Post on 16-Dec-2015
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ACCELERATING DEVELOPMENT OF GEOTHERMAL ENERGYIN DEVELOPING COUNTRIES
1. STATUS AND POTENTIAL OF GEOTHERMAL ENERGY
2. DRIVERS FOR DEVELOPMENT OF GEOTHERMAL ENERGY
3. CONSTRAINTS ON DEPLOYMENT OF GEOTHERMAL POWER PLANTS
4. SUCCESS STORIES
5. CONCLUSION: KFS FOR THE ACCELERATION OF DEPLOYMENT
L. Y. BronickiORMAT Group
“Day of Geothermal Power”Organized by UNEP Energy, BGR, Rödl & Partner, GtV, GFZ and others
P62
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Installed base and potential: Geothermal energy is a mature competitive industry
Geothermal energy has the lowest environmental impact
Continuous improvement in plant design: steam turbines, ORC and combined cycle
Continued technology transfer from oil and gas drive the cost reduction in geothermal energy, exploration, drilling and production
1. Status Of Geothermal Energy
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A Mature and Competitive Industry
COUNTRYPOTENTIAL FOR ELECTRICAL
GENERATIONINSTALLED ELECTRICAL GENERATION CAPACITY
MWeMWe TOTAL MWeTOTAL MWe
South & Central America 3,500 1220
The Philippines 6,000 1,900
Africa, including Kenya 6,500 60
Indonesia 16,000 790
P.R.China 6,700 30
USA 12,000 2,300
New Zealand 1,200 450
Japan 2,400 550
Europe, including Iceland and Azores Islands 2,000 1,050
Russia 1,400 60
Installed Geothermal Capacity (~8,500 MWe), Worldwide Potential (~60,000 MWe)
1. STATUS OF GEOTHERMAL ENERGY (CONT.)
Source: DOE, GRC, IGA
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CO2 Emissions
kg CO2 per kilowatt-hour
Coal
Oil
0 0.25 0.5 0.75 1.0 1.25 1.5
Geothermal: Steam
Geothermal: Binary or Combined Cycle
FUEL TYPE
Natural Gas – Gas Turbine
TechnologyLand area
(m2 per GWhr/year
for 30 years)
Geothermal 404
Wind (land with turbines and roads) 1,335
Photovoltaics 3,237
Solar Thermal 3,561
Coal (including open pit mining) 3,642
Land Area Occupied
Environmental Features of
Geothermal EnergyComparison with Other Energy Sources
range
Min. Max.
1. STATