economics of geothermal energy

8/4/2019 Economics of Geothermal Energy

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TITLE: ECONOMICS OF GEOTHERMAL ENERGY

AUTHOR(S): Glenn E. Morris, S-2. Jefferson W . Tester, G-3Glen A. Graves, DIR

SUBMITTED TO:February 27-29, 1980 Hyatt Regency Hotel, Los Angeles, CA.Meeting Titled "A Technical Assessment of Nuclear Power andIts Alternatives. IAmerican Nuclear Society Topical Meeting,

DISCLAIMER- . -- . -.This book- mwed 01anm u n f 01w a k vponsored by an a e r r v 01the UnitedStaer Govetnmnt.~ e i t h nhe United Smer Gownm n t ngr any agency mwmf. mr my of their emplovser.makoranvmrranty. express or impkd. or ~ U U W am lW i liability or rwnribi l iw for the m-.mmpletsnsrJ. or usefulness of any information. BPP~~~U I . d u n . 01 w'mstr dielond. arqr-rns that its use -Id m t infrlnps privafeiy owed riaMs. Reference herein to amwifiimmmacial pmdun. wces. OT m i c e by trade m m , rademark. manufectumr. M otlwmise, doernot ngenatily mnslitute or imply ill endoramsnt. rsmmmsndstion. or favorinp by the UnitedSafer Government 01 any age- thereof. The vi- andopinionli of aufh-m t a p r d herein do mt


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. .. -*

ECONOMICS OF' GEOTHERMAL ENERGYGlenn E. M o r r i s , J e f f e r s o n W. T e s t e r , and Glen A. Graves

U n i v e r si t y o f C a l i f o r n i aLos Alamos, NM 8 7 5 4 5

- Los Alamos S c i e n t i f i c L a b o r a to r yB O X 1663 - MS 981( 5 0 5 ) 667- 4318

ABSTRACTT h i s paper p r e s e n t s a se lec ted summary of t h e re-s o ur c e, t e c h n i c a l , and f i n a n c i a l c o n s i d e r a t i o n s whichi n f l u e n c e t h e economics of geothermal energy i n t h eU.S. E s t i m a t e s of r e s o u r c e b a s e an d l e v e l i z e d b u s b arc o s t o f base l o a d power f o r s e v e r a l t y p e s o f g e o t h er -mal r e s o u r c e s a r e compared w i t h s i m i l a r e s t i ma t e s f o rmore conven t iona l ene rgy re s our ces . Cur ren t geo the r -mal e l e c t r i c power p l a n t s p l a n n e d , u n d e r c o n s t r u c t i o n ,and on- l in e i n t h e U.S. a re noted.The s h o r t n e s s o f t h i s p ap er p r o h i b i t s a n in - de p th p r e se n -t a t i o n o f t h e c u r r e n t " s t a t e of t h e a r t " i n geo the rmal deve lop-men t i n t h e U.S. We have t r i e d t o f o c u s on t h e mos t impor tan titems o f ec on omic i n t e r e s t c o n c e rn i n g t h e resource and end-use

c h a r a c t e r i s t i c s of b ot h n a t u r a l and a r t i f i c i a l l y - s t i m u l a t e dgeo the rmal sys tems . Wi th in t h e p a s t 5 y e a r s , i n t e r e s t i n geo-the rmal ene rgy has grown con s ide rab ly a s ev idenced by t h e i n -crease i n a v a i l a b l e l i t e r a t u r e on t h e s u b je c t . A more thorough


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From the commercial perspective, however, what reallycounts is the fraction of the resource base which can be ex-tracted at competitive costs. Table 2presents some estimatesof levelized busbar costs of new base load electic capacity forseveral conventional generation systems and the geothermalenergy resource types introduced above. Table 2highlightsagain the enormous variation in both the nature and quality ofgeothermal resources and the primitive state of knowledge asso-ciated with most of the extraction concepts. For example, hy-drothermal systems are characterized by convection-dominatedflow within a permeable, water saturated reservoir. This en-compasses both vapor-dominated and liquid-dominated systems.The vapor-dominated resource, as epitomized by The Geysers res-ervoir in northern California, produces high temperature drysteam which can be utilized directly to produce low cost elec-tricity. This electricity, in turn, is economically transportedto load centers. The Geysers system currently has 663 MW(e) ofgenerating capacity in place with over 1700 MW(e) planned for1985.- The difficulty is that, at best, only 2% of the hydro-thermal resource is vapor dominated (3).are generally characterized by relatJvely low temperatures:perhaps half the resoure base is


