fernando sanchez penarroyo - overview of the global geothermal energy development marketplace

7/31/2019 Fernando Sanchez Penarroyo - Overview of the Global Geothermal Energy Development Marketplace

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Overview of the Global Geothermal

Energy Development MarketplaceFernando S. Pearroyo

DirectorInternational Geothermal Association

7th Asia Clean Energy Forum

08 June 2012, Asian Development Bank Manila


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Presentation Outline

State of the marketplace

Technology

Financing schemes Risk mitigation

Challenges


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World Geothermal Electricity (2005)

Bertani (2005) WGC2005


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2010 Capacity and Use

Installed Energy

Power Use Capacity

Use (MW) (GWh/yr) Factor

Electric 10,715 67,246 0.72

Direct-use 48,483 117,778 0.28

Lund and Bertani, 2010, WGC and GRC

Geothermal energy kept its promises!


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June 19, 2012

61950 1960 1970 1980 1990 2000 2010

Bertani, 2010, WGC

18,500 MWe in 2015

World Geothermal Electricity (2010)


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2010 Worldwide Annual Use (TJ/yr)

June 19, 2012

Geothermal heat

pumps 49.0%

Others 0.2%

Space Heating

14.4%

GreenhouseHeating 5.3%

Aquaculture pond

heating 2.6%

Agricultural drying

0.4%

Industrial uses

2.7%

Cooling / snow

melting 0.5%

Bathing andswimming 24.9%



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2010 Worldwide Installed Capacity (MWt

June 19, 2012

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Industrial uses

1.1%

Cooling / snow

melting

0.7%

Bathing and

swimming

13.2%

Geothermal heat

pumps

69.7%

Agricultural drying

0.3%

Aquaculture pond

heating

1.3%

Greenhouse

Heating3.1%

Space Heating

10.7%

Others

0.1%



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IEAs Top 15 geothermal energy producing

countries, electricity and heat in 2009


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Great East Japan Earthquake

Earthquake and tsunami on 11 March 2012

Fukushima I Nuclear Plant and other nuclear andthermal plants were severely damaged

No serious effects on geothermal plants in Tohokuregion

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Photo: TEPCO


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Statement by Former PM Kan at the G8

Summit in Deauville on 26 May 2011

Japan will now review the energy basic plan. We must nurture the two new pillars of

renewable energy and energy-efficiency,

in addition to the two pillars to date of

nuclear power and fossil fuels. We will engage in drastic technological innovation in order to

increase the share of renewable energy in total electric power

supply to at least go beyond 20 percent by the earliest

possible in the 2020s.

We aim to introduce large scale offshore wind turbines, next

generation biomass fuels from algae etc., biomass energy,

and geothermal energy by mobilizing Japanese technology.

- Jiro Hiratsuka, Climate Change Policy Div., Ministry of the Environment, Japan


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Closing the nuclear power plants inGermany

Security tests

Ethics Commission

June 30th, decisionof the parliament to

close all nuclearpower plantsforever until 2022

- Prof. Dr. Horst Rueter

March 11th, 2011 Earthquake, tsunami and nuclear accident inFukushima

March 15th, Moratorium, closing of the 10 oldest plants (Merkel)

Unterweser, Brunsbttel, Krmmel, Biblis A und B, Philippsburg 1, Isar 1

sowie Neckarwestheim 1.


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Icelands Primary Energy Consumption 1940-2009From an under-developed to a highly industrial country in few decades, Dr. Bjarni Plsson

Central America C rrent Geothermal electric


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Central America Current Geothermal-electricInstalled Capacity (Gutierez-Negrin, MGA)

Country MW

Mexico 958.0

Costa Rica 207.1

El Salvador 204.4

Nicaragua 123.5

Guatemala 52.0

Total in the region 1,545.0

~14% of the worldwide

geothermal-electric

capacity (10,715 MW)


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South America and Africa

Abundance of resources such as oil, gas, and hydro- energy policies and strategies in South Americahave excluded renewables and other alternatives

as being too costly and technologically unfeasible Eastern Africa has an estimated geothermal

resource potential of over 7,000 Mwe but high

upfront costs and risks associated with exploration

drilling remain the greatest obstacles. Investmentin the geothermal sector is still hindered by

unsupportive regulatory, institutional and financial

conditions.


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TECHNOLOGY


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Innovative exploration techniques

Magnetotellurics

Microseismic interpretation

3D modelling

High temperature logging techniques Infra-red for surface monitoring

Geochemical modelling

- Dr. Colin Harvey, GNS Science, Past President New Zealand Geothermal Association


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June 19, 2012

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Enhanced Geothermal Systems EGS

Source: http://hotrock.anu.edu.au

Most heat is contained in therock, but:

if rock is impermeable howdo you circulate water?

how do you get injector andproducer tocommunicate?

fracturing

Sometimes known as Hot, DryRock

In Australia, HFR is notconsidered as a risky

technology the appropriateapplication of HFR techniquesis regarded as the bestgeological risk mitigation


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Direct Use Technology Developments

Space heating and cooling with Geothermal Heat Pumps

(GHPs)

Geostructures, e.g. Energy Piles

GHPs for large building complexes

- Ladislaus Rybach, Institute of Geophysics ETH Zurich, Switzerland

P H


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Process Heat

Innovation in

New Zealand

- Dr. Colin Harvey, GNS Science

Largest industrial direct geothermal heat use inthe World (~200 MWth ; 5300 TJ/yr)Norske Skog Paper Mill

