditions of a geothermal concession other than revoking the license, except for the non-payment of the annual fee, which is increased in a 10% when it is not paid every March plus a 5% additional charge for each month delayed.

  In addition, the Superintendency of Environment may carry out on-site visits (by its own or through the relevant agencies) in order to supervise the execution of the geothermal project and/or the compliance with the corresponding environmental permits.

  Finally, please note that once the power plant is generating electricity, the Superintendency of Electricity and Fuels supervises the compliance of the electrical regulation, and the Economic Load Dispatch Center coordinates and supervises the safety and quality of the service provided by power plants.

• 9. Regulatory and information obligation

• 9.1 Briefly outline the surveillance carried out by the regulatory authorities during the license period, e.g. with regards to reporting duties and/or on-site visits.

  The Ministry of Energy supervises the execution of the project according with the activities and investments committed in the application of the geothermal concession.

• 9.2 Which information is required to be submitted to regulatory authorities during the license period for the holder of a license for:
     (i) exploration,
     (ii) exploitation,
     (iii) power plant (generation license)?

  The geothermal concessionaire is required to report annually to the Ministry of Energy the completing of the geothermal project. This report must include the activities and investments executed in the project in each year. In addition, the start and finish of every drilling work for the geothermal project has to be reported to the Ministry of Energy.

  In case the geothermal project has an environmental approval, specific information of the project has to be reported to the Superintendency of Environment.

  Finally, please note that once the power plant is generating electricity, the Center of Economic Load Dispatch may require information from the project holder relating with the performance of the power plant.

• 10. Power purchase agreements

• 10.1 Are general terms and conditions, such as duration of Power Purchase Agreements regulated? If no, are there any soft law or general recommendations in place in your jurisdiction?

  Wholesale sales of electricity (whether through Power Purchase Agreements (“PPAs”) or simply into organized markets) is largely deregulated and subject to limited review by FERC, as discussed above. Terms and conditions, including prices, of PPAs are not generally regulated as part of the geothermal regulatory regime.  

• 10.2 What is the permitted or general duration of PPA's?

  Agreements. From our experience, the duration of this type of agreements varies from 8 to 20 years.

• 10.3 Are public and/or national regulatory authorities involved in any way in forming the terms of PPA's, either directly or indirectly?

  The National Commission of Energy carries out the bidding processes for energy supply to distribution companies and establishes their rules. The terms and conditions of the Power Purchase Agreements are usually established in advance in the bidding rules.

• 11. Incentives

• 11.1 Is there any governmental support or funding available for exploration activities?

  Currently, there is no specific governmental funding for geothermal exploration activities.

  From a non-governmental source, last year the Geothermal Development Facility for Latin America awarded a grant of Surface Studies for Chile.

• 11.2 Are there any incentives offered by the government or local authorities for utilization of geothermal energy? If yes, in what form (e.g. tax and/or feed-in tariffs) and what are the maximum amounts permitted?

  The incentives are not subject to recovery under the current regulation.

• 11.3 What requirements must the project fulfil in order to be eligible to receive such incentives?

  Geothermal energy qualifies as a NCRE as it is expressly recognized in the number 3) of the Article 225 aa) of the General Law of Electric Services. In relation with the financial support, the requirements are determined in the relevant administrative act to grant such incentive.

• 11.5 In the case of production of electricity from geothermal, are there any incentives/rewards for utilizing the geothermal energy for other than producing electricity, such as waste heat?

  No incentive/reward at the moment.

• 12. Participation and authority of indigenous people

• 12.1 Are the rights of indigenous peoples in connection to geothermal resources regulated?

  Indigenous people have a special statute in Chile that establishes, among others, that the indigenous land cannot be alienated and requires prior approval of the Indigenous Development National Corporation to impose a lien (i.e. an easement) on it. Therefore, the exploration and exploitation of geothermal concessions may be slowed down if such arrangements are not entered in due course.

  Investment projects that are carried out within the boundaries of Indigenous Development Areas must be subject to participation procedures. In addition, if a project implies resettlement of indigenous communities, a significant alteration of their life styles and customs, or has proximity to indigenous populations, it must be submitted to the Environmental Assessment Agency by means of an Environmental Impact Study.