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between sites of high load, low temperature use and liquid-dominated hydrothermal systems.As one considers geothermal energy possibilities whichoffer the prospect of a significantly greater resource base, oneis confronted with a corresponding increase in the technical andcommercial uncertainties associated with resource utilization.Geopressured-geothermal resources, as typified by the geologic,formations lying along the Gulf Coast from Mexico 80 -Mississippi, contain moderately hot water (150-180 C) underextremely high pressure (200-400 bars). There is the possi-bility that some of these brines are saturated with methane. Ifthis is the case, then the energy content of the fluid would beenormously enhanced. Few wells have been drilled to producegeopressured-geothermal brine; although the U.S, DOE has ini-tiated a substantial program to increase knowledge of this area(4).producing, and re-i'njecting fluids into such high pressure for-mations. For example, there is considerable concern that pres-sure reductions associated with production would cause the col-lapse of the geologic formation and reduce well productivitysignificantly. Even if geopressured-geothermal energy utili-zation should prove technically feasible, the drilling, pumping,and methane separation costs may overwhelm the value of therecovered product. In short, geopressured-geothermal energy isstill in an early experimental stage and serious commercialconsideration must await the resolution of these technical dif-ficulties.Extraction of energy from low-permeability HDR geothermalresources will involve the circulation of pressurized waterthrough man-made fracture systems in deposits of hot, crystal-line rock. This approach to geothermal heat extraction is alsoin the early stages of development. Currently there is oneexperimental HDR system operating at Fenton Hill, New Mexico

8

There are engineering problems associated with drilling,


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expenses saved) by the HDR system. Considerable effort has beendevoted to establishing the resource, engineering, and financialconditions necessary for commercially feasible HDR/electricsystems (2).relatively high geothermal gradient (40 C/km) and good reservoirperformance (10% temperature loss over 5 years) will result in acommercially attractive baseload system.- It would be a mistake to assume, however, that the'satis-faction of certain technical conditions would be sufficient toquarantee commercialization of HDR or any other geothermal re-source. The cost estimates and financial procedures which areemployed can vary significantly depending upon who is conductingthe financial analyses. El-Sawy, Leigh, and Trehan (7) recentlydemonstrated this; for the same set of geothermal resource,power plant, and cost assumptions, they found that differencesin busbar cost estimates could be as much as 3.2 &/kwh dependingupon which financial model is employed. Actual operating ex-perience is needed to help narrow the estimates of financial aswell as technical performance of geothermal energy systems.the technical and economic uncertainties which currently sur-round the non-vapor-dominated geothermal resources, there are anumber of important features of geothermal energy which favorits ultimate acceptance as a major commercial energy resource.Once the resource development costs are incurred, the costs ofthe primary resource will be essentially fixed over the life ofthe system. This frees geothermal energy resources from many ofthe primary resource market and production uncertainties whichcurrently plague the conventional alternatives. The economiesof scale associated with geothermal/electric production arecurrently regarded as exhausted at individual unit capacities of50 MW(e) or greater. Thus, geothermal energy is a relativelysmall scale, deCentraliZed, energy alternative. As such itoffers real advantages in meeting utility expansion planning and

