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Geothermal Report Ed 1, 2011

 

2010 appeared to be a weak year for geothermal with few projects commissioned and only in existing markets. However, this is not indicative of the state of the sector as a whole. As more money was invested in geothermal last year than the previous year. Several projects are now in the advanced stages of development, e.g. in the US alone there is 722 MW of project in phase 3 and 4, and support for the sector is strong. Specifically, Japan and Indo-nesia are relaxing rules on developing geothermal projects on protected land, which should open up more sites for development.

Once again the US is the largest country in terms of installed capacity of 3,102 MW followed by the Philippines (1,966 MW), Indonesia (1,189 MW), Mexico (958 MW) and Italy (863 MW). Sixth placed New Zealand is reporting strong growth after a 140 MW geothermal plant was commissioned in the country last year and is now the biggest plant in operation. This is a flash geothermal plant, like the second largest plant – the 117 MW Wayang Windu plant in Indonesia.

However, there are signs of a move towards the increasing use of binary geothermal plants. These plants tend to be used at lower temperature resources. As viable high temperature geothermal sites are being used or are under development and the creation of more viable sites through hydraulic fracturing, known as enhanced geothermal systems (EGS), is not close to full commercialisation. With only two EGS projects in operation, the economics is not fully understood and there are concerns about induced seismicity. An even more innova-tive idea is the use of underwater geothermal resources for projects, but this would be extremely expensive and a long way in the future.

There are also reports that lithium in geothermal brine could be used to generate additional revenue for owners of geothermal projects. One project such project is under development in the Salton Sea in California in the USA.


Research and Analysis highlights

Over the next five years high growth markets for the sector are expected to continue to be the top six main markets, Kenya, Iceland, Mexico and South America. For the latter, devel-opers have already been awarded concessions to explore new sites in Argentina, Colombia, Chile and Peru. In the middle of 2010 the Chilean government announced plans to invest up to USD 200 million in geothermal projects and will grant over 170 geothermal concessions over the next two years, which should result in the country installing its first generation plant in the mid-term. Kenya and Mexico and the other six major markets are likely to commission projects in the advanced stages of development. As part of a strategy to raise revenue Iceland is considering exporting electricity to other countries. A feasibility study is being undertaken to build a sub-sea electric cable linking Iceland to Europe to sell electricity generated from geothermal projects to Britain, Norway, Holland and Germany.

Another potential growth market is Japan. The country’s geothermal power plants were largely unaffected by the recent earthquake and tsunami unlike the Fukushima nuclear power plant. As both provide base load electricity and Japan has a good geothermal re-source.

Australia is also developing geothermal projects, and has several EGS and Hot Sedimentary Aquifer (HSA) projects in the pipeline.

Cost is still a major barrier to the development of projects and access to finance for the exploratory stages is still a challenge.


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Sep 2011
NRGExpert
424 pages

Global Market Research
ASDR-23137

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