Renewable, Long-Life, Baseload, and Dispatchable

While economic returns outside of known hydrothermal resource areas are today relatively weak compared to commercial renewable energy sources, geothermal offers significant strategic advantages over other energy sources; namely, geothermal is a unique source of renewable power that is:

1. Long-Lived: Geothermal projects have a life of 30-50 years, with minimal ongoing capital requirements, and new systems could have essentially unlimited lifespans if properly maintained.

2. Baseload: Geothermal is not subject to intermittency issues that affect wind and solar, so geothermal does not require supplemental peaking power generation (often using fossil fuels) or battery capacity

3. Dispatchable: Closed-loop geothermal technologies can be geared to increase power generation at times of peak demand and scaled back in times when there is limited demand. When power generation is below capacity, heat continues to build in the reservoir, which increases power capacity when scaled back up.

Regulatory Environment

The regulatory environment in which a geothermal project is developed and located can significant impact its feasibility. Most directly, royalties and land rights can reduce the economics of a geothermal project; conversely, supportive regulatory regimes can be conducive to development – this could be in the form of government-subsidized, above-market power pricing or grants. Environmental protection is another facet of legislation that can impact a project. Depending on the rules in place, a geothermal developer can be subject to stringent guidelines, requiring significant investment into liability management.

Other Infrastructure considerations are also key to the economics of a geothermal project. Power station interconnects are a significant one-time upfront cost. However, phased development at a single site – Ormat’s McGinness Hills Geothermal Complex, for example – can effectively amortize this cost over a greater number of plants If grid power can be used, then the parasitic load of a geothermal project can be wholly offset – in effect, trading “grey” grid power for known green energy. Parasitic load can also be offset by the installation of solar panels on facility sites; the Tungsten Mountain Geothermal power plant already utilizes this design. However, this could suffer from the same intermittency problem as solar generation in general. With directuse heating, proximity of a geothermal well to buildings and facilities will reduce the amount of capital needed to build pipelines.