|Global geothermal capacity could approach 14,000 MW by 2020
Credit: Gretar Ívarsson, Nesjavellir
By the end of this year, the worldwide geothermal market is expected to reach an installed operational capacity of 12,000 MW. This is according to the 2013 Geothermal Power: International Market Overview, the latest report published by the Geothermal Energy Association (GEA).
The GEA report is also extremely bullish about the future of the market. It expects geothermal power to “continue to grow substantially” right across the globe, anticipating capacity worldwide could approach 14,000 MW by the end of the decade when the current project pipeline is taken into consideration.
The country that is topping the table in terms of megawatts under construction is Indonesia with 475 MW, and Kenya is in second place with 296 MW. Other countries the report makes special mention of, again in terms of geothermal power plants under construction, are the Philippines (110 MW), Iceland (260 MW), New Zealand (166 MW) and the US with 178 MW.
However, in terms of the actual number of projects the US remains the undisputed leader with 182 projects under development. According to the report, that largely reflects the fact that the US has explored its geothermal resources much more extensively than most other nations, with the first geothermal power plant built there over 50 years ago.
Thus in relative terms, says the report, countries such as Chile and Indonesia are just beginning to explore their geothermal resources, but in the future, the GEA expects to see more exploration and development as the geothermal markets in countries like Chile, Indonesia, the Philippines and Japan evolve.
|Global installed capacity of operating geothermal power plants (MW). Source: B. Matek, GEA|
The GEA report divides the global geothermal market into three categories: Established Markets, with more than 500 MW of installed capacity; Developing Markets, with a capacity ranging from 50 MW to 500 MW; and New Markets, with less than 50 MW installed.
So let us look in more detail at a selection of countries, whether established, developing or new, where progress to develop geothermal power capacity has taken place over the last year.
Despite the US leading the world in installed geothermal energy – it currently stands at 3389 MW – development somewhat slowed in the first part of this year compared to a period of rapid growth seen in 2011 and 2012. According to the report, several US projects have progressed slowly because of an uncertain policy environment and problems attaining power purchase agreements (PPAs) or financing. Rather controversially, the reports suggest that “there could be a time in the foreseeable future when Indonesia leads in global installed geothermal capacity”.
However, it is not all bad news and projects across the country are still moving forward. For example, a geothermal project in Aspen, Colorado recently finished drilling test wells and is anticipated to move to the next project stage.
The opportunities for geothermal to be utilized as a flexible power source, contrary to its traditional baseload role, also became a topic of discussion in the US this year following a report sponsored by Ormat Technologies. It relates in particular to binary power plants, which can be ramped up and down multiple times a day – see boxed text on p.22).
Diverging geothermal technology uptake
There are three main types of geothermal turbines – binary, flash and dry steam. In dry steam, the oldest power technology, steam is withdrawn directly from an underground geothermal reservoir and used to run the turbines that power the generator.
In flash plants, high-pressure and high-temperature geothermal water separates into steam and water as it rises to the surface. The two-phase mixture of steam and liquid is separated or ‘flashed’ in a surface separator. The steam is delivered to a turbine that powers a generator and the resulting liquid is re-injected to the reservoir.
In binary plants, geothermal water is used to heat a secondary liquid called a working fluid, which boils at a lower temperature than water. Heat exchangers are used to transfer the heat energy from the geothermal water to vaporize the working fluid.
The vaporized working fluid, like steam in flash plants, turns the turbines that power the generators. The geothermal water is injected back into the reservoir in a closed loop that is separated from groundwater sources.
Interestingly, the distribution of power plant technology in the US is not reflective of the rest of the world. America has mostly developed its high-temperature resource in flash and dry steam plants and very few new power plants with this technology are in the pipeline, favouring binary power plants instead. Since 2007 all but one of the new power plants that came online in the US were binary.
Interestingly, this trend has not been replicated in the rest of the world, where many countries are beginning to develop their higher-temperature resources. Flash and dry steam plants are in the pipeline in many countries across Southeast Asia, South America, and Africa.
Finally, the reports believes that President Barak Obama’s recent directives on cutting carbon and the greater development of renewable energy both bode well for geothermal development in the US.
With an installed capacity of 1884 MW, the Philippines is currently second to the US. According to the GEA report, this Southeast Asian nation has 27 projects under development, three of which are under actual construction, as well as 724 MW of planned capacity additions.
Recently, the Philippine Department of Energy announced plans for a geothermal expansion of 1445 MW by 2030, with an estimated total potential investment of $7.5 billion. The report says that could translate into a 75 per cent growth over the current installed capacity, with the majority of this development occurring by 2020, i.e. ahead of the government’s schedule.
|Developing geothermal markets’ installed capacity (MW). Source: B. Matek, GEA|
The other important established market, again in Southeast Asia, is Indonesia, which has an installed geothermal capacity of 1333 MW and, as indicated above, could well vie for the US geothermal power crown in the not too distant future.
Indonesia undoubtedly has a massive potential for geothermal power, but like many countries it is struggling with regulatory issues and a government that is obstructing geothermal development, says the report.
