Developing, Building, and Operating Geothermal Power Plants

1. Developing, Building, and Operating Geothermal Power Plants Prepared for the Geothermal Technologies Workshop Series Guy Nelson, Team Leader Utility Geothermal Working Group Robert Putnam, CH2M�HILL Updated July 30, 2008

2. What is the Utility Geothermal Working Group? The UGWG is a group of utilities and other industry stakeholders formed with support from the U.S. Department of Energy�s (DOE) GeoPowering the West (GPW) Program to accelerate the appropriate integration of three geothermal technologies into mainstream utility applications: Power Generation Direct Use Geothermal Heat Pumps

3. UGWG Support The UGWG is supported by a number of organizations, including: The National Rural Electric Cooperative Assoc. Western Area Power Administration The American Public Power Association Bonneville Power Administration Geothermal Resources Council

4. UGWG Members Include: Arizona Public Service Sandia National Lab Idaho National Lab South San Joaquin ID Salt River Project Seattle City Light State Working Groups Springfield UB Redding Electric Palo Alto Utilities Ormat, Int�l

5. Webcasts and Workshops Role of Renewables in Consumer-Owned Utility Supply Portfolios � Feb. 13, 2008 REC Tracking and Marketing Systems � April 9, 2008 Public Participation � May 14, 2008 Geothermal Technologies Workshops March 17-18 Redwood Falls, MN March 20-21 Sioux Falls, SD June 9-10 Denver, CO For further information, go to www.repartners.org

6. The Geothermal Resource

7. Geothermal Power Plant Economics ($/kW) 1. Exploration & Resource Assessment 400 12 Months time frame 2. Well Field Drilling and Development 1000 12 Months time frame after completion of item 1 3. Power Plant, Surface Facilities, & Transmission 2000 18 Months time frame with overlap of item 2 4. Other costs: 600 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 ~ $ 4000/kW

8. P Project Timeline 3 to 4 years

9. Annualized Capital Costs (CC) Capital Costs $4000/kW @ 0.2 Annual Factor, CC = 101 $/mWh @ 0.15 Annual Factor, CC = 76 $/mWh @ 0.10 Annual Factor, CC = 51 $/mWh O&M costs ~ 15 $/mWh Fuel Cost = 0

10. Economic Comparisons Gas Fired Combined Cycle Default Choice Capital Costs + O&M Cost + Fuel Costs = 7.0� to 8.2�/kWh Geothermal Power Costs Capital Costs + O&M Cost + Fuel Costs = 6.6� to 11.6�/kWh Geothermal Fuel Costs are zero

11. Geothermal Power Capital CostsInterest rates are the key!!! Conventional Lending Institutions: 10 - 12% Consumer Owned Utilities: 5 � 6%

12. Utility Risk Considerations A delineated geothermal resource, A defined permitting path without pitfalls, A credible developer, The control of entire geothermal resource, and The use of proven technologies.

13. Delays are costly 1. Exploration & Resource Assessment 400 12 Months time frame ($ 400/kW 2. Well Field Drilling and Development 1000 12 Months time frame after completion of item 1 ($ 1000/kW Funding Sources: Internal or Venture Capital 15-20% interest Pacing of the investments is critical

14. TX Issues Reliability Hydro Conditions NIABY

15. Power Plant Cost Caveat

16. Power Plant Cost Caveats Competition for Commodities Size and Modularity New Technologies Skill Demography

17. Utilities with Geothermal Power in their Resource Portfolios No. CA Power Agency, So. CA Public Power Authority, PG&E, SCE, SDG&E, Idaho Power, and PacifiCorp

18. Who carries the load? Societal Costs � Production Tax Credits � Carbon Credits

19. 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.

20. GHP Economics Continued For the customer, GHP makes sense if the loop lease is less than: Conventional Cost � GHP costs = $1516 - $1061 = $455/yr Loop leases vary due to loan terms. Assuming 6% - 30 year terms = $332/yr If the conventional source is propane, oil, or electric resistance for heating, GHP economics are better.

21. Utilities Can Influencing GHP Economics Utilities can offer: A rebate (often in $/ton), Favorable rate schedules, or Low (sometimes even zero) loop lease rates

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

23. Utility GHP Economics (continued) The utility saves about 40% in peak demand in the summer (and about the same in winter if it is replacing electric resistance heating) and loses about 70% of revenues from kWh sales. GHP makes sense if the peak demand savings more than offset the revenue losses and any other losses such as rebates, rate reductions, or lower interest rates.

24. 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.

25. Contact Information Guy Nelson, UGWG Team Leader 541-994-4670 Gnelson181@aol.com Robert Putnam, CH2M�HILL 315-751-2638 rputnam@ch2m.com