Often seen as the poor relation to wind and solar, geothermal energy now appears to be enjoying renewed interest as a growing number of countries from across the globe seek to ensure a secure and sustainable baseload supply of electricity.

Geothermal energy is often overlooked as a viable renewable energy resource when compared to its big brothers wind and solar power. But recent years have brought a revival in interest and a change in attitudes. The latest international geothermal energy market update from the Geothermal Energy Association (GEA), published earlier this year, reveals a changed outlook for the sector.

The GEA report shows that geothermal power is growing rapidly right across the globe, with the United States retaining its leadership in production with the biggest addition to its installed capacity between 2005 and 2010, while Germany was somewhat surprisingly the fastest growing geothermal power producer in percentage terms.

Geothermal power plants, such as the 100 MW Mokai plant, generate 10 per cent of New Zealand’s electricity

Overall, on-line geothermal power grew from 2005 to 2010 by 20 per cent. But, more significantly, 70 nations now have projects under development, which is a 52 per cent increase in the past three years.

This global geothermal development is being driven in part by regional institutions that, in addition to financing geothermal projects, are enhancing regional co-operation within an emerging renewable energy sector.

Examples include the African Rift Geothermal Energy Development Facility (ARGeo), which underwrites drilling risks in six African nations and is backed by the United Nations Environmental Programme (UNEP), the World Bank and the geothermal initiatives of the European Bank for Reconstruction and Development supported by European Union (EU) climate policies.

Africa

Geothermal energy is a key resource for African countries along the East African Rift Valley System, a volcanic region with an estimated 7000 MW of electricity generating potential. ARGeo is working to assist six member countries – Djibouti, Eritrea, Ethiopia, Kenya, Tanzania and Uganda – to accelerate the pace of geothermal resource development in the region. It is doing so primarily via a risk mitigation facility (RMF), that cuts the risks associated with geothermal exploration and drilling.

High upfront costs and associated risks involved in geothermal development have been significant barriers to geothermal development worldwide. A regional mitigation strategy is expected to open the door to private and public sector funding for power plant development.

Kenya exploits 167 MW of geothermal power at the Olkaria geothermal field and is fast-tracking programmes to increase its renewable capacity, of which geothermal energy resources could contribute 490 MW by 2012.

According to the state-run Geothermal Development Company, this east African nation is moving to expand geothermal generating capacity by 4000 MW over the next 20 years. GDC currently reports a total geothermal capacity of 490 MW under development coming from six projects in Olkaria and Menengai.

Kenya’s largest geothermal power generating project to date consists of four 70 MW geothermal plants in Olkaria and Naivasha, on which construction started earlier this year. The 280 MW project is the result of a contract between Kenya Electricity Generating Company (KenGen) and Sinclair Knight Merz of New Zealand Company, at a cost of $1.4 billion.

Asia

The realization of Asian nations’ considerable geothermal potential has tended to be overshadowed by oil development. An adequate policy framework to promote renewable energy is also largely absent.

Locations with operating geothermal power plants include Tibet, Thailand and Turkey. In many others countries in the region geothermal projects have been proposed, or are under discussion, or at a preliminary stage.

The Europe and Central Asia Geothermal Energy Development Programme aims to promote the use of geothermal energy in the region. The programme includes: technical assistance to remove barriers to geothermal energy growth; direct investment funding to support project developers; and geological risk insurance to mitigate geological risks.

Turkey’s geothermal electricity is produced in the Denizli province at the 20 MW Kizildere plant, which entered operation back in the late 1960s. Between 2005 and 2010, Turkey added 62 MW of installed geothermal capacity, representing an increase of over 300 per cent.

The country also aims to reach 550 MW of on-line geothermal power by 2013. More than 270 geothermal fields have been documented, with a proven potential of 3293 MW.

Geothermal development in Iran has gained momentum. The 50 MW Sabalan geothermal plant – a joint project between the Ministry of Energy and the Renewable Energy Organization of Iran (SUNA) – is expected to be completed next year

Central America

Central America and especially the Caribbean are reliant on carbon-intensive fossil fuels to provide the bulk of their electricity, but geothermal does play an important role in the energy mix of some of the region’s countries.