In 2003, Geothermal Law 27/2003 was introduced and significantly changed the framework for geothermal development, mandating that all future development had to be conducted under a competitive tendering process that was transparent. The expectation was that this would speed up the process.
However, land acquisition and permit issues are currently stalling 30 geothermal projects that were launched before and after the introduction of the 2003 law, i.e. 11 out of 20 geothermal projects launched before the 2003 law, and 19 projects launched after the law are still in the exploration stage.
Nevertheless, Indonesia ranks second for developing projects with 57 projects in some phase of development. Although the report does not expect any more plants to come online this year, if all plants are finished by their publicly announced completion dates, Indonesia could reach close to 2 GW by 2018.
Finally, since Fukushima in 2011, Japan has been looking for clean alternatives to nuclear energy. As a result, says the report, interest in geothermal energy has been revived following several years of stagnant development. In March 2012, the Japanese Energy and Environment Council decided to deregulate several burdensome regulations that hindered geothermal development. Additionally, in July 2012 Japan introduced a new feed-in tariff scheme – 27.30 yen/kWh ($0.30/kWh) for project greater than 15 MW and 42 yen/kWh for projects smaller than 15 MW.
According to the Ministry of Economy, Trade and Industry, Japan is currently developing 36 geothermal power projects with four of those actually under construction. The nation plans to bring at least 50 MW of geothermal power online by the end of the decade. But despite this good news, the report says, Japan has a number of regulatory and structural barriers to overcome before any surge in geothermal development is expected.
Developing and new markets
Kenya remains the world’s most important developing market. This East African nation boosts an installed geothermal capacity of 215 MW, but has an estimated potential of 7000–10,000 MW. It is also one of the fastest growing geothermal markets, and is currently fast-tracking 22 projects, with three under construction and expected to be operational in late 2014.
Kenya’s government is also putting substantial resources into building up its geothermal infrastructure – by 2030 it envisions 5000 MW, requiring a reported capital investment of $18 billion – and it appears to be paying dividends, says the GEA report.
Currently, 296 MW of the 1000+ MW of geothermal under development in the country are under construction, and if all projects are completed on time the report expects Kenya to lead the world over the next decade, as well as become a centre of geothermal technology on the African continent.
Turkey is another extremely promising emerging market for geothermal power, with a current installed capacity of 163 MW, with majority of its geothermal resources are located in the West Anatolian provinces.
Over the last 40 years, Turkey has drilled about 1200 wells for geothermal electricity, as well as direct-use applications, and about one-third of these wellbores were drilled in the last four years, confirms the report. Four more power plants are expected to be operating by the end of 2013, adding 150 MW and raising the installed capacity to over 300 MW. Currently, Turkey has 59 projects under development and 310 MW under construction.
In terms of new markets, the GEA report highlights one in particular that is showing huge promise, and that is Ethiopia.
According to the report, in recent months several announcements look set to greatly benefit geothermal development there. The Development Bank of Ethiopia confirmed in July that an initial $20 million, funded by the World Bank, will be ready to kickstart geothermal energy projects within months, with another $20 million expected to be added to the fund at a later date.
The African Development Bank is also working to define a geothermal development roadmap for Ethiopia, confirms the report.
Ethiopia has an estimated geothermal potential of 5000 MW and has plans to bring 450 MW on line by 2019. With six early-stage geothermal fields under development and one geothermal plant expansion at Aluto-Langano, Ethiopia is actively pursuing the exploitation of its geothermal resources, says the report. The Aluto-Langano expansion is expected to add between 35–70 MW to the existing plant’s capacity by 2016.
The report also looks at the current geothermal activity in the Central and South American region, and finds that the majority of it is in the early exploration stages, with the governments of nations such as Chile, Peru and Argentina having made land available for geothermal exploration.
And there are some projects in the region that have reached the middle/late stages and drilled their first production wells. This relates in particular to Guatemala, which has 42 MW of capacity currently installed and Nicaragua, with 104 MW of capacity.
Costa Rica is another important developing market in the region. This Central American country has a substantial geothermal resource and a current installed capacity of 208 MW. According to the Ministry of Environment and Energy, geothermal could provide up to 40 per cent of the Costa Rican electricity generation, up from 12 per cent.
However, a lot of its resource lies within the boundaries of national parks, leaving substantial regulatory barriers to its development.
The government is beginning to address this issue and unlock some more of its geothermal potential, the report says, and plans to introduce legislation that would open the Rincon de la Vieja National Park in Guanacaste for geothermal project development. It is likely, however, to face substantial opposition from environmentalists.
The GEA’s latest report clearly paints a positive picture about the current status of the world’s geothermal power development and also, looking long-term, it remains upbeat. In our inextricable move towards a low-carbon power generation base, geothermal undoubtedly has an important role to play, although it continues to face a number of policy, regulatory and structural obstacles, as well as its continued high CAPEX.
However, Karl Gawell, the executive director of the GEA, believes that “the number of projects will continue to grow as more and more countries recognize the potential economic and environmental benefits that geothermal power can bring”.
The full report can be downloaded from the GEA website (www.geo-energy.org)
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