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Utility Geothermal Working Group Update

Utility Geothermal Working Group Update. Prepared for APPA E&O Conference Generation & Fuels Environmental Committee Round Table April 18, 2007 Al Pless, Economist Southeastern Power Administration (706) 213-3847 alp@sepa.doe.gov. Utility Geothermal Working Group Sponsors.

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Utility Geothermal Working Group Update

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  1. Utility Geothermal Working Group Update Prepared for APPA E&O Conference Generation & Fuels Environmental Committee Round Table April 18, 2007 Al Pless, Economist Southeastern Power Administration (706) 213-3847 alp@sepa.doe.gov

  2. Utility Geothermal Working Group Sponsors And the Geothermal Resources Council Contact: Guy Nelson, Team Leader (541) 994-4670 Gnelson181@aol.com

  3. What is the Utility Geothermal Working Group? The UGWG is a group of utilities and ancillary associations formed under the US Department of Energy’s (DOE) Geopowering the West (GPW) Initiative

  4. UGWG Support UGWG is supported by a number of organizations, including: • Bonneville Power Administration (BPA) • DOE • Geothermal Resources Council (GRC) • Western Area Power Administration (Western)

  5. UGWG Mission To accelerate the appropriate integration of three geothermal technologies into mainstream applications • Power Generation • Direct Use • Geothermal Heat Pumps

  6. Some UGWG Members Arizona Public Service BPA State Working Groups GRC Sandia National Lab Western Idaho National Lab Ormat, Int’l South San Joaquin ID Palo Alto Utilities Salt River Project Redding Electric Seattle City Light Springfield UB

  7. Webcasts Power Generation Direct Use GeoExchange Transmission Issues Public Participation Tale of Two Buildings RECs Project 25x25 Central Solar Option www.repartners.org

  8. GRC Annual Meeting • UGWG Annual Meeting in conjunction with the GRC meeting • UGWG Members encouraged to submit papers for the GRC meeting • Several sessions are designed to address Utility Issues

  9. AffirmationCost Effective Energy Efficiency is the first choice

  10. Duct Loss and Testing

  11. Geothermal Power Production UTILITY GRADE POWER  Modular power plants are readily expanded as needs increase  Power costs competitive with current fossil fuel technologies  Base Load power produced 24/7 @ over 90% Capacity Factor  Fuel Risk assumed by project operator not by consumer SUSTAINABLE & ENVIRONMENTALLY SAFE  Many projects operating for decades at 98%+ availability  Geothermal is non-combustion - near zero emissions MINIMAL SURFACE USE - INDEPENDENT OF WEATHER FIELD-PROVEN TECHNOLOGIES - 9,000 MW WORLD WIDE STRAIGHT FORWARD TO INSTALL, OPERATE AND MAINTAIN  Projects developed over 3 year period - O&M by local staff

  12. Binary Cycle Power Plant

  13. Biomass - Energy Forestry Energy Crops Solar Thermal Power Average Capital and Delivered Costs 22000 Capital Cost (US$/kW) Solar Photovoltaic 4000 3000 New Geothermal without PTC 2000 Coal Wind without PTC 1000 Cost of delivered energy (US$/kWh) Gas 0 0.16 0.18 0.86 0.04 0.06 0.08 0.10 0.12 0.14 0.20 0.88 0 0.02 Source: International Energy Agency & Ormat

  14. PROJECT DEVELOPMENT 20 MW net 1. Exploration & resource assessment $ 5.0 M 12 Months time frame 2. Well field drilling and development 15.0 12 Months time frame after completion of item 1 3. Power plant, surface facilities, & transmission 30.0 18 Months time frame with overlap of item 2 4. Other costs: 10.0 • Commitment fees • Legal & Accounting fees • Consultants, • Interest during construction, and • Debt service and operating reserve • Construction contingencies and Developers fee 12 Month process which should begin after completion of item 1 5. TOTAL FINANCED COST FOR 20 MW PROJECT $ 60 M To be provided as construction phase financing 6. Total Average Development Period 36 months