Two World class pulp mills using rawgeothermal steam for drying

World class large scale greenhouses and formilk product drying


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Globally installed geothermal heat pump capacity

Data from Lund et al. (2010)

Growth rate: 20 % per year


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Terminal E, Zurich airport

85,200 m2 energy supply area 2120 MWh/a heating, 1240 MWh/a cooling load 310 energy piles 30 m

- Ladislaus Rybach, Institute of Geophysics ETH Zurich, Switzerland


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Development complex Suurstoffi at Rotkreuz near Lucerne, Switzerland

1st development stage 230 flats + 11,000 m2

Heating and DWW 1.8 GWh, cooling 1.0 GWh

- Ladislaus Rybach, Institute of Geophysics ETH Zurich, SwitzerlandSource: Wagner/Geowatt AG (2011)


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Development site Suurstoffi at Rotkreuz near Lucerne, Switzerland

Status in September 2011- Ladislaus Rybach, Institute of Geophysics ETH Zurich, Switzerland


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Geothermal stores at Science City, ETH Zurich

(now in construction)- Ladislaus Rybach, Institute of Geophysics ETH Zurich, Switzerland

Total 4 mio m

3

, >700 BHEs 200 m, Total cost ~ 40 MCHF


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FINANCING


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The Challenge: Accessing Capital

The main support instrument utilized in the EU is

feed in tariff, i.e. a fixed and guaranteed price paid

to the producers of electricity from RE

Geothermal developers who wish to accesscapital must have strong resource prospects, an

understanding of the developers game plan to

gain comfort with risks, and experience.

Resource identification, resource evaluation, testdrilling: the three earliest and highest risk

development phases are the most difficult for

raising capital.


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Three approaches to raising

early-stage funding

Private equity placements of a portfolio of projects

Exchange-traded corporate equity financing

Balance sheet financing (effectively a combinationof corporate debt and retained earnings) by more

established companies


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RISK MITIGATION


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Insurance and risk coverages different approaches:

Geological risk insurance system (France)

Risk guarantee system (Switzerland, Germany)

Exploration risk insurance (Unterhaching by Munich Re)

Productivity guarantee insurance - insures the risk offinding geothermal reservoirs, which do not have sufficient

discharge for the feasible economic development of ageothermal project.

- Michael Schneider, KONSENS KG, Germany


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US Resource risk management tends to

be handled by a combination of:

Technical approaches (application of best practices for

exploration, development and resource management,

based on a significant body of resource developmentexperience)

Commercial approaches (risk pooling, joint ventures,

equity funding)

Government / regulatory / legislative approaches (price

supports and tax mechanisms, cost-shared funding)

- Ann Robertson-Tait, Roger Henneberger and Subir Sanyal, GeothermEx


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US Federal and State Policies andIncentives

Tax incentives

Inter-agency coordination and streamlining of federal

permitting and land lease processes Renewable Portfolio Standards

Greenhouse gas emission reduction policies


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CHALLENGES


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Technical barriers

While some high temperature hydrothermal arecompetitive, many geothermal technologies are moreexpensive than fossil plants (but may be lessexpensive than other RE sources like solar and wind)

Large differences and cost ranges per technologymake it difficult for project finance

Some new technologies have yet to be developed andtested commercially

According to the International Energy Agency, EGSwill only become commercially available after 2025 Data from non conventional geothermal and EGS

geothermal heat deployment are scarce


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Risk Factors

Foreign equity ownership

Availability of geo-scientific information and

professionals

Area status and clearance, conflict with other land

use, surface/land ownership

Procedural efficiency and clarity between

government agencies Environmental issues - Judicial intervention and

opposition by some sectors of civil society


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Market facilitation and transformation

Development of more competitive drillingtechnology (e.g. exploration-only drilling,directional drilling)

Introduction of guarantee schemes Development of publicly available database

protocols and tools for geothermal resourceassessments

RE Financial Program geologic risk insurance,facilitate access to risk capital


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Development of guidelines for the

following mechanisms

Resource reporting

Renewable Portfolio Standard

Inclusion of the following technology for Feed-inTariff Rates

Enhanced geothermal systems

Low enthalpy


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Conclusion

Since 2005, a geothermal renaissance. New countries and

new companies have joined the geothermal community.

New technologies have been implemented. Lowerresource temperatures are now recoverable. EGS widens

the accessibility of geothermal energy.

BUT: Regulatory framework should be long term,

transparent, predictable and independently administered

As long as costs are higher than fossil fuel plants, economicand financial incentives are appropriate

Forms of support other than financing, like technology

sharing, training, & geological surveys are being used.


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About the Speaker

BS Geo, Bachelor of Laws (UP), Master of Laws (Univ.of Melbourne)

Director, International Geothermal Association

Trustee, National Geothermal Association of thePhilippines

Director, Clean Rock Renewable Energy Resources Corp.(Natib and Daklan RE Service Contract areas)

Professorial Lecturer, UP National Institute ofGeological Sciences

Managing Partner, Puno and Penarroyo Law(www.punopenalaw.com)

fernando sanchez penarroyo - overview of the global geothermal energy development marketplace

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