Think GEOENERGY Magazine - Issue 01 2013 Preview

GLOBAL GEOTHERMAL ENERGY – AFFAIRS | BUSINESS | DEVELOPMENT | ENGINEERING | FINANCE

M

A

G

A

Z

I

N

E

ISSUE 01 SEPT. 2013

1

COUNTRY IN FOCUS: NEW ZEALAND

A

AFFAIRS

B

BUSINESS

C

COUNTRY FOCUS

D

DEVELOPMENT

E

ENGINEERING

F

FINANCE

Industry associations are crucial for holistic representation of each industry and its promotion

Exiting new developments are in development on almost every continent with public concerns being addressed

Utilization of geothermal brine and various additional direct use applications in the Philippines

From exploration and drilling to turbine technology engineering is a crucial element of the industry

This first issues‘ spotlight is on New Zealand - in the forefront of the geothermal industry for a century

Mitigating and managing risk in geothermal projects may ease the financing process particularly in the early stages

Issue 01 2013

THINK GEOENERGY MAGAZINE

Think GEOENERGY Magazine Editor Alexander Richter Managing Editor Haraldur Unason Diego

ALEXANDER RICHTER Founder & Principal ThinkGeoEnergy

Director of Production Gudmundur St. Sigurdsson Design Linde Richter

From the editor Back in 1998, when I set my foot into the famous Blue Lagoon in Iceland for the first time, I never imagined ever working in geothermal energy and being able to declare a bath in Iceland’s number one tourist attraction a work trip. But here I am today, with a rather young career in this – our – global geothermal energy industry and have, on more than one occasion, enjoyed a “work trip” to a geothermal pool.

So perhaps it is not so surprising that the topic of a geothermal pool finds itself woven into an article in this first edition of the Think GEOENERGY Magazine.

When I founded ThinkGeoEnergy.com in 2008 as the first news website focused on the power and large-scale direct use sector of the geothermal energy industry, I always thought about creating a paper magazine as well. Many of you will ask, why create a paper magazine when everything is going digital? Well, the reason is simple; nothing beats holding a real, printed publication in your hand. Some might add that digital magazines are hard to read in the sun.

Our goal was to develop a new magazine that would not only serve as a publication for our industry, but also one we would like to perceive as a promotional tool for geothermal energy and our industry as a whole. The magazine is structured into the following key content elements: affairs, business, a specific country feature (New Zealand for this edition), development, engineering & technology and finance. It will – as thinkgeoenergy.com – focus on the global geothermal power and large-scale direct use sector, explicitly not covering the geothermal exchange/heat pump market.

The content of the magazine is intended to be less time sensitive, featuring engaging stories that are interesting to readers from the industry and outside, as well as helping to promote the many opportunities that geothermal energy provides. While continuously covering global stories, each edition will focus on a certain country, providing an overview of its geothermal energy industry, development and outlook. We are starting with New Zealand, a country with a great track record in geothermal development and a highly experienced and advanced geothermal sector that is now increasingly looking at applying its know-how and experience internationally.

Think GEOENERGY Magazine will be distributed at the major geothermal energy events and also be available electronically, with an iPad version planned for the second edition. For now we are planning to run two editions per year, one in the fall and another in the spring.

We hope you find the magazine as exciting as we do. For up-to-date news you can continue to tune into thinkgeoenergy.com, where you can find the latest news and updates on global geothermal development.

I would like to thank all of the people who have supported us in the path of making the magazine a reality and in particular the team of Flugmalautgafan, who I am partnering with to produce this new publication.

Please don’t hesitate to contact me on content for the next issue, or perhaps on why you think your country should be the focus of our attention at some time in this magazine.

Layout Bratislav Ðikic´ Contact magazine@thinkgeoenergy.com www.thinkgeoenergy.com Address ThinkGeoEnergy ehf.

Grensásvegur 9 105 Reykjavik Iceland Publisher ThinkGeoEnergy ehf. in cooperation with Flugmálaútgáfan.

1

3 2

Cover for issue 1 01 Nga Awa Purua Power Plan, NZ (Picture: Mighty River Power 02 Champagne Pool, Wai-O-Tapu, NZ (Picture: © CC BY-SA, Eli Duke) 03 Satellite image of New Zealand’s North Island (Picture: NASA, public domain)

www.thinkgeoenergy.com 03

Issue 01 2013

THINK GEOENERGY MAGAZINE

Think GEOENERGY Magazine Editor Alexander Richter Managing Editor Haraldur Unason Diego

ALEXANDER RICHTER Founder & Principal ThinkGeoEnergy

Director of Production Gudmundur St. Sigurdsson Design Linde Richter

From the editor Back in 1998, when I set my foot into the famous Blue Lagoon in Iceland for the first time, I never imagined ever working in geothermal energy and being able to declare a bath in Iceland’s number one tourist attraction a work trip. But here I am today, with a rather young career in this – our – global geothermal energy industry and have, on more than one occasion, enjoyed a “work trip” to a geothermal pool.