In general, such economic,analyses show that a

While much of the emphasis, up to this point, has been on


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r e i n j e c t i o n . A dv oca te s o f g eop r es sur ed- g eo t he r mal r e so u r c es a r ep a r t i c u l a r l y c on ce rn ed a b o ut t h e p o t e n t i a l f o r ma ss iv e s u b s i-dence due t o a d e c l i n e i n t h e p r e s s u r e which c u r r e n t l y s u p p o r t st h e r oc k s t r a t a o f t h e r eg io n. A l l t h e g eo t h e r ma l r e so u r ces ,even HDR, h av e a r emot e p o t e n t i a l f o r i n d u c in g seismic e v e n t sand a l l i n v o l v e h e a t r e j e c t i o n w hich would c o n t r i b u t e t o t h ethermal burden on our a tmosphere and/o r water r eso urce s .geo thermal energy? As t h e d i s c u s s i o n a bov e s u g g e s t s , t h elonger - t e rm fu tu r e o f commercial geo thermal energy aw ai t s ar e s o l u t i o n of t h e s i g n i f i c a n t t e c h n i c a l a n d e c o n o m i c q u e s t i o n swhich remain ou ts ta nd in g i n th e ca se s of lower-grade hydro-ther mal , geopressu red-geo thermal , and HDR g eo t h e r ma l r e so u r ces .I n t h e n e a r e r term, we fo re se e a con t inued deve lopment o f t hea l r e a d y commercial vapor-dominated geothermal re so ur ce s and amark ed ly acc e l e r a t ed a p p l i ca t i o n o f h i gh - gr ade l i q ui d - do mi n at edh y d r o t h e r ma l r e so u r ces d u e b ot h t o t h e e s c a l a t i o n o f e ne rg ypr i ce-s i n gen er a l and t he t e ch n i ca l and management e xpe r i en cega ined from th e p ionee r developments s i t e d i n Table 3. Direc tu t i l i z a t i o n of g eo th er ma l r e s o u r c e s , e s p e c i a l l y t h e l i q u i d -dominated resources , w i l l i n c r e a s e i n r e sp o n se t o ex p ec t ed i m -' p rovement s i n t h e e x p l o r a t i o n and e v a l u a t i o n t ec h n i qu e s f o rg eo t he r ma l en e r g y r e s o u r c es .

What, then, i s t h e fu tu re o f t h e commerc ia l deve lopment o f

The fo l lo wing summary co nc lus ion can th e re f or e be drawn:0 Geothermal energy i s a n i n c r e d i b l y l a r g e a nd d i v e r s een e r g y r e so u r ce .0 E x t r a c t i o n and u t i l i z a t i o n o f much o f t h i s re s o u rc e i sc a p i t a l i n t e n s i v e and t e c h n i c a l l y complex.0 The l a r g e s t g eo t h er ma l r e so u r ces , h o t d r y ro ck and

geopressu red-geo thermal , a re s t i l l i n t h e e a r l y s t a g e so f r e s e a r c h b u t r a p i d a d va nc e s a r e c u r r e n t l y b e in gmade .-

0 The su cc es s f u l demons t ra t ion o f power p ro duct ion and


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4.

5 .

5-6.

7.

8.

9.

10.

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G. Samuels, "Geopressure Energy Resource Evaluat ion," OakRidg e N a t io na l La bo ra to ry r e p o r t ORNL/PPA-79/2 (May 197 9) .J. W. T e s t e r a n d J. N. A lb ri g ht (Ed s.), "Hot Dry RockEn er g y Ex t r ac t i o n F i e l d T e s t :P r o t o t y p e R ese r v o i r a t Fenton H i l l ," Los Alamos Scient i f icLa bo ra to ry r e p o r t LA-7771-MS (A pr il 197 9).J . W. Tester (Ed. ) , "Phase I-Energy Ex t ra c t ion F ie l d T e s tR e s u l t s f rom the Fen ton H i l l Hot Dry Rock Geothermal System- Segments 1-2," L o s Alamos S c i e n t i f i c Lab o r a to r y r e p o r t ,( t o be p u b l i sh ed ) .

75 Days of Ope rat i on of a

A. N. El-Sawy, J . G. Leigh, and R. K. Trehan, " A Compara-t i v e An al ys is of Energy Cost ing Methodologies ," The MitreC o rp o r a ti on re p o r t MTR-7689, McLean, VA (February 1979) .Dept . of Energy, Of fi ce of Energy Technology, F o s s i l EnergyDivision, "Market Oriented Program Planning Study (MOPPS),"Washington, D.C., (August 1978). See a l s o USGS Ci rc u la r725.HDR P r o j e c t S t a f f , "Hot Dry Rock Geothermal Energy Develop-ment P r oj e c t. Annual Repor t. F i s c a l Year 1977," Los AlamosS c i e n t i f i c Labora tory re po r t LA-7109-PR (Febru ary 1978) .G. Ramachandran, e t a l . , "Economic Analysis of GeothermalEnergy Development i n C a l i f o r n i a , " V o l s 1 and 2 , S t a n f o r dResearch I n s t . , p r o j e c t ECU 5013, Menlo Park, C A (May1977).S. L. Milora and J. W. T e s t e r , Geothermal Energy a s aS o u r ce of E l e c t r i c Power, M IT Press, Cambridge, MA (1976).


