RELIABILITY OF RENEWABLE ENERGY: GEOTHERMAL

Transcription

1 RELIABILITY OF RENEWABLE ENERGY: GEOTHERMAL Jordan Lofthouse, BS, Strata Policy Randy T Simmons, PhD, Utah State University Ryan M. Yonk, PhD, Utah State University

2 The Institute of Political Economy (IPE) at Utah State University seeks to promote a better understanding of the foundations of a free society by conducting research and disseminating findings through publications, classes, seminars, conferences, and lectures. By mentoring students and engaging them in research and writing projects, IPE creates diverse opportunities for students in graduate programs, internships, policy groups, and business.

3 RELIABILITY OF RENEWABLE ENERGY: GEOTHERMAL INTRODUCTION As Americans have grown more concerned with fossil fuel emissions, policymakers have responded to their constituencies by mandating and subsidizing renewable energy sources, including geothermal energy. Though government mandates and subsidies have encouraged the growth of the geothermal industry, geothermal power only accounted for 0.4 percent of U.S. electricity production in One way to determine whether government mandates and subsidies for geothermal power are beneficial is to examine the reliability of geothermal power. If geothermal power is unreliable, government policies that bolster the geothermal industry are misguided and should be discontinued. A recent report by the Institute of Political Economy (IPE) examined the economic, physical, and environmental implications of geothermal power to assess its overall reliability. The IPE report found that geothermal electricity production is physically reliable and more environmentally friendly than traditional fossil fuels. The high startup costs and failure rates for geothermal development discourage many investors from entering the geothermal market. Because of these characteristics, the growth of the geothermal industry is dependent on financial assistance from the government and is economically unviable. 1 Institute for Energy Research. (2014). Geothermal. Retrieved from mal/ 2 United States Energy Information Administration. 2015a. Electricity Net Generation: Total. [Table]. United States Department of Energy. Retrieved from 3 United States Energy Information Administration. 2015a. Electricity Net Generation: Total. [Table]. United States Department of Energy. Retrieved from 4 Geothermal Energy Association. (n.d.) Geothermal Basics - ECONOMIC RELIABILITY The high startup costs of geothermal power plants and the risks involved with the exploration and drilling phases of geothermal projects make geothermal power unattractive to investors. As a result, the growth of much of the geothermal industry in the United States is dependent on government subsidies. Because much of the geothermal industry s growth is dependent on government financial assistance, geothermal power is economically unviable. In 1960, the annual output of geothermal net electricity generation was 33 million kilowatt-hours. 2 Since then, the geothermal industry experienced two major growth spurts, in the 1980 s and early 2000 s. As a result, annual geothermal electricity production was 16,628 million kilowatt-hours by the end of These periods of growth directly followed the passage of major federal and state laws designed to increase renewable-energy production. This pattern suggests that the growth of geothermal energy industry is responsive to government assistance. Geothermal power plants have high capital investment costs for exploration, drilling wells, and plant installation. 4 Exploration and drilling alone make up more than 51 percent of the total project costs for geothermal power plants. 5 The initial stages of a geothermal project are not only expensive, they are also high risk. Failure rates measure the number of wells drilled that do not provide a sufficient resource. Failure rates for geothermal wells are higher than failure rates for oil and natural gas wells. 6, 7 Furthermore, a geothermal developer may expend millions of dollars in the exploration phase before realizing that they are unlikely to find a useful Power Plant Costs. Retrieved from 5 National Renewable Energy Laboratory. (n.d.). Financing Geothermal Projects. Retrieved from 6 Cochener, J. (2010, June 28). Quantifying Drilling Efficiency. US Energy Information Administration. p. 7. Retrieved from 7 International FInance Corporation. (2013, June). Success of Geothermal Wells: A Global Study. p Retrieved from 3ff966f85/ifc-drilling-success-report-final.pdf?MOD=AJPERES