So perhaps it is not so surprising that the topic of a geothermal pool finds itself woven into an article in this first edition of the Think GEOENERGY Magazine.

When I founded ThinkGeoEnergy.com in 2008 as the first news website focused on the power and large-scale direct use sector of the geothermal energy industry, I always thought about creating a paper magazine as well. Many of you will ask, why create a paper magazine when everything is going digital? Well, the reason is simple; nothing beats holding a real, printed publication in your hand. Some might add that digital magazines are hard to read in the sun.

Our goal was to develop a new magazine that would not only serve as a publication for our industry, but also one we would like to perceive as a promotional tool for geothermal energy and our industry as a whole. The magazine is structured into the following key content elements: affairs, business, a specific country feature (New Zealand for this edition), development, engineering & technology and finance. It will – as thinkgeoenergy.com – focus on the global geothermal power and large-scale direct use sector, explicitly not covering the geothermal exchange/heat pump market.

The content of the magazine is intended to be less time sensitive, featuring engaging stories that are interesting to readers from the industry and outside, as well as helping to promote the many opportunities that geothermal energy provides. While continuously covering global stories, each edition will focus on a certain country, providing an overview of its geothermal energy industry, development and outlook. We are starting with New Zealand, a country with a great track record in geothermal development and a highly experienced and advanced geothermal sector that is now increasingly looking at applying its know-how and experience internationally.

Think GEOENERGY Magazine will be distributed at the major geothermal energy events and also be available electronically, with an iPad version planned for the second edition. For now we are planning to run two editions per year, one in the fall and another in the spring.

We hope you find the magazine as exciting as we do. For up-to-date news you can continue to tune into thinkgeoenergy.com, where you can find the latest news and updates on global geothermal development.

I would like to thank all of the people who have supported us in the path of making the magazine a reality and in particular the team of Flugmalautgafan, who I am partnering with to produce this new publication.

Please don’t hesitate to contact me on content for the next issue, or perhaps on why you think your country should be the focus of our attention at some time in this magazine.

Layout Bratislav Ðikic´ Contact magazine@thinkgeoenergy.com www.thinkgeoenergy.com Address ThinkGeoEnergy ehf.

Grensásvegur 9 105 Reykjavik Iceland Publisher ThinkGeoEnergy ehf. in cooperation with Flugmálaútgáfan.

1

3 2

Cover for issue 1 01 Nga Awa Purua Power Plan, NZ (Picture: Mighty River Power 02 Champagne Pool, Wai-O-Tapu, NZ (Picture: © CC BY-SA, Eli Duke) 03 Satellite image of New Zealand’s North Island (Picture: NASA, public domain)

www.thinkgeoenergy.com 03

Issue 01 2013

THINK GEOENERGY MAGAZINE

A

A FFA IRS

05 | INDUSTRY CHANGE AGENTS

The Role of Geothermal Industry Groups and Associations

06 | NEW ZEALAND GEOTHERMAL ASSOCIATION

32 | GEOTHERMAL RESOURCES AND POTENTIAL 34 | UTILIZATION OF DIRECT USE for Industrial Applications in New Zealand

36 | GEOTHERMAL PLANTS AND OUTLOOK

Interview with Brian White, Executive Director

40 | THE GEOTHERMAL INDUSTRY IN NEW ZEALAND

09 | U.S. GEOTHERMAL INDUSTRY GROUPS

44 | A NATIONAL INDUSTRY COLLABORATION

13 | EUROPEAN GEOTHERMAL ENERGY COUNCIL

D

16 | INTERNATIONAL GEOTHERMAL ASSOCIATION

47 | STATUS OF GLOBAL GEOTHERMAL POWER DEVELOPMENT

B

49 | SUSTAINING THE PUBLIC’S TRUST IN GEOTHERMAL PROJECTS

Interview with Steve Ponder, Executive Director Geothermal Resources Council and Karl Gawell, Executive Director Geothermal Energy Association Interview with Philippe Dumas, Secretary General Interview with Prof. Roland Horne, President

BUSINE SS

for International Business Development

DEV ELOPMENT

18 | GEOTHERMAL FLUIDS

E

22 | SPA RESORT, FISH FARMING AND COSMETICS

52 | HOT PURSUIT

Value Creation Beyond Electricity

Side Businesses for Geothermal Project

C

COUN T RY FOCUS

24 | NEW ZEALAND

This Issue’s Country in Focus

26 | IT ALL STARTED AT WAIRAKEI Short History of Geothermal in New Zealand 38 | GEOTHERMAL’S CRUCIAL ROLE in New Zealand’s Energy Supply

30 | NEW ZEALAND ENERGY Market and Policy Framework

04 www.thinkgeoenergy.com

ENGINEER ING

From Geothermal Education to Exploration

56 | ROMANCING THE STONE Geothermal Energy’s Path to Promise

58 | DRILLING A DEVIATED GEOTHERMAL WELL 60 | GEOTHERMAL STEAM TURBINES Ready for Prime Time Base Load Power Generation

F

FINA NCE

63 | DEALING WITH RISKY BUSINESS 65 | DE-RISKING GEOTHERMAL EXPLORATION

Issue 01 2013

AFFAIRS

A Industry Change Agents

The Role of Geothermal Industry Groups and Associations Representing the interests of the geothermal sector is a core element of the geothermal industry associations, but they are doing a lot more to promote geothermal energy and the opportunities it provides.

Over the course of time, people, political movements, companies, and other entities have demonstrated the value of joining forces to bolster their position and represent a unified voice. Political parties and interest groups are probably the best current-day examples and highlight how political views and beliefs can affect decision making at the various levels. Put simply, the power of numbers pushes for change and creates impact.

Companies, whether in the same line of business or different industries, also often understand the need to join forces and influence decision makers. And while in the past these groups were seen mostly as pressure groups for labor and policy purposes, their perceived role today goes beyond that. They build cooperation among their members and other interest groups, foster the sharing of information and provide training, but also offer a variety of services to help their members grow their business.

Various types of associations Industry associations, per definition, play an institutional and ambassadorial role by coordinating the activities of their members, as well as promoting, developing and preserving their industries.

In the broad global context of geothermal energy, there are a variety of groups and associations representing the industry and its constituents, each with their own specific priorities, interests, goals, and initiatives. Some are more closely aligned to research and academia, others to the industry’s business interests through policy support and lobbying (i.e. trade associations). Others focus on cooperation for the sake of industry development and growth (i.e. cluster groups), or national marketing groups for business development (collaboration groups). Because these groups represent such varied interests within the industry, each approaches specific situations with a tailored perspective. They all, however, play an important role in promoting awareness of the in-

1

dustry, addressing public concerns about development of geothermal resources, and working to promote dialogue that helps create business opportunities.

Associations are often forced to cope with the sobering reality of insufficient political support: limited support for the business environment in which they function, and tenuous support in terms of fundraising. The latter in particular forces difficult decisions on prioritization – where to focus attention and resources.

This limits the impact that an association, as an advocate for the industry and an agent of change, is capable of. At the industry level, this leads to a misalignment of interests and limitations on what an association is capable of backing. The interests of academia and the research community are in a different part of the geothermal development chain than those of a small-scale consulting firm, technology supplier, construction firm, developer, or large-scale power utility. Additionally, the reality remains that financing for geothermal projects is the largest obstacle for the industry as a whole, and in certain regions, the key barrier to wide-scale development. These challenges, coupled with ongoing compe-

01 Steam Separator Kawerau Power Plant, New Zealand (Picture: Š CC-SA-BY Rjglewis) tition for government funds, require even more collaboration and a focus on development activities that truly help the industry grow.

Despite the natural inevitability of differences arising, the geothermal associations are all unified in the promotion of the same industry and the incontestable environmental benefits and opportunities created through industry growth.

Instead of bunkering down and remaining fractious, associations have the ability to leverage their roles as catalysts in a united manner. There will always be some overlap in aims and goals, but no matter how large or small those overlaps may be, the more backing and support there are for initiatives universally agreeable to the geothermal industry, the better for the industry.

Industry associations can play a crucial role in this as change agents for the geothermal energy industry, both nationally and internationally. We spoke with several executives in geothermal industry associations to learn more about their roles and activities. Read their interviews below. - AR www.thinkgeoenergy.com 05

Issue 01 2013

BUSINESS

B Geothermal Fluids

Value Creation Beyond Electricity

by Abraham Ormad & Alexander Richter, ThinkGeoEnergy

Geothermal fluids have mostly been associated with power generation, but there have been efforts to extract additional value beyond heat from the mineral-rich content.

