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Geothermal Energy Systems Assessment - A Strategic Assessment of Technical, Environmental, Institutional and Economic Potentials in Central and Eastern European Countries

5. Geothermal Energy Potentials

"The market for direct uses of geothermal energy has extensive potential in European countries (…) Opportunities both to extend this usage and to develop related businesses exist, especially in CEECs, where large centralized DH systems already exist which mainly use conventional fuels" (EU Blue Book on Geothermal Resources, 1999).

5.1 Background

Covering about 0.13 per cent of the worlds energy demand, geothermal energy (GE) currently plays a marginal part in our energy supply. However, there are indications that the potential for exploitation of GE in Europe is currently facing unprecedented focus and interest from investors and policymakers alike. The EU Bluebook on Geothermal Resources (1999) foresees an average global growth rate for GE of 10-15 per cent over the next three decades, provided that the energy market develops favourably in terms of prices, regulations and environmental incentives. Other forecasts envisage an increase to 1 per cent of the world total by 2020, based on a projected 4 per cent annual growth in geothermal electric production and 10 per cent annual growth in geothermal heat energy (Ahmadzai 2001).

Geothermal energy is the heat of the earth. This heat is not evenly distributed over the earths' surface, but geothermal energy potential exists in most parts of the world. In a classical sense, regions of geothermal potential are conventionally perceived as being characterized by plate tectonic boundaries (or hot spots), where molten rock is left at a depth of 5-20 km beneath the earth's surface². Here the molten rock releases heat that can drive hydrological convection, which in turn forms high temperature geothermal systems at shallower depths of 500-3 000 m. Areas of geothermal interest may also exist away from plate tectonic boundaries however. These areas have a higher natural heat flow than the average crust and groundwater will bring up heat from high temperature localities along fracture zones, concentrating heat in shallow reservoirs³ (approx. 200 m.) or discharging heat in form of hot springs; - geysers.

Within the same type of geothermal resources, temperature levels vary from 50-350 °C. Furthermore, geothermal resources can also be either dry, mainly steam, a mixture of steam and water or just water. In order to extract geothermal heat from the earth, water is the transfer medium. Hot water penetrates rock, dissolve minerals and carry them along. The water may also contain various gases - SO₂, CO₂ etc. If the water is artesian, bringing it to the surface will require little or no pumping. Recently technologies to extract energy even from hot dry rock resources have also been developed.

As geothermal energy resources have now been documented to be plentiful and the technology required is mature, future utilization of geothermal energy is determined by a combination of technical, environmental, political/institutional and economic factors and decisions.

5.2 Technical Potentials of Geothermal Energy Systems

It is the type and quality of a geothermal reservoir in addition to temperature and water conditions that determine the type of technology suitable. The condition of the geothermal source and the best available technology, when combined, determines the potential technical use of a geothermal energy resource.

The table below lists the basic technologies available. The most common use of low temperature geothermal energy is direct use.

Table 5.2-1
Types of Geothermal Energy Systems

Reservoir temperature	Reservoir fluid	Technology commonly chosen	Common use
High temperature > 220 °C	Water or steam	Flash steam Combined (flash and binary) cycle Direct fluid use Heat exchangers Heat pumps	Power Generation     Direct use
Intermediate temperature 100-220 °C	Water	Binary cycle Direct fluid use Heat exchangers Heat pumps	Power Generation     Direct use
Low/intermediate temperature 50- 150 °C	Water	Direct fluid use Heat exchangers Heat pumps	Direct use
Low temperature 20-50 °C	Water	Heat pumps	Direct use

Source: www.worldbank.org (modified)

It is of paramount importance to any geothermal project to examine all technical factors that will influence project performance because each geothermal plant will be unique.

5.3 Economic Potentials of Geothermal Energy Systems

"The market for direct use applications only exist when resource and demand are coincident. This is why geothermal resources are only used where there is a large local energy demand" (EU Blue Book on Geothermal Resources, 1999)

The technological and geo-political development trends mentioned earlier has introduced a dynamic factor which will alter the future of GE. This factor will change conventional economic comparisons between different energy technologies and cause a reversals in the order of these. Along with the fact that variability is great for GE due to local conditions (including well drilling and well productivity), this means that economic analysis and economic forecasting of GE investments is both complex and challenging. Still, however, the basic approach to analysing GE investments is a matter of estimating the amount of energy to be produced by a system over its technical lifetime, relative to the capital and operational costs.

The economics of GE plants are characterized by high initial investments costs and very low operating costs. As far as the latter is concerned, some plants are known to have run for decades with only minor servicing. Bronicky expects fast track financing of private sector geothermal projects and recognition of their real value, to provide opportunities for new geothermal projects worldwide (Bronicky 2000).

An increasingly important economic factor and parameter in calculating the economic feasibility of GE, is the extent to which a market exists for CO2 emissions in the country of operation. With the Kyoto Protocol and Berlin agreement, the motivation for investors in highly industrialized countries to effectively buy CO2 quotas by investing in GE, is rapidly increasing. This parameter is of a magnitude that will significantly influence the costbenefit calculations of a GE investment.

In the terminology of development banks, this means that GE projects may be seen as "bankable". Supporting this perspective, the Energy Carbon Facility under the Joint Stock C. of Russia, represents a pioneering approach in striving to translate the concept of carbon credits and joint implementation into reality on Russian ground, applying the concepts to geothermal energy development⁴. Also the UNEP-GEF "Technology Transfer Network" is working on turning emission benefits into a real competitive advantage for geothermal energy.

Currently, it is broadly considered that the economic value of geothermal energy is highly underestimated. Geothermal energy is often compared to other sources of energy, where externalities are excluded. To the extent such externalities will be internalised, through green taxes and new regulation, geothermal energy will become more competitive. According to some studies, external costs of conventional energy systems may be up to ten times greater than those of renewables.

5.4 Environmental Potentials of Geothermal Energy Systems

Environmental potentials refer to the geothermal potential in terms of environmental costs and benefits, - the latter including the reduction of emissions.

Environmental impacts of geothermal energy are generally positive. The following environmental potentials can be listed:

GE plants require smaller area compared to most conventional energy sources.

GE produces no or little air and water pollution. In terms of carbon dioxide emissions, the gas emissions from district heating systems, using low-temperature geothermal resources and fossil fuels, are for GE only a fraction of that from fossil fuels. The CO2 emission from GE plants is in many cases insignificant, compared to heating systems based on coal, oil and gas (see figure 5.4-1 below).

In addition to reducing the greenhouse effect, other positive impacts of GE (generating no combustion) are reduction of "other" air pollutants known to cause acid rain and respiratory diseases.

Following the Kyoto Protocol geothermal energy plants may well pose themselves as attractive investments for foreign investors wishing to buy "greenhouse gas" emission quotas.