Reno, Nevada — Geothermal developers and industry advocates assembled in Reno this week for the Third Annual National Geothermal Summit focused much of their discussion on the potential for cost reduction through the use of new technology, and on revealing geothermal energy as more competitive with sun and wind renewables. “If we can reduce costs and increase revenues the market will react immediately,” surmised Aaron Mandell, the chief commercial officer for AltaRock Energy, a geothermal technology company based in Seattle.
Research Tackles Cost Reduction
Among areas of cost reduction highlighted during the conference were better geological research, a broader use of heat recovery technology and enhanced geothermal systems to boost site production.
Two leading centers of new geothermal research in the country are the University of Nevada, at Reno, and the University of California, at Davis, which operate three-dimensional geological modeling facilities, among a handful in the country, according to Andrew Fowler, a graduate student in the geology department at U.C. Davis. With over half of the total cost of a typical $10 million geothermal project tied up in exploration and development, much hope is on technological advances — often largely funded by the U.S. Department of Energy — to lower total cost.
One efficiency and revenue boost for geothermal plants can come from adding heat recovery technology at existing geothermal facilities. A variety of companies are adding megawatts of capacity to existing geothermal plants, taking off heat energy from the brine and/or the turbines to boost boiler plate capacity. Andover, Mass.-based Enel Green Power North America’s acquired Cover Fort geothermal plant in Sulphurdale, Utah, and is now adding a 25-MW Ormat energy converter that will be online in December 2013. Ormat, based in Reno, supplies the equivalent of the entire metropolitan Reno baseload through geothermal energy.
And the use of still-controversial enhanced geothermal systems, or EGS, also was broadly advocated at the summit as a means of boosting under-performing or previously closed geothermal facilities. One major EGS project that in June moved to stage two testing of pumped water testing is located at Raft River, Utah, where a DOE award is helping to demonstrate the technology, notes Jim Moore, a research professor at the Energy & Geoscience Institute, within the University of Utah, in Salt Lake City, in charge of the Raft River project science.
Another means of enhancing geothermal competitiveness is to cluster plants so that new transmission line and other costs can be reduced. Perhaps the most ambitious such clustering announced thus far is Imperial Irrigation District’s new initiative to build 1,000 MW of geothermal plants in the Salton Sea area of southern California. The Imperial, Calif.-based IID is also lobbying with the California PUC to add a 500-kV transmission line to link the production to consumers. “We see this project as providing a shot in the arm for the geothermal industry,” says Carl Stills, the interim energy manager for IID. The agency hopes to develop a public-private partnership model to help mitigate the cost risk of drilling for the Salton Sea project.
Clarifying Geothermal Competitiveness
Until new technology can cut production costs, the industry is keen to reposition itself as more competitive than variable renewables like solar and wind. “We’ve been left in the dust by wind and solar,” complained Jonathan Weisgall, the vice president of legislative and regulatory affairs at MidAmerican Energy Holdings, a major geothermal developer. “The states have really taken the lead on the development of renewable policies — we don’t have a federal renewable policy and we will never have one,” he suggests.
Still, other geothermal advocates suggest national support for geothermal is on the rise, both in terms of the number of states now developing projects, and in terms of key Congressional policy makers. In a video opening of the conference Senator Harry Reid, D-NV, said, “There is a lot more we can do in Nevada and around the country with geothermal to remove ourselves from fossil fuels.” Similarly, Senator Dean Heller, R-NV, said, “It is in our national interest to promote geothermal, and I will continue to support policies that encourage it.”
While President Obama’s recent pronouncements on U.S. green gas emissions goals notably heartened the summit group, more comfort seems to have been taken in the number of western nuclear and coal plants that have gone offline recently or that have been announced as targeted for shutdown.
Indeed, the planned replacement of fossil fuel plants present a strong opportunity for geothermal in states like California, where the San Onofre Nuclear Generating Station, or Songs, recently went out of commission, and in Nevada, where substantial coal capacity is marked for shutdown, several industry executives suggested. In Nevada, the leading U.S. geothermal state, “Our plan is to put out three 100 MW RFPs starting in 2014, with another 250 MW by 2017, followed by another 250 MW by 2019,” notes Stacey Crowley, the director of the Nevada governors’ Office of Energy.
Such domestic opportunities should result in a boost to the current U.S. geothermal annual growth rate of about three or four percent, according to Karl Gawell, the executive director of the Geothermal Energy Association, based in Washington. Still, the sluggish U.S. market is forcing many U.S. geothermal companies to export for better growth. “The international geothermal market is growing at double-digit rates,” Gawell notes. Installed geothermal capacity is on track to surpass 12,000 MW globally by the end of the year in 25 countries, and over 60 countries are reported to have projects in development.
Refining the Valuation of Geothermal
Part of the problem with marketing geothermal power is its perception as a 24/7 baseload energy source akin to fossil fuels, albeit with no greenhouse gas emissions. But because the technology is environmentally friendly, it is lumped in with more variable sun, wind and biomass generation as renewable. Several officials complained that when California utilities compare bids for a PPA, they do not ultimately factor in the added cost of procuring replacement power — usually achieved by building a gas peaker plant — when solar or wind power varies. Similarly, a geothermal bid receives no extra consideration for the temporal flexibility it can bring to the grid, ramping up even faster than gas booster units. And lower-cost integration to the grid is not recognized for geothermal competitors with other renewables — at the instruction of the public utilities commission, according to Paul Thomsen, the president of the GEA, who recently drafted a paper on geothermal competitiveness.
“Geothermal energy will become even more valuable if every renewable project is required to show all the costs that it will impose (integration, transmission, and gas system costs),” writes Thomsen. “While geothermal energy projects enjoy operational and environmental attributes that variable generation technologies do not, regulators, load serving entities, and politicians have for some time undervalued or ignored these attributes,” he charges.
As a function of this widely accepted argument in the industry, a repeated call was made to pressure public utilities commissions — in California and beyond — to factor in the full valuation of geothermal energy benefits that are not yet considered in power purchase agreements in order to level cost competition in the renewables playing field.
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