1

Historical prices: Lithium, Zinc & Potassium Chloride (US$/ ton) 2 5,000 4,500 4,000

This year, the geothermal energy industry celebrated 100 years of commercial power generation at Larderello in Tuscany, Italy.

Piero Ginori Conti, who started operating the first commercial geothermal plant in 1913, was – and this is not widely known – head of a company that derived boric acid from geothermal steam.

There has always been an interest in looking to derive valuable minerals from geothermal brine, but are there any examples today? Can mineral extraction become a profitable side business to geothermal power generation?

In the past, some companies, mainly in the U.S., have been active in mineral extraction from geothermal brines, particularly between the 1960s and 1980s. However, experimental, pilot and commercial projects have also derived minerals from brine in Mexico, New Zealand, Italy and Iceland.

When geothermal fluids interact with hot rocks, the fluids become saturated with various minerals through a chemical reaction.

The composition of these resulting fluids is determined by the composition of the rocks, the chemical composition of the initial fluids, and temperature and pressure during the interaction of fluid and rock mass.

18 www.thinkgeoenergy.com

3,500 3,000 2,500

Potassium Chloride

Zinc

Lithium

2,000 1,500 1,000 500 0

1990

2000

Despite various efforts and projects to commercially extract minerals from geothermal fluids, there is only one promising commercial-scale project. Based in the Salton Sea area of California, Simbol Mining Corporation received a US$3 million grant from the U.S. Department of Energy and is itself investing $6.7 million in a project to develop the company’s initial commercial mineral extraction facility. The project will utilize geothermal fluids derived in the process of geothermal power generation co-located at EnegySource’s John L. Featherstone (Hudson Ranch I) geothermal power plant.

Simbol Materials is planning to derive chemicals needed in the production of batteries (lithium, manganese and zinc) from the Salton Sea hyper-

01 John L. Featherstone Geothermal Plant, Salton Sea, U.S. (Picture: EnergySource) 02 Historical prices for Lithium, Zinc and Potassium Chloride, US$/ ton (Data: USGS) 03 Electric car charging station, Amsterdam (Picture: © CC BY-SA, Ludovic Hirlimann)

2010

saline geothermal reservoir located in Southern California. The company expects that the geothermal fluids from each 50 MW plant will be able to produce up to 16,000 tons of lithium carbonate equivalent, 24,000 tons of electrolytic manganese dioxide and 8,000 tons of zinc metal.

Simbol Materials aims to demonstrate with its project the technical and economic feasibility of geothermal mineral extraction.

History Looking historically at the projects that either did or at least tried to derive minerals from geothermal fluids, it is relatively obvious that the vast majority of projects never went much beyond the experimental or feasibility phase.

There have also been only a limited number

Issue 01 2013

of pilot plants. Worldwide, only four projects ever reached a commercial production stage.

The only ongoing project now is the Salton Sea project by Simbol Mining.

The United States was one of the first countries to start investigating byproducts from geothermal operations, mostly in the 1960s, but only two plants ever reached commercial operation.

One of these two plants was developed and operated by Morton International in the Imperial Valley, California. It produced small amounts of calcium chloride, potassium chloride and other salts, but due to a drop in salt prices in the late 1960s, production was stopped.

In the 1970s, two water desalination projects were developed, but never reached a commercial stage. A study established geothermal desalination to be a feasible but uneconomical concept due to the specific conditions in New Mexico.

One of the companies that has been very active in mineral extraction is CalEnergy. In 1998, the company built a small demonstration plant at its Elmore geothermal plant. For a ten-month period, it successfully produced 41,000 lbs. of high-grade zinc. In 2002, CalEnergy set up another plant at the Salton Sea with the goal of producing 30,000 metric tons of 99.99-percent pure zinc, but due to technical problems, the company shut down the project in 2004.

Co-funded by the California Energy Commission and the U.S. Department of Energy, the Lawrence Livermore National Labora-

BUSINESS

tory conducted a pilot-scale demonstration of silica extraction at Mammoth Lakes in 2000. The project aimed to demonstrate the technical and economic feasibility of metal and mineral co-production of silica from geothermal fluids. The economic analysis from the results of the demonstration showed the feasibility and favorable rates of returns. The technology is now being utilized by Simbol Mining Corporation at its Salton Sea project.

Around the same time, the U.S. Department of Energy’s Geothermal Technology Program carried out a study at Coso in California, and Dixie Valley and Steamboat Springs in Nevada. The goal was to obtain more information about the extraction of silica, but there is no information available about the current state of this study.