  15. Geothermal Power Economics Gas Fired Combined Cycle Default Choice • Capital Costs + O&M Cost + Fuel Costs = 6.5¢ to 7.2¢ per kWh Geothermal Power Costs • Capital Costs + O&M Cost + Fuel Costs = 6.5¢ to 9.5¢ per kWh • Geothermal Fuel Costs are zero, O&M costs are less than 1.0¢ per kWh

  16. Geothermal Power Capital CostsInterest rates are the key!!!! Capital Cost (CC) = $3000/kW @ 0.2 Annual Factor, CC = 7.6¢/kWh (reflects interest rates of ~ 18-20%) @ 0.15 Annual Factor, CC = 5.7¢/kWh (reflects interest rates of ~ 13-15%)

  17. Utilities with Geothermal Power in their Resource Portfolios No. CA Power Agency – including Alameda, Palo Alto, Lodi, Lompoc, Roseville, Redding, Silicon Valley Power, and Turlock Irr. Dist. So. CA Public Power Authority – including Anaheim, Burbank, Glendale, and Imperial Irr. District Investor Owned Utilities such as PG&E, SCE, SDG&E, Idaho Power, and PacifiCorp

  18. UGWG Draft Steps to Implementing a Successful Geothermal Power Project 1. Delineated geothermal resource, with bankable report, defining probable long term performance. 2. Financible Power Purchase Agreement from a Creditworthy purchaser. 3. Defined permitting path without pitfalls. 4. Credible developer with proven track record and experienced supply/subcontract team. 5. Control of entire geothermal resource to preclude competing interests for same fluid/steam supply. 6. Use of Proven Technologies.

  19. Geothermal Heat Pumps Heating Mode Illustration developed by NREL Geothermal heat pumps use the stable temperatures of the ground (often vertical boreholes typically are 100 to 400 feet deep) as a heat source to warm buildings in winter and as a heat sink to cool them in summer. Also called ground-source heat pumps or Geoexchange units.

  20. Geothermal Heat Pumps Geo Heat Pumps Cooling Mode Illustration developed by NREL

  21. Geothermal Heat Pump (GHP) Economics – Residential Customer Perspective Assumptions: electric rate = 10¢ per kWh, gas rate = $1.50 per therm, res. gas heating use = 900 therms per year, res. electric AC use = 1660 kWh per year Conventional HVAC costs (gas heating and electric cooling) = $1350 (heating) + $166 (cooling) = $1516/year GHP costs (all electric) = $1061 + loop lease Sources for assumptions are USDOE and USEIA. If the conventional source is propane, oil, or electric resistance for heating, GHP economics are better.

  22. Customer GHP Economics Continued GHP makes sense if the loop lease is less than: Conv. Cost – GHP costs = $1516 - $1061 = $455/yr Loop leases vary due to loan terms. Assuming 6% - 30 year terms = $332/yr

  23. Other factors influencing GHP economics(customer perspective) The Utility can sweeten the pot by offering • A rebate (often in $/ton) and or • Favorable rate schedules and or • Low (sometimes even zero) loop lease rates

  24. Utility GHP Economics Utility economics are less straight forward than customer economics. Considerations include: • Peak period (Summer vs. Winter) • Default heating option (electric (electric resistance vs. other)

  25. Utilities with GHP in Their Resource Portfolios Colorado Springs, Delta-Montrose, First Energy, Kansas City P&L, Moon Lake, Otter Tail, Palmetto, Plumas-Sierra, and Yellowstone Valley.

  26. Future UGWG ActivitiesWorkshops and Webinars in conjunction with Western, UWIG, NREL, APPA, and NRECA See repartners.org website for details CREBs -April 4th, Webinar Heat Pump Economics -Utility Energy Forum May 4

  27. Future UGWG Activities – Technology Related Waste Heat Recovery Utility Financing Geothermal Heat Pumps

  28. Contact Information Guy Nelson, UGWG Team Leader (541) 994-4670, Gnelson181@aol.com

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