Geothermal Competitive in Markets

The price of petroleum and natural gas remained lower in the international market and monopoly management on electricity industry was broken down in many countries making the geothermal energy faced with challenges from the market. However, geothermal power generation is still the suitable generation program with its advantage of lower cost.

In 1995 world geothermal conference, Custavo Calderron, energy expert in chief for Inter-American Development Bank (IDB), elaborated the advantage of exploiting geothermal resources in the developing country.

In accordance with the data used to work out the development planning by decision-makers in the World Bank and countries in the Central America and Caribbean Sea, the investment expenses for unit installed capacity and average value for basic load generation cost for various energy generation can be obtained:

a.        For hydropower (capacity ranging from 70MW to 450MW), it is 2700 $/kW and 0.080 $/kWh,

b.        For geothermal power generation, it is 2650 $/kW and 0.045$/kWh,

c.        For steam generation (petroleum and coal powered ranging from 30MW to 125MW), it is 1850$/kW and 0.075 $/kWh,

d.        For diesel engine plants, it is 1540 $/kW and 0.080$/kWh.

The investment expense of geothermal generation has no so much difference with that of hydropower, but the generation cost is comparatively lower than that of conventional generation schedule.

On a series of economic demonstrations for 3 geothermal power station loan projects approved by IDB, geothermal generation was brought into the schedule due to the lowest cost based on various conditions on lower, moderate, and higher needs on electricity. According to the records by IDB, its investment recompense rate was ranging from 16.4% to 21.6%, higher than 12% acceptable by IDB. All these data indicated that the geothermal energy was competitive in developing countries.

In order to increase the economic competitiveness, the production cost should be decline uninterruptedly. The statistics in the US in the recent 5-year shows that the production cost for geothermal generation has been declined 3% since the innovative exploration technologies are applied; the key technologies to further increase the competitiveness include 5 aspects:

a.        To employ small-diameter exploration well and corresponding test tools so as to decrease the drilling cost,

b.        To exploit technologies for the flerry fracture survey under the well and the delineation lie concealed heat storage,

c.        To increase the production capability on geothermal well,

d.        To shorten the construction period,

e.        To increase the project model on geothermal storage and technologies on model management.

This reflects that the geothermal industry in western countries has intentions to conduct research and improve the current technologies in order to decline the exploration cost and finally increase the competitiveness of geothermal energy.

Although the price for future electricity market is still uncertain, it is sure that there is comparatively potential in decline the engineering expense for geothermal power station and the generation cost. The potential is based on the undergoing research and development, which will be gradually realized under great efforts.