  Finally, Chile ratified the ILO Convention 169 on Indigenous and Tribal Peoples in Independent Countries. As a result, the environmental approval resolution of investment projects must be consulted with indigenous people when it affects them directly. It has been understood that a project may directly affect indigenous people when the project has to be submitted to the Environmental Assessment Agency by means of an Environmental Impact Study. The corresponding consultation process is undertaken within the environmental assessment under a set of rules different from that applicable to regular citizen participation.

• 12.2 To what extent are indigenous municipalities involved in the process of granting licenses?

  The geothermal concessions are granted by the Ministry of Energy, which also leads the granting process. Within this process, it may require the relevant agencies (e.g. Indigenous Issues Agency), but also the corresponding municipalities, to report relevant information within their scope of power in order to resolve the geothermal concession application. 

• 13. Alteration of law and regulation

• 13.1 What are the principles regarding retroactivity of laws and regulations, can changes in such rules affect license holders?

  Chilean law does not operate retroactively.

  On the other hand, the geothermal concessionaire has a right of property over the concession. This right is protected by the Political Constitution. As a result, the only way to expropriate a geothermal concession to its owner is through a law enacted for that purpose and paying to the concessionaire the corresponding compensation, which includes the future flows.

• 14. Taxation and capital controls

• 14.1 How does taxation in the sector affect license holders?

  The energy sector is subject to the general rules of Chilean taxation. In addition, geothermal concessionaires must pay an annual fee for the concession, but there are no additional royalty payments during the exploitation of the resource.

• 14.2 Please describe and provide information on the applicable tax rate and resource tax.

  The Chilean tax system is considered an “integrated system” in that corporate tax, which may be 25% or 27% depending on the chosen regime, can be used as a credit against final taxes. Final taxes are the Personal Income Tax, applied to income received by natural persons that are domiciled or reside in Chile, which has a progressive rate ranging from 0% to 35%, and the Withholding Tax, applied to income received from taxpayers that are not domiciled nor reside in Chile, which has a general rate of 35%.

  Geothermal resource exploitation is not subject to any specific tax.

• 14.3 Is the sale of energy subject to VAT?

  Yes, VAT levies at a 19% rate the sales of energy in Chile

• 14.4 Is VAT refundable and what is the procedure for VAT refunding?

  Generally, the VAT works under a credit-debit mechanism, in which the VAT borne by the taxpayer constitutes a fiscal credit which is offset against the VAT fiscal debit arising from taxpayer’s taxable activities.

  Chilean VAT Law contemplates a mechanism to request an advance cash-refund of the VAT fiscal credit borne in relation to the taxpayer’s fixed assets and accumulated for six or more consecutive monthly-periods. The procedure for the VAT cash-refund request initiates by a filing before the Chilean IRS, which has to be answered within 60 days and, in case of approval or non-response, the refund must be paid within five business days.

  Exporters are allowed to recuperate the VAT borne in acquiring goods, using services or performing other taxable operations in their export activities. There are two mechanisms for the VAT refund. In order to qualify for the first mechanism, within the month following the shipping of the goods, the exporter must submit to the Treasury a sworn statement together with the supporting documentation and background information.

  Finally, please note that a VAT exemption regime is available regarding the import of capital goods that are necessary for the development of projects like energy plants. In order to apply for this exemption before the Ministry of Finance, a minimum investment amount of US$ 5 million has to be evidenced jointly with other formal requirements. The authority has a 60-day period to review the presentation made.

• 14.5 Is the flow of foreign capital restricted with capital controls? If so, briefly describe the nature of such controls.

  As a general rule, investors wishing to bring foreign currency into the country shall do it through an entity member of the Formal Exchange Market (FEM), comprised of commercial banks operating in Chile and other entities expressly authorized by the Central Bank.

  There are two regimes allowing foreign investment of capital in Chile and the remittance of such investment and its profits abroad. Currently, the simplest is provided by Chapter XIV of the Compendium of Foreign Exchange Regulations of the Central Bank (Chapter XIV). The second regime is provided by Law N° 20,848/2015 which sets forth a new legal framework and institutional structure (i.e., Foreign Investment Promotion Agency) for direct foreign investment, in replacement of Decree Law N° 600/1974 administered by the Foreign Investment Committee.

  In general terms, there are no currency controls restricting the repatriation of capital, the repayment of debt, or the making of profit distributions or other payments to a non-Chilean shareholder, member or partner of a local joint venture.

• 15. Environmental Impact Assessment

• 15.1 What demands are there regarding environmental impact assessment prior to exploration, exploitation and or production of geothermal energy?

