“The ability of plants to run continuously (‘baseload’) with very high load factors (>70%) makes geothermal energy one of the most attractive renewable sources for power grid stability and one of the most valuable for investors (in terms of value per MW installed).” Dario Carradori, analyst
How large is the market for geothermal energy?
The International Energy Agency forecasts that by 2050 geothermal electricity will represent 3.5% of all power generation, with 200 gigawatts (GW) of installed capacity. This would represent an increase in capacity of more than 200% from the 12GW of active geothermal power in 2016.
At present 40 countries host geothermal plants, with large sources of geothermal power in Africa, the Pacific and Latin America. Substantial additions to capacity are expected in Turkey, the Philippines and Indonesia, along with Europe as part of its regulatory push towards renewable energy.
What is driving the geothermal market?
Solar and wind power are crucial to the modern renewable energy mix following the clean energy revolution. In 2017, Bloomberg Energy Finance reported that $160.8bn and US$107.2bn was invested in wind and solar projects respectively.
Unfortunately, Wind and solar output is highly variable due to changing weather, resulting in high spot prices during peak consumption. Geothermal power provides constant renewable power to offset the instability inherent to solar and wind power generation. The aim is to make geothermal a key part of a renewable energy economy, along with utility scale batteries that can capture and redistribute electricity.
How is geothermal power produced?
Geothermal power plants use natural sources of heat and steam found beneath the earth’s surface to power an electricity generating turbine. Three types of geothermal power plant exist: dry steam, flash steam and binary cycle. The simplest, dry steam, extracts evaporated water trapped underground to turn turbines.
Geothermal flash plants use pressurised water beneath the earth’s surface with temperatures greater than 182oC to generate steam. The pressurised water flows upwards through a well, then ‘flashes’ into steam as the newly unrestrained molecules expand into a gas. To create a sustainable power source the steam, after it has been used to power the turbines, is piped back down into the reservoir along with any remaining liquid.
Binary cycle plants use the same principles as flash steam generators, but with water ranging from 107-182oC mixed with a “working fluid” with a low boiling point. Binary cycle plants are preferred when it is uneconomic to mine very hot reservoirs or the risks of exploring for high temperature waters make investors wary.
What is the regulatory landscape of geothermal power?
The renewable energy market relies on regulatory subsidies, especially in less developed sectors like geothermal power. Subsidies are specific to the country in which a geothermal plant resides. In Indonesia, one of the most active geothermal nations, new regulations are helping to subsidise its biodiesel and geothermal sectors. The country recently updated its geothermal auction scheme to take into account stable long-term financing, in addition to price point.
In Europe, Germany passed the German Renewable Energy Sources Act (EEG) last year that in some key ways supports geothermal over other renewable sources, like solar and wind.
Which are the largest players in geothermal energy?
The market for geothermal power is highly fragmented, with many regional champions. However, there are a few global players. In Mexico most geothermal fields, including the 720 megawatt (MW) Cerro Prieto Station, are operated by the state-owned Comisión Federal de Electricidad (CFE).
In the US, BHE Renewables operates the large CalEnergy Operating in California. The facility can produce 338MW of power. Meanwhile, the European market hosts Enel Green Power, part of the Enel Group and one the largest geothermal suppliers in the world, operating 900MW of geothermal capacity. In Indonesia, Star Energy Geothermal retains the large Wayang Windu plant and its 225MW of electricity.
Which are some of the well performing smaller geothermal ventures?
US Geothermal is involved in the American market with its Oregon, Nevada and Idaho plants. The company produces around 45MW of power. Nevada Geothermal, with its 50MW of power is also involved in the American market.
Daldrup & Söhne broke new ground in Germany as the first geothermal developer in Europe to use alternative risk transfer (ART) instruments.
Constellation NewEnergy, Enel Green Power, LTC Federal, EEC Renewables and Siemens have been picked to operate geothermal projects for the US Department of Defense worth $7bn.
More surprisingly, Calpine has seen some success after it filed for Chapter 11 early last year, posting profits as of June 2017. The company is negotiating an $85m loan from the US Department of Energy to develop a facility in Oregon.Download PDF