In Mexico, government-owned Fertilizantes Mexicanos (Fertimex) established a pilot project at the Cerro Prieto geothermal power facilities in the 1970s. The plan was to process potassium chloride with a target of 80,000 tons per year for the production of fertilizers. During the final construction phase, the international prices for potash collapsed and the project was abandoned.

The possibility of silica extraction was explored in a pilot plant at the Wairakei geothermal power plant in New Zealand in the mid-1990s. A study carried out on the project concluded that the production of silica would be possible but there were concerns about the amount of aluminum and calcium and their impact on the final product.

3

In Italy, the extraction of chemical products goes back to the 11th century, but there was no geothermal association until the early 1980s when a chemical factory was set up in Larderello that extracted boric acid from geothermal fluids. The time between 1850 and 1975 was the most productive and commercial phase for boric acid production. In the 1920s other products, such as sodium perborate, ammonium carbonate and carbonic acid, were extracted from geothermal fluids.

In 1970, Japan set up an experimental project to recover lithium from geothermal brine with initial successful results. The project was carried out by the Department of Environmental Science, Department of Metallurgy and the Kyushu Institute of Technology in the Hatchobaru and Othake areas in Kiushu.

Other projects, such as in the Cheleken area of western Kazakhstan in Russia, never reached large-scale production. In Kenya, a project extracted CO2 from shallow geothermal wells for making dry ice, and a demonstration project on Kimolos Island in Greece showed the technical feasibility of seawater desalination.

In 1979, a pilot plant in Iceland was built and operated for several years, producing sodium chloride as a fishery salt (production of salted cod). On the basis of this experimental plant, a bigger one was erected in 1983 under the name of Reykjanes Geo-chemicals with the purpose of producing sodium chloride, potassium and calcium chloride. The plant increased its production through the 1990s, but after five years of operation, the plant was closed due to technical problems and other factors. A new company, Arctic Sea Salt, plans to start production of health salt at Reykjanes in 2014, with a newly patented method and an estimated future capacity of 30-50,000 tons/year.

Other projects have been mentioned for Ethiopia and Chile, but no further details are currently available.

Applications and costs In a paper by Leon Lehr, “Potential for by-product recovery in geothermal energy options” (1982), it is described that “economics of mineral extraction [from geothermal fluids] are driven by geothermal fluid characteristics, specific by-product(s) to be recovered, quantity, quality, value, marketability, type of geothermal energy conversion system used, size of energy facility, regulatory waste treatment and disposal requirements.”

www.thinkgeoenergy.com 19

COUNTRY IN FOCUS – NEW ZEALAND

Issue 01 2013

New Zealand - 60 years of geothermal power development

1 24 www.thinkgeoenergy.com

Issue 01 2013

COUNTRY IN FOCUS – NEW ZEALAND

C

Quick facts on Geothermal Energy in New Zealand 1 Wairakei – first large-scale geothermal power plant in the world to generate from a liquid-dominated resource (commissioned 1958-1963)

Country in Focus

2 Geothermal power generation capacity of 960 MW – ranking 4th in the world

6 Contact Energy and Mighty River Power represent more than 800 MW together 7 Strong national Geothermal Association (NZGA) with around 345 members

New Zealand

3 Geothermal contributes around 15% of NZ electricity (August 2013)

8 Strong scientific, engineering and geothermal energy consulting expertise

4 Geothermal contributes around 20% of primary energy supply (August 2013)

9 NZ Geothermal Institute at the University of Auckland has graduated more than 850 geothermal trainees

Each issue of the Think GEOENERGY Magazine will cover one particular country or region. For our first issue, we start with New Zealand.

5 Wairakei/ Te Mihi/ Pohipi: largest geothermal facility on one resource at combined 345 MW

10 NZ Geothermal Workshop key annual conference on the world geothermal calendar

01 Nga Awa Purua Geothermal Power Plant, Taupo, NZ (Picture: Mighty River Power) 02 Waimangu geothermal spring, Rotomahana, NZ (Picture: © CC BY-SA, Kristina D.C. Hoeppner)

2 New Zealand has a long history of utilizing geothermal resources.

Described as a “geothermal wonderland” in tourist guides, the country fascinates with natural volcanic and geothermal activity.

