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Mid-Term Conference - Potsdam, Germany
Mid-Term Conference - Potsdam, Germany
9-12 January 2007 GeoForschungsZentrum Potsdam
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Economics of Developing EGS Systems and Potential for Market Penetration
A comprehensive assessment of enhanced, or engineered, geothermal systems was carried
out by a 12-member panel assembled by the Massachusetts Institute of Technology (MIT)
to evaluate the potential of geothermal energy becoming a major energy source for the
United States.  Geothermal resources span a wide range of heat sources from the
Earth, including not only the more easily developed, currently economic hydrothermal
resources; but also the Earth’s deeper, stored thermal energy, which is available
almost anywhere.  Although conventional hydrothermal resources are used effectively
for both electric and nonelectric applications in the United States, they are
somewhat limited in their location and ultimate potential for supplying electricity.
 Beyond these conventional resources are EGS resources with enormous potential for
primary energy recovery using heat-mining technology, which is designed to extract
and utilize the earth’s stored thermal energy.  EGS methods have been tested at a
number of sites around the world and have been improving steadily.  Because EGS
resources have a such large potential for the long term, we focused our efforts on
evaluating what it would take for EGS to provide 100,000 MWe of base-load
electric-generating capacity by 2050. 

This study performs a traditional benefits analysis using the National Energy
Modeling Systems (NEMS) to assess the competitiveness of geothermal electricity
generation in the mid-term (up to 2030). This analysis incorporates input data and
assumptions different from past geothermal analyses, including recently available
updated geothermal resource supply for hydrothermal geothermal energy and also for
EGS energy completed as part of the MIT study of EGS resource supply and costs.  

This analysis, consistent in approach with the preliminary Government Progress and
Results Act FY2008 (GPRA08) analysis conducted for the Department of Energy (DOE)
Office of Energy Efficiency and Renewable Energy EERE portfolio of technology
programs included in the FY2008 budget request, indicates a significant increase in
overall geothermal penetration and in incremental capacity and generation benefits
over past analyses.  A stand alone case that incorporates the estimated
cost-reduction impact of potential technology improvement results in 50 GW of
capacity in 2030. Implementation of a carbon policy that increases the price of
fossil fuels based on their carbon content increases penetration over the stand alone
case by 30 GW. Supply in non-Western regions plays a significant role in national
penetration through the development of co-produced fluids from existing oil and gas
wells. Hydrothermal resources provide the bulk of capacity additions in Western
regions. Enhanced Geothermal System (EGS) resources play a small but significant
penetration role in the next 25 years unless significant technology improvement is

The Updated Supply representation features significantly lower development costs for
hydrothermal resources, although somewhat higher EGS costs than used previously. The
inclusion of a significant amount of relatively low cost co-produced resource further
accentuates the hydrothermal cost difference and contributes to a significant
increase in the amount of geothermal resource that is likely to be technologically
and economically accessible in the near through mid-term period. While this Updated
Supply representation is the primary supply-related input to NEMS, there are several
other key inputs, including industry learning, program improvement, and annual builds
limits, that either impact the capital cost component of the supply representation
through time or place limits on how much supply can be absorbed. 

Comparison of specific case results suggests that penetration is most sensitive to
the supply representation and annual build limits inputs. The significant increases
in both overall and incremental penetration compared to previous results are likely
attributable to differences in these two key inputs.

Given the assumptions used in the analysis, these forecast results should be treated
more as the maximum possible, rather than the most likely or probable, level of
absorption of geothermal capacity by the electricity market. Other factors such as
market forces, government regulation changes to geothermal leasing laws, state
renewable portfolio standards and availability of venture capital for resource
exploration and development will control the actual rate of absorption. Several
limitations in the current NEMS treatment of geothermal modeling are overcome in this
Id: 55
Place: GeoForschungsZentrum Potsdam
14473 Potsdam
Room: Building H, auditorium and seminar rooms
Starting date:
10-Jan-2007   13:50
Duration: 20'
Primary Authors: PETTY, Susan (Black Mountain Technology)
Co-Authors: PORRO, Gian (National Renewable Energy Laboratory)
Presenters: PETTY, Susan
Material: slides Slides

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