4 geothermal reservoir in the area and have to abandon the project. 8 These high risks, combined with geothermal development s high capital costs make geothermal development unattractive to many investors. Geothermal power plants, however, have low fuel, operations, and maintenance costs. Once a geothermal power plant has been established, it can produce electricity inexpensively. 9 PHYSICAL RELIABILITY Geothermal power plants can generate electricity efficiently, consistently, and flexibly. The ability to produce geothermal power is dependent on areas with abundant water and geothermal heat. Therefore, geothermal power is physically reliable when power plants are built in suitable locations. Geothermal plants are highly efficient, making geothermal power advantageous over wind and solar power, which are inefficient and intermittent. The efficiency of a power plant is measured by its capacity factor, which is the ratio of the power plant s actual output to its potential output (if operating at full capacity) over a period of time. Geothermal power plants have a capacity factor range from 70 to 95 percent. For comparison, wind power's capacity factor ranges from percent and solar photovoltaics' 8 Geothermal Energy Association. (2005, August). Factors Affecting Costs of Geothermal Power Development. p. 7. Retrieved from hermal%20power%20development%20-%20august% pdf 9 Geothermal Energy Association. (n.d.). Geothermal Basics Power Plant Costs. Retrieved from: 10 Open Energy Information. (n.d.). Transparent costs database - LCOE. Capacity Factor. Retrieved from 11 Matek, B. (2015, May 1). Geothermal Energy Association Issue Brief: Firm and Flexible Power Services Available from Geothermal Facilities. p. 4. Retrieved from Services%20from%20Geothermal.pdf 12 Spinning reserve and non-spinning reserve. (2006, January 31). Retrieved from ingreserve.pdf 13 US Department of Energy. (2012, September). What is an Enhanced Geothermal System (EGS)? p. 1. Retrieved from 14 Geothermal Maps. (n.d.). Retrieved from capacity factor ranges from percent. Geothermal plants also have the ability to change their output as needed. 11 This flexibility allows grid operators use geothermal plants to match changes in electricity demand within several minutes. 12 The ability to generate geothermal power, however, is dependent on the presence of abundant water and geothermal heat. For geothermal power generation to be possible, an area must have high underground temperatures and geothermal fluid (natural underground water reservoirs), and electricity producers must be able to access that fluid through rock openings. 13 Potential geothermal locations are in the United States are most commonly found in the West. 14 Because geothermal resources are often remotely located, the cost of building transmission lines to connect geothermal power plants to the grid can also be a barrier to geothermal development. 15 Enhanced Geothermal Systems (EGS) attempt to overcome geothermal power s geographic limitations by manufacturing underground reservoirs in areas that already have high underground temperatures. 16 EGS could increase the geothermal potential in the United States by 13 times. 17 The U.S. Department of Energy has spent millions of taxpayer dollars on multiple projects to demonstrate the viability of EGS. 18 The 15 Kagel, A. (2008, January). The State of Geothermal Technology Part II: Surface Technology. Geothermal Energy Association. p. 13. Retrieved from energy.org/reports/geothermal%20technology%20- %20Part%20II%20%28Surface%29.pdf 16 Schlumberger Business Consulting. (n.d.). Improving the Economics of Geothermal Development through Oil and Gas Industry Approach. p. 2. Retrieved from: 20of%20View%20Docs/Improving_the_Economics_of_Geotherm al_development.pdf 17 Williams, C. F., Reed, M. J., Mariner, R. H., DeAngelo, J., Galanis, S. P. (2008) Assessment of moderate- and hightemperature geothermal resources of the United States: U.S. Geological Survey Fact Sheet p. 4 Retrieved from 18 Energy Department Announces Project Selections for Enhanced Geothermal Systems (EGS) Subsurface Laboratory. (2015, April 1). Retrieved from 10

