100511 Investing in Geothermal Energy

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GEOTHERMAL: THE ENERGY TO CHANGE THE WORLD

INVESTING IN GEOTHERMAL ENERGY

Horst Kreuter, Colin Harvey & Orhan Mertoglu

17. May 2010, Qatar


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Introduction

Technology

Geothermal Potential Investing in Geothermal Energy

CONTENTS

217.05.2010 Horst Kreuter Investing in Geothermal Energy

Earnings

Funding Schemes

Risk Mitigation Schemes

Research & Development


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Power and Heat (Heating & Cooling) Base Load / Around the Clock

> 90% Availability Renewable Energy

Inexhaustible Reservoir

W HY G EOTHERMAL ENERGY ?


Non-Polluting (Climate Change) No Fuel Necessary (Independent) Supporting Home Economy (no imports) Largest Potential of all Renewables


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ENVIRONMENT



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H ISTORY



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POTENTIAL (G ERMANY)

50% OF THE POWER GENERATION OF 2006

Biogas

Liquid Biomass

Solid Biomass

Gross power generation 2006

Generation potential

Final energy potential

Photovoltaics

Wind Power

Geothermal

Potential in TWh/a



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S PATIAL D ISTRIBUTION OF G EOTHERMAL A CTIV ITY



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Conventional Geothermal: Natural Steam Reservoirs

A well produces steam or a mixture of steam and water.

Temperatures above 200C. Medium Temperature Geothermal: Hot Water Reservoirs

A well produces hot brine for power generation and

D I FFERENT RESOURCES


ea ng.Temperatures 120C - 200C.

Low Temperature Geothermal: Hot Water Reservoirs

A well produces hot brine for heating and cooling.

Temperatures 60C - 120C.


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CONVENTIONAL G EOTHERMAL



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CONVENTIONAL G EOTHERMAL



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MEDIUM TEMPERATURE GEOTHERMAL



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Binary USA

MEDIUM TEMPERATURE GEOTHERMAL


Binary Hawaii


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HYDROTHERMAL



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EGS



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DRILL ING



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ELECTRICITY AND


BLUE LAGOON ICELAND


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EXAMPLES OF HEAT USE



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GEOTHERMAL ON THE WORLD SCENE

(10 GWe Operational, - Rapid Expansion Underway)



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G EOTHERMAL POTENTIAL

1000

10000

Electrical generation GWe

Direct Use GWth

E S T I M AT E D G L O B AL E L E C T R IC I T Y A N D D I R E C T U S E P O T E N TI A L

1

10

100

Installed

2008

2050

Minimum

2050

Median

2050

Maximum

Identified

technical

Inferred

theoretical



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COSTS

50MW Development US$150 to $200 million



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Cost of Recent Large (100 MWe) ConventionalGeothermal Projects in New Zealand

Kawerau: ~US $ 2.1 M / MWe Nga Awa Purua: ~US $ 2.4 M / MWe Tauhara I: ~US $ 2.4 M / MWe

COSTS (EXAMPLE )

New projects ~US $2.8 M to 3.0 MWe(in 2010)

Remark: Costs in NZ are extremely low. Expect more inother parts of the world for conventional geothermal.



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Cost of Small (3 - 5 MWe) MediumTemperature Geothermal Projects in Germany

Landau (3MW): ~US $ 10 M / MWe

New ro ects 3-5 MW : ~US $8 M to 10 M MWe

COSTS

(in 2010) Reasons:

Deep wells (3000 to 5000m)

Low Temperature (140 180C)



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FEED - I N TARIFF (EXAMPLE G ERMANY )

Basic Tariff 160 /MWhr up to 10 MW

105 /MWhr > 10 MW Bonuses


Early Bird: 40 /MWhr Heat use: 30 /MWhr

EGS: 40 /MWhr Maximum Tariff: 270 /MWhr


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EARNINGS

Market Price (Example NZ) Geothermal is economically competitive at

the current wholesale electricity price in NZ(~ US$ 60 / MWhr)

Subsidized Price


Power Purchase Agreement (PPA) Bonus

Feed-In Tariff (Example Germany) Carbon Credits


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R ISK M IT IGATION

Exploration Risk Technical Drilling Risk

World Bank Risk Mitigation Schemes


. .

Government Schemes (e.g. Germany, France) Private Insurance

Insurance (e.g. Munich Re, Swiss Re, Axa) Insurance Broker (e.g. Marsh)


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SUCCESS FACTORS

Sales Prices (Electricity/Heat Price) Environmental Benefit

Price Increase of Conventional Heat andElectricity generation


Country Risks Learning Curve Electricity and Heating/Cooling


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PROJECT AVAILABILITY

Many Countries (NZ, Turkey, Germany) All Resources

Conventional

Low and Medium Temperature All Technologies


Steam and Hydrothermal EGS All Risk Levels

Greenfield and Brownfield Portfolio !


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GOALS EFFICIENCY

RISK REDUCTION TOPICS

R&D CHALLENGES AND OPPORTUNITIES

PUMPS DRILLING TECHNOLOGY

BINARY POWER PLANTS SEISMICITY



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THANK YOU FOR YOUR ATTENTION !

Horst Kreuter, Colin Harvey, Orhan Mertoglu

17. May 2009, Qatar

100511 Investing in Geothermal Energy

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