  The exploration activities may require only “sectoral” permits, but not an environmental approval. However, prospecting activities do require environmental approval. Since these statements have a qualitative nature in the relevant regulation, the determination as to when an activity is considered “exploration” or “prospection” has been made on a case-by-case basis by the Environmental Authority.

  In connection with the exploitation and or production, geothermal projects must obtain an environmental approval as long as its power plant has a capacity over 3 MW. In addition, geothermal projects will also require an environmental approval if it is located within protected areas regardless of its capacity. In order to get the environmental approval, the project holder must submit an Environmental Impact Study or an Environmental Impact Declaration, depending on the magnitude of the environmental impacts generated thereofOther regulatory requirements or permits needed

• 16. Other regulatory requirements or permits needed

• 16.1 What other licenses are needed in order to commence exploration, exploitation and/or production with geothermal energy?

  Besides the corresponding geothermal concession, the environmental approval resolution operates as a global environmental permit, which certifies that a project complies with all applicable environmental laws and regulations and entitles the project owner to obtain from public agencies the “environmental sectorial permits” related to specific environmental components detailed in the environmental approval resolution.

  In case a project or activity is not of those that must be submitted to the Environmental Impact Assessment Agency, environmental permits must be applied for before the corresponding agency. The timeline to obtain such permits will highly depend on the type of permit and the complexity involved.

• 16.2 Which other regulatory requirements are in place, including but not limited to the need to provide insurances or guarantees, in connection with the commencing or continuing of exploration, exploitation and/or production of geothermal energy?

  Apart from the requirements already referred, geothermal exploration and exploitation activities, several insurances or guarantees must be provided under Chilean labor and employment laws. These are usually borne by the corresponding subcontractor.

• 17. Legislation

• 17.1 Have there been any recent amendments to the legislation for licensing, exploration and/or exploitation of geothermal energy in the last 15 years? If so, have these amendments made a noticeable impact on the increase or decrease of production of electricity from geothermal resources?

  Last amendment to the law was introduced in February 2010. However, it consisted of small adjustments to the applying process for a geothermal concession.

  In July 2015, Decree 114, issued by the Ministry of Energy, was introduced in order to streamline the procedure for granting geothermal energy concessions and adapt its regulations to the new institutional reality.

• 17.2 Have any other factors made a strong impact on the production of electricity from geothermal in the last 15 years? If so, for what reasons.

  Today, there is only one geothermal generation project injecting energy to the system, which started its operation on March 2017, called Cerro Pabellón (48 MW of installed capacity).

  Energy Development Corporation, from Philippines, is developing Central Mariposa, whose planned installed capacity is planned to be 100 MW expandable to 250 MW.

  Though the development of geothermal generation industry has been shy, it is expected from it to have a significant increase due to the relevance that ERNC generation has acquired in recent years. Also, geothermal generation stands out for being a continuous and autonomous electricity supply source and for having a plant factor up to 95%. Furthermore, it uses less land than any other energy source, reducing its environmental impact.

  Being located within the Pacific Ring of Fire, Chile has abundant geothermal resources with potential for electricity generation, estimated at about 3,500 MW.

• 17.3 Is there a specific legislation in place regarding geothermal extraction?

  Geothermal extraction is specifically regulated by Law No. 19,657 and Decree No. 114 of 2012, issued by the Ministry of Energy.

• 18. Alternative or cascade use of resources

• 18.1 When applying for a licence, is it possible to apply for one license or authorization, which provides for multiple or cascade use of the resource, e.g. direct and indirect utilization (generation of electricity, district heating and cooling)?

  Geothermal exploitation concession allows the concessionaire to use and take advantage of the geothermal energy that exists within its limits to transform it into electricity or thermic energy, without imposing any limitation to the uses that such kinds of energy might have.

• 18.2 Could mineral extraction from geothermal fluid be included under such cascade usage clauses?

  No. Mineral extraction is subject to specific and different concessional regimes depending on their nature. Therefore, a different concession must be requested for such activity.

• 19. Water rights

• 19.1 Once an exploitation license has been granted for the operation of a power plant, along with access to fresh water for power plant operation, can the licence allow for sales and distribution of fresh water to local communities?

  No. The right to water use, granted along with the geothermal concession, is given to the concessionaire only to the extent necessary for the exercise of the concession.