5 capital costs of EGS, however, are estimated to be 37 percent higher than the capital costs of conventional geothermal systems, which already have prohibitively high capital costs. 19 This makes EGS a less attractive investment than conventional geothermal systems, and more dependent on government for its development until new technology can bring EGS prices down. ENVIRONMENTAL RELIABILITY Geothermal energy is an environmentally reliable source of energy when compared to traditional fossil fuel energy sources. Using geothermal energy, however, is not without environmental costs. Most of these costs can be minimized or prevented entirely by using proper technologies to contain harmful emissions and protect local water sources from geothermal runoff. Also, correct management of fluid levels in geothermal reservoirs reduces the chance of land subsidence and seismic activity. Geothermal fluid can contain heavy concentrations of salt, as well as harmful chemicals and heavy metals such as hydrogen sulfide, arsenic, boron, mercury, lead, and aluminum. 20 These high levels of materials in geothermal reservoirs are problematic because they can contaminate local environments and water sources if released into waterways. 21 Geothermal developers prevent geothermal fluid from contaminating the environment by collecting geothermal fluid in holding ponds and by injecting used geothermal fluid back into geothermal reservoirs. 22,23 Success is measured by the lack of a single reported instance of water contamination from a geothermal site in the United States. 24 Geothermal power plant s water use can strain local fresh water supplies. A study conducted by the National Renewable Energy Laboratory showed that the amount of water a geothermal plant needs depends heavily on the type of cooling system used. Binary cycle geothermal plants with cooling towers used 1,700 to 3,963 gallons of water per megawatt hour, while binary cycle geothermal plants with dry cooling systems used gallons of water per 25 megawatt hour. Geothermal plants can use geothermal fluids, or even sewage water to meet their water cooling needs. 26,27 Geothermal plants have lower pollutants than traditional fossil fuel plants. They emit less than one percent of the nitrous oxide, one percent of the sulfur dioxide, and about five percent of the carbon dioxide emitted by a coal-fired plant with the same production capacity. 28 Geothermal plants do emit large amounts 19 DeLaquil, P., Goldstein, G., and Wright, E. (n.d.) US Technology Choices, Costs and Opportunities under the Lieberman-Warner Climate Security Act: Assessing Compliance Pathways. Natural Resources Defense Council. p. 25. Retrieved from: 20 Kristmannsdo ttir, H., & A rmannsson, H. (2003, May 19). Environmental aspects of geothermal energy utilization. Geothermics. p Retrieved from d4b7cf05 21 United States Department of Energy. (n.d.). Chapter 8 Environmental Impacts, Attributes, and Feasibility Criteria. Office of Energy Efficiency and Renewable Energy. p Retrieved from: df 22 United States Department of Energy. (n.d.). Chapter 8 Environmental Impacts, Attributes, and Feasibility Criteria. Office of Energy Efficiency and Renewable Energy. p. 6. Retrieved from: df 23 Kagel, A., Bates, D., & Gawell K. (2007, April) A Guide to Geothermal Energy and the Environment. Geothermal Energy Association. p. 44. Retrieved from 24 Environmental Protection Agency. (n.d.) Class V UIC Study Fact Sheet: Geothermal Direct Heat Return Flow Wells. Retrieved from 25 Macknick, J., Newmark, R., Garvin, H., & Hallett, K. (2011, March). A Review of Operational Water Consumption and Withdrawal Factors for Electricity Generating Technologies. National Renewable Energy Laboratory. p. 12. Retrieved from 26 Macknick, J., Newmark, R., Garvin, H., & Hallett, K. (2011, March). A Review of Operational Water Consumption and Withdrawal Factors for Electricity Generating Technologies. National Renewable Energy Laboratory. p. 5. Retrieved from 27 Kagel, A. (2008, January). The State of Geothermal Technology Part II: Surface Technology. Geothermal Energy Association. p. 9. Retrieved from energy.org/reports/geothermal%20technology%20- %20Part%20II%20%28Surface%29.pdf 28 Matek, B. (2013, April). Promoting Geothermal Energy: Air Emissions Comparison and Externality Analysis. Geothermal