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C. H. Bloomster and C. A. Knutsen, "An Analysis if Elec-tricity Production Costs from the Geopressured GeothermalResource," Battelle Pacific Northwest Laboratories reportBNWL-2192 (February 1976).J. W. Tester, G. E. Morris, R. G. Cummings, and R. L.Bivins, "Electricity from Hot Dry Rock Geothermal Energy:Technical and Economic issues," Los Alamos Scientific Lab-oratory report LA-7603-MS (January 1979).D. N. Anderson, "The Most Promising Geothermal Fields inthe Western United States," Geothermal Resources Council(Spring 1979).


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TABLE 1.ENERGY RESOURCES OF THE UNITED STATES

Estimated- Resoujce BaseaResource Type (1 0 Quads) Re fe re nc esOil/Gas(n ot i n c l u d i n g sh a l e )D i rec t MagmaHyd rot germa1Coal -

(>90 t o 3 km)

Geopressured(i,nclu ding methane)

Hot Drg Rock0 4 0 /km, >15OoCt o 10 km )Hot Dryo Rock0 1 5 0 C to 10 km)

-aTotal thermal energy in pla ce .

1 . 5

4 . 09.6

a

33

15 11 7 0 3

200

13 000


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TABLE 2BASE LOAD BUSBAR COST ESTIMATES FORNEW G EN ER A TIO N C A P A C I T Y I N THE U N I T E D STATES I N 1980 $

I n s t a l l -ed PowerP l a n tc o s t sS/kW

-

Nuclear 1200O i l 600-800d

A n n u a l T o t a lPower Gener-P l a n t Well o r a t i n gc o s t s O+M Fuel Cost Cost Refer-C /k W C/kWh f/km fkWh ences2.9 0.1 0.4 3.4 (10-12)1.5-1.9 0.1 3.0 4.1 (10-11)($18 / b b l )

Coa l 600-1000 1.5-2.4 0.2 1.2 2.9-3.8 (10-11)Hydro- 300 0.8 0.1 1.3 2.1 (10,131t h e r ma l b( v ap o r )

d($30/ ton)

Hydro-t h e r m a l c( l i q u i d )Flashing500-800 1.2-1.9 0.3 1.7-2.7B in a ry 550-950 1.3-2.3 0.3 1.5-2.5 3.1-5.1F l u i dGeoprgs-875-750 2.1-1.8 0.4 1.8-3.8 4.3-6.0 (4, 14- 16)s u r e d( i n c l.Methane

. 3.2-5.3 (10-11,13)


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TABLE 3aIQUID-DOMINATED HYDROTHERMAL POWERPLANTS UNDER DESIGN OR CONSTRUCTION IN THE U.S.

- (January 1980)

Area/KGRA Utility/DeveloperImperial Valley, Calif./ Southern CaliforniaSalton Sea Edison/Union Oil

Imperial IrrigationDistrict/Magma Power Co.Imperial Valley, Calif./ Republic Geothermal Inc.Imperial Valley, Calif./ Southern CaliforniaBrawley Edison/Union OilImperial Valley, Calif./ Southern CaliforniaHeber Edison/Chevron ResourcesImperial Valley, Calif./ Republic Geothermal

Westmorland and MAPCO

East MesaImperial Magma

Reno, Nev./Brady-Hazen Sierra Pacific Power/'Phillips PetroleumUtah/Roosevelt Hot . Utah Power and Light/Springs Phillips and ThermalPower

II

PlantCapacity[MW(e)] Status/Scheduled On-Line10 Design Completed/l98249 Construction Complete/198050 Under Design/198210 Under Construction/Late19805048105020305555

Design Completed/l983Under Construction/Late1981Final Construction/Late1980Two Plants Under Pre-liminary DesignDesign Complete/l982Design Complete/l984


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TABLE3 (CONT, ' Ic ,

PlantCapacityArea/KGRA Utility/Developer [ M W ( e ) ] Status/Scheduled On-Line

New Mexico/Baca Public Service of New 50 Construction About ToLocation #l Mexico/Union Oil Begin/1982

18aBased upon Anderson, David N.

,

economics of geothermal energy

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