Costa Rica, El Salvador, Guatemala and Nicaragua all have operational geothermal power plants. In Costa Rica and El Salvador, geothermal energy represents 13 per cent and 26 per cent of national generation, respectively.

Costa Rica has been producing geothermal electricity from units in the foothills of the Miravalles volcano since 1994. The 35 MW Las Pailas geothermal project, at the Rincón De La Vieja Volcano, is in its latter stages of development, and Ormat Technologies recently signed a $65 million contract with the Banco CentoAmericano de Integración Económica (BCIE) for the construction of the power plant.

In addition to developments at Las Pailas, geothermal exploration and a plant feasibility study have been initiated at the Borinquen geothermal resource in the north.

In El Salvador, the Ahuachapán (95 MW) and Berlin (109.4 MW) geothermal power plants supply about 26 per cent of the country’s electricity. The state-owned company LaGeo operates the two plants, whose 204 MW of cumulative installed capacity makes El Salvador the largest producer of geothermal energy in Central America.

LaGeo has engaged in early exploration activities at the Chinameca geothermal resource located in San Miguel. Initial exploration results have been positive and may pave the way for El Salvador’s third geothermal power plant.

Studies of Guatemala’s geothermal resource indicate that the country has up to 4000 MW of potential, of which a small portion has already been developed for electricity production. Two geothermal power plants currently operate in the country. The Zunil I (28 MW) and the Amatitlan (24 MW) binary geothermal power plants provide a combined 52 MW of geothermal energy to Guatemala’s electricity grid.

Nicaragua’s geothermal potential has been estimated at 1500 MW and several firms are developing its geothermal resources. Ram Power is in the process of engineering the San Jacinto-Tizate resource to increase production up from 10 MW to 82 MW in three phases.

The island nations of the Caribbean Sea are almost all net energy importers. As they depend upon oil imports to generate electricity, these countries are sensitive to fluctuations in the prices of fossil fuels.

In an attempt to move away from this dependence upon fossil fuels, a few Caribbean island nations are exploring and developing their geothermal resources. A geothermal project is now under development on the island of Nevis.

EUROPE

According to the GEA report, between 2005 and 2010 Germany was the fastest growing geothermal power producer, with an increase in its installed capacity of 2774 per cent.

Its fifth power plant came on-line in December 2009, adding 0.5 MW at Baden-Württemberg to the existing 210 kW at Neustadt-Glewe, 3.8 MW at Landau, 3.4 MW at Unterhaching, and 200 kW at Simbach Braunau.

With the release of a report in 2008 that concluded that Germany exploited very little of its geothermal potential, the government announced that by 2020 it would establish a 280 MW geothermal network, which would represent more than 40 times the country’s current installed capacity.

Development has surged since then and is expected to continue to climb, primarily because of a feed-in tariff scheme that provides €0.20/kWh ($0.28) for electricity that has been produced from geothermal resources.

Plants in Sauerlach, Durrnhaar, Riedstadt, Speyer, Gross Schöenebeck, Kirchstockach and Mauerstetten are expected to come on-line this year. According to the government, 150 geothermal power plant projects are now in development, representing an overall investment of €4 billion ($5.6 billion).

Iceland is often considered the model for geothermal development and it continues to grow its geothermal portfolio. With a small population, the country currently generates 100 per cent of its power from renewable sources, deriving 25 per cent of its electricity and 90 per cent of its heating from geothermal resources.

Seven geothermal power plants have been constructed, of which six are operational and generating 575 MW of an estimated 4255 MW of geothermal potential.

North America

With approximately 3086 MW of installed geothermal capacity, the United States is the leading producer of geothermal energy for electricity generation. Mexico, with 958 MW of geothermal energy online, ranks fourth in global installed geothermal capacity.