6 of hydrogen sulfide, a toxic and flammable gas that is naturally present in many geothermal reservoirs. In the past, hydrogen sulfide emissions have been regulated by the federal government, but are currently only regulated by some states. 29, 30 Some geothermal developers manage hydrogen sulfide emissions with advanced abatement equipment, which converts more than 99 percent of hydrogen sulfide into sulfur, an element with practical agricultural uses. 31 Geothermal energy has minimal emissions and, unlike wind and solar power, does not have to be backed up by less environmental friendly sources of energy like coal. Geothermal energy production may lead to land subsidence due to removing water from underground reservoirs. This phenomenon was first observed in the Wairakei Power Station in New Zealand, where the plants did not use any type of reinjection. The rate of subsidence in this area was recorded at levels as high as 0.45 meters per year. To prevent or mitigate the risks of this occurrence, plants have continued the practice of injecting used geothermal fluids and other sources of water back into the reservoirs once the heat has been captured. 32 Drilling for geothermal resources, as well as removing fluid from, and injecting it back into underground reservoirs can induce seismic activity. A 2013 study on a geothermal field in Southern California found a strong correlation between seismic activity and the amount of fluid being extracted from and injected into the earth by geothermal power plants in the area. 33 Since 1975 The Geysers, a Northern California Geothermal plant, has experienced earthquakes that have all been caused by geothermal energy production. 34 Geothermal developers can minimize the amount of seismic activity they induce by reducing the size of the fractures they drill into the earth's crust. The larger the fracture created, the more seismic activity induced. At The Geysers, developers aim to keep earthquakes small, with a magnitudes of less than two. 35 Generally speaking, the seismic activity caused by geothermal energy production has not posed a serious threat to man-made structures. CASE STUDY: ICELAND Iceland s geographic location has made importing traditional fossil fuels expensive and has increased Iceland s need for alternatives like geothermal. Iceland s geology provides it with a large amount of geothermal reserves. 36 After several decades of government promotion and subsidization, geothermal energy now provides over a quarter of Iceland s entire electricity supply. 37 Iceland now has some of the cheapest electricity prices in the European Union, however, current electricity prices hide the true cost that implementing geothermal energy has had on Icelandic citizens. 38 Energy Association. p. 7. Retrieved from Externality%20Analysis_Publication.pdf 29 Environmental Protection Agency. (1990, February). Ambient Air Quality Standards. Retrieved from: 30 Maine Department of Health and Human Services. (2006, March). Ambient Air Guidelines for Hydrogen Sulfide. Retrieved from: entairguidelines.pdf 31 Kagel, A., Bates, D., & Gawell K. (2007, April) A Guide to Geothermal Energy and the Environment. Geothermal Energy Association. p. 22. Retrieved from 32 Union of Concerned Scientists. (n.d.). Environmental Impacts of Geothermal Energy. Retrieved from: 33 Stephens, T. (2013, July 11). Geothermal power facility induces earthquakes, study finds. University of California Santa Cruz. Retrieved from 34 Harmon, K. (2009, June 29). How Does Geothermal Drilling Trigger Earthquakes? Scientific American. Retrieved from 35 Harmon, K. (2009, June 29). How Does Geothermal Drilling Trigger Earthquakes? Scientific American. Retrieved from 36 Iceland. (n.d.). Graduate School of Oceanography University of Rhode Island. Retrieved October 7, 2015, from 37 Árni Ragnarsson. (2015, April). Geothermal Development in Iceland Proceeding World Geothermal Congress p. 6 Retrieved from pdf 38 Half-yearly electricity and gas prices, second half of year, (2015, June 5). Retrieved from

7 Many of the costs and risks associated with developing geothermal were subsidized by the Icelandic government and thus born by Icelandic citizens through taxation. 39 Also, because the United States has a much larger population and much more localized geothermal resources, geothermal power would be cost prohibitive for the United States to implement on a scale comparable to Iceland. Iceland s experience, however, illustrates that geothermal power can provide large amounts of baseload electricity reliably. CONCLUSION Geothermal electricity production is both physically reliable and more environmentally friendly than traditional fossil fuels. The risks and costs associated with exploration, drilling, and construction are higher than most other energy sources, which discourages many investors from entering the geothermal market. As a result, much of the geothermal industry's growth has been dependent on government subsidies. Geothermal power is not economically viable because it is typically not developed without government aid for the initial investment of building a geothermal plant. Advancements in exploration and drilling technology could decrease the costs and risks in the early stages of geothermal development in the future. Allowing markets, rather than government policies, to decide which energy sources get developed will ensure that we get our power from the most cost-effective energy sources. yearly_electricity_and_gas_prices,_second_half_of_year,_ _(EUR_per_kWh)_YB15.png 39 Orkustofnun. (2010, February). Geothermal Development and Research in Iceland. p. 17, 18. Retrieved from