It is this geothermal activity that has helped form Maori history and legends such as those of Ngatoroirangi. It is these resources – the Ngawha (mud pools), the puia (geysers) and the waiariki (hot springs) – that were used by the indigenous people for bathing, cooking and community life, becoming locations around which habitation developed and associated Marae (community meeting areas) established. The European spa culture started to permeate the hot spring areas of New Zealand in the mid-19th century. Waiwera was the site of the first spa developed in 1842 with other areas following. Rotorua became a focus

of serious spa and medicinal activity from 1878 as part of the broader tourism ventures associated with Rotorua and the geothermal areas nearby, such as the Pink and White Terraces at Lake Rotomahana. Utilization of the underground geothermal resources for larger-scale energy production was a feature of the 20th century, with large-scale direct heat use at Kawerau and electricity generation at Wairakei commencing later in the 1950s.

Today, New Zealand is ranked 4th in the world for installed geothermal power generation capacity and New Zealand expertise was formative in assisting the Philippines and Indonesia to be ranked 2nd and 3rd respectively.

With New Zealand in focus, we want to provide an overview of the history of geothermal energy development in the country, its

energy market and the main legislation framework. We are going to look at the geothermal resources, their utilization and the key parties in the New Zealand geothermal sector.

Today, New Zealand has 18 geothermal power plants with a power generation capacity of around 960 MW. Fifteen percent of New Zealand’s electricity is currently generated from geothermal energy. This is up from a level of about 7% in the 2000 to 2005 period as a consequence of significant investment in new geothermal capacity in New Zealand since that time.

Two very active groups represent the NZ geothermal industry – the New Zealand Geothermal Association (www.nzgeothermal. org.nz), focused on in-country geothermal sector interchange, and Geothermal New Zealand (www.

geothermalnewzealand.com) with a focus on large-scale development outside of New Zealand.

The country hosts one of the longest running annual geothermal conferences, the New Zealand Geothermal Workshop, which will hold its 35th annual event this year in Rotorua.

The Geothermal Institute (www. geothermal.auckland.ac.nz), with a mission to train both New Zealand and international students in geothermal methods and technology, was founded in 1979 by the University of Auckland. The Institute has been at the forefront of geothermal training, with more than 850 graduates completing courses.

New Zealand geothermal firms are involved in geothermal developments and in training of geothermal expertise in many nations of the world. With the current flat electricity demand coupled with recent new builds of power plants (including geothermal power stations), major New Zealand developers are now talking about 3-5 years before the next round of major local development recommences, so the NZ geothermal industry is increasingly looking outside of the country for sector growth. - AR

www.thinkgeoenergy.com 25

COUNTRY IN FOCUS – NEW ZEALAND

New Zealand Energy Market and Policy Framework

Issue 01 2013

1

New Zealand has a wellstructured energy market, and joint geothermal development with Maori tribes has helped overcome different views on ownership rights in geothermal resources.

The New Zealand energy market has been the domain of the central government in Wellington for over 100 years. The market and its regulatory framework, however, have seen larger and smaller changes throughout that time. Under the Electricity Act of 1992, the NZ government established the Electricity Commission in 2003 to regulate the market.

The Commission was replaced with the Electricity Authority in November of 2010 to narrow the focus of regulatory overview on industry competition, reliability and efficiency in the New Zealand Electricity Market. The Authority acts as “an independent Crown entity responsible for the efficient operation of the New Zealand electricity market.”

In its key functions, it registers industry participants, develops and administers the Electricity Industry Participation Code, monitors and enforces compliance with the Code, acts as a market administrator, contracts providers of market operations services, and facilitates market performance.

There are, though, several functions that are reserved for other bodies. Consumer protection in the energy market falls under the scope of the Ministry of Consumer Affairs, and electricity efficiency is monitored by the Energy Efficiency and Conservation Authority.

30 www.thinkgeoenergy.com

Monitoring of reserve energy, emergency planning and security of supply information are tasks performed within the state-owned transmission company Transpower.

While the Treaty of Waitangi of 1840 is today widely accepted to be a constitutional document establishing and guiding the relationship between the government of New Zealand and Maori natives, certain controversies remain.

The partial sale of Mighty River Power by the NZ government raised debates over land and water rights with conflicting legal positions held by Maori groups and the NZ government.