In the US, the Renewable Energy Production Tax Credit (PTC), provided by the federal government to developers who bring renewable energy projects on-line, has acted as a significant driver to geothermal development. Additionally, ambitious state renewable portfolio standards in the western US have also served as an incentive to geothermal developments in that region.

The geothermal industry in the United States continues to increase its development activity and is currently developing 188 geothermal projects in 15 states. Taken together, these projects constitute from 4584 MW to 7875 MW of geothermal energy in production.

Pacific Islands

With an impressive 28 100 MW in geothermal potential, Indonesia has about 40 per cent of the world’s geothermal energy reserves. To date it has exploited 1197 MW, to rank third in the world in terms of geothermal energy consumption, after the US and the Philippines.

The Indonesian government has recently signed $5 billion worth of geothermal energy deals, and it has a goal to reach 9000 MW from geothermal resources by 2025.

Tata Power Company and PT Supraco have partnered for the Sorik Merapi geothermal plant in North Sumatra. The plant will have an initial capacity of 55 MW but could be expanded to 200 MW.

In April 2010, the US Trade and Development Agency announced $1.6 million in grants for feasibility studies to PT Star Energy for the 370 MW Jailolo plant in Halmahera and to PT Indonesia Power for the 300 MW Tangkuban Perahu project in West Java, for which Raser Technologies is the sole source contractor.

Also in April 2010, Indonesia won a €7 millionloan from Germany for geothermal projects, and the World Bank announced $400 million for Indonesia’s geothermal development.

The Philippines’ first geothermal plant was the 3 MW Leyte geothermal pilot, which went into operation in July 1977. The country is now the second biggest producer of geothermal power in the world after the US, with an installed capacity of 1904 MW.

Energy from geothermal power plants on the islands of Luzon, Leyte, Negros and Mindanao makes up about 18 per cent of the country’s power generation. The Philippines’ estimated potential of untapped geothermal resource is slated to be in the region of 2600 MW. The government hopes to increase the on-line capacity up to 3100 MW within a decade and to overtake the US as the geothermal power production leader.

As of April 2010, the Philippines Department of Energy (DOE) had awarded eight out of ten geothermal sites under the Philippine Energy Contracting Round, an open and competitive selection process. Two geothermal contract areas – Sta. Lourdes-Tagburos, Palawan (1 MW) and Cagua-Baua, Cagayan (40 MW) – are currently under review.

DOE also awarded two geothermal service contracts to Philippine National Oil Company Renewables Corporation (PNOCRC) with an estimated total generating capacity of 40 MW. DOE also signed six service contracts for geothermal projects, for a projected capacity of 315 MW.

The Energy Development Corporation (EDC) won a bid to complete the Bacon-Manito geothermal expansion project, adding 90 MW to the existing 150 MW.

South America

Although no geothermal power plants are currently producing geothermal energy on the continent, several South American countries – led by Chile and Argentina – are working to encourage geothermal development through implementing policy measures that incentivize the development of all renewable energy resources, including geothermal.

Both local and foreign companies have taken an interest in the development of this region’s geothermal resources. This is especially the case in Chile, where local and international mining companies are now looking to develop geothermal resources to help meet the electricity needs of their operations.

The government has already sold a number of geothermal exploration and development concessions to local and foreign geothermal developers in order to address issues stemming from increased energy consumption and demand.

While Chile stands out as the foremost among the South American countries that are actively fostering the development of geothermal energy within their borders, Argentina’s mining industry and local developers are also working to develop their country’s geothermal resources.

The GEA’s latest update on the international geothermal energy market clearly demonstrates that a growing number of nations are now seriously exploring how they can effectively harness their geothermal energy resources to produce clean, sustainable baseload electricity.

In the next 10–15 years as more and more countries seek to ensure energy security, as well as to reduce their carbon intensity, geothermal power generation looks to be on the up.

The GEA is a trade association of United States companies that support the expansion of the use of geothermal energy and are developing geothermal resources worldwide for electrical power generation and direct heat uses. For more information visit www.geoenergy.org

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