Legislation, and in particular the Resource Management Act of 1991, is helping to blend in the perspectives of native groups on geo-

Blessed with geothermal resources, New Zealand has created an effective market environment for development

Issue 01 2013

COUNTRY IN FOCUS – NEW ZEALAND

2

01 NZ Parliament Building, Wellington, NZ (Picture: © CC BY, Bruce Tuten) 02 Power lines, Rotorua, NZ (Picture: © CC BY-SA, thetejon) 03 Maori meeting house at Whakarewarewa, Rotorua, NZ (Picture: © CC BY-SA, Evan Goldenberg)

3

Key pieces of legislation: 8Electricity Act 1992 8Electricity Industry Act 2010 and related regulations 8Electricity Operators Order 2000 8Energy Efficiency and Conservation Act 2000 8Energy Resources Levy Act 1976 8Energy Companies Act 1992 8Electricity Industry Participation Code 8Environment Act 1986 8Resource Management Act 1991

thermal development. To this day, geothermal resource ownership is still not possible under the Common Law in New Zealand. The Waitangi Tribunal in 1993 provided some protection and rights to Maori on “surface features” as “treasured possessions,” providing Maori groups certain powers towards proposed development.

For the government of New Zealand, in its 2011-2012 Energy Strategy, the “abundance of natural resources” is the main element and driver to “make the most of all assets [NZ] has, including hydro, wind, geothermal, oil, gas and minerals.” New Zealand’s goal is set to have 90% of electricity generation coming from renewable sources by 2025.

Various large Maori tribes hold some prime geothermal land in New Zealand, but a limited number of Maori groups have developed projects utilizing their geothermal resources.

In some cases, they have teamed up and established a joint ownership model with companies such as Contact Energy and Mighty River Power in the development of geothermal power plants on Maori land. This seems to have assisted in combining Maori interests and the interest of power companies, such as Mighty River Power and Contact Energy, to develop geothermal power plants to provide New Zealand with renewable base-load geothermal power.

Seen as a setback by many, New Zealand has recently (in August 2013) scaled back on its target for reducing carbon emissions, from initially 10-20 percent below 1990 levels by 2020, to five percent by 2020. The country is still on target to achieving 90% of its electricity from renewables by 2025, currently deriving around 70% of its electricity from those sources. - AR Sources: New Zealand Electricity Authority New Zealand Ministry of Justice Electricity Authority of NZ White, B; Morris, G., Lumb, T., “New Zealand Geothermal Resource Ownership – Cultural and Historical Perspective” (1995), White, B; Morris, G., Lumb, T. www.thinkgeoenergy.com 31

Issue 01 2013

COUNTRY IN FOCUS – NEW ZEALAND

Geothermal Plants and Outlook Since the installation of only the second commercial geothermal power plant at Wairakei, New Zealand has been in the forefront of geothermal development. Today, geothermal plants have been built at Wairakei, Rotokawa, Kawerau, Mokai, Ngatamariki, Ohaaki, Ngawha and Tauhara, with additional development planned at the fields of Tikitere and Rotoma.

New Zealand has today an installed capacity of 957 MW, with additional projects to add 335 MW by 2020. This ranks New Zealand number four among the top 10 countries with geothermal electricity generation capacity.

1

3

4

Wairakei

Kawerau

The Wairakei geothermal field is where it all began, with the construction of the first geothermal power plant in New Zealand in 1958.

From an initial 69 MW, field capacity has been increased to its current 231 MW. The field contains three operating plants: the Wairakei plant with 157 MW and a 5 MW backpressure unit, the Wairakei binary plant with 14 MW, and the Poihipi plant with 55 MW installed. The new Te Mihi plant will produce around 166 MW, but as it relieves some of the previous capacity, the total addition will be 114 MW when online by the end of 2013. All of the Wairakei plants are operated by Mighty River Power.

In 1966, the paper mill company Norske Skog built a 10 MW plant in the geothermal field of Kawerau. A number of plants have been built since, with six currently running a combined capacity of 143 MW. KA24 has a capacity of 8.3 MW and is operated by Eastland Generation.

Tasman BP with 8 MW, and the newly added Topp1 plant adding 16 MW, are operated by Norske Skog. Mighty River Power operates the 100 MW Kawerau plant and Ngati Tuwhareteo Geothermal runs TG1 and TG2, two binary plants with a combined capacity of 5.9 MW. The Te Ahi OMaui geothermal project by Eastland Generation, the Kawerau A8D Trust and IDG plans to add a further 15 MW to the field.

8

9

Ngawha/ Northland

Mokai

The only field not to be found in the Taupo Volcanic Zone is the Ngawha field in the Northland of the North Island of New Zealand. An initial 10 MW plant was installed and started operating in 1998 and with a later extension of 15 MW, the overall capacity is today at 25 MW. The plant is operated

by Top Energy.

The first geothermal plant in the Mokai field started operating in 1999 with an installed capacity of 55 MW. With plant extensions in 2005 and 2007, it now operates with an installed capacity of 111 MW. The Mokai Plant is jointly owned by Tuaropaki Power Co. and Mighty River Power, with the latter holding 25% ownership and managing plant operation.

Top 10 Countries - installed capacity, MW 2 USA

3,386

Philippines

1,968

Indonesia

1,339

New Zealand

957

Italy

863

Mexico

812

Iceland

665

Japan

502

Costa Rica

208

El Salvador

204

Other

730 0

500 1,000 1,500 2,000 2,500 3,000

Sources: IGA, GEA, BP, ThinkGeoEnergy

01 Location of NZ’s geothermal plants, North Island (ThinkGeoEnergy Power Plant Map) 02 Geothermal electricity generation capacity by country 2013, in MW (ThinkGeoEnergy) 36 www.thinkgeoenergy.com

ENGINEERING & TECHNOLOGY

Building a career in geothermal or joining the Geothermal Good Life 52 www.thinkgeoenergy.com

Issue 01 2013

Issue 01 2013

ENGINEERING & TECHNOLOGY

E

My interest was stimulated and from there I dove deeper and deeper into the literature.

Hot Pursuit

From Geothermal Education to Exploration

by Ryan Libbey, PhD candidate at McGill University, VP Geology at ADAGE Venture, Co-Founder and Lead of the Canadian Geothermal Research Council (CanGRC)

With an ageing geothermal professional community and increasing geothermal development activities, there will be an increasing need to educate and train the geothermal workforce of tomorrow.

Though it has had reliably heated buildings for two millennia and generated electricity since 1904, geothermal remains a modest and astonishingly unrecognized player in the renewable energy sector.

The complexities of the technology coupled with the high capital costs and associated risks admittedly make geothermal power plants a harder sell than wind turbines and photovoltaic panels. However, the benefits of geothermal are immense in its ability to generate cheap and clean baseload “green” electricity, and the capacity to support a vast array of cascaded direct uses (fruit drying, heating, fish farming, etc.). But what initially draws people to geothermal and how can one best prepare

1

01 Dr. Bruce Mountain on a sampling expedition at the Champagne Pool, Wai-O-Tapu, New Zealand.

Picture: Ryan Libbey

for a technical career in the field?

This article sets out a number of potential entry points for those interested in becoming involved with the geothermal industry, along with anecdotes from my own experiences. I also provide an outlook of what is in store for the next generation of geothermalists.

In and out of the classroom I became interested in geothermal energy early in my undergraduate studies due to a combined interest in geology and “green” energy technologies. My first notable introduction to geothermal was through a textbook titled Renewable Energy: Power for a Sustainable Future. Geothermal was nestled behind a chapter on wave energy and was the final technology covered in the book (presumably Godfrey Boyle was saving the best for last). This chapter in my copy of the book was quickly transformed into a decorative mess of multicolored highlights and densely penciled side notes.

As with many disciplines, a review of published material can provide a decent theoretical launch pad – but there is no substitute for practical experience. For this reason I encourage all geothermally minded students to pursue internship opportunities. I was fortunate enough to land a summer internship with GNS Science at the Wairakei Research Centre in New Zealand during the summer of my third undergraduate year. Upon arrival to the North Island, and after a (near) crash-course in how to drive stick on the “opposite side of the road,” I was put directly to work and spent the entire summer learning from some of the world’s top geothermal scientists.

With fumarole-dotted landscapes, acid-sulfate pools, boiling hotsprings, and the comforting feeling that the ground you’re taking a water sample from is about to explode, it doesn’t take long to realize the amazing energy potential of geothermal systems in the Taupo Volcanic Zone.

Upon returning home, I took a little bit of New Zealand with me; figuratively with my secured passion for geothermal, and quite literally with twenty kilograms of rock samples that formed the basis of my undergraduate thesis. I’m confident that my time at GNS was mutually beneficial and I urge companies to take on student interns, as it is a both a key component to fortifying the next generation of researchers and a relatively inexpensive source of labor.

Depending on a person’s specific interests, technical post-graduate degrees in engineering (reservoir, well, mechanical, electrical), earth sciences (geology, geochemistry, geophysics, hydrology), and environmental science are all relevant educational backgrounds for a career in geothermal exploration and development. There are a handful of institutions that offer geothermal-centric degree and www.thinkgeoenergy.com 53

Issue 01 2013

THINK GEOENERGY MAGAZINE

www.thinkgeoenergy.com 03

THINK GEOENERGY MAGAZINE

02 www.thinkgeoenergy.com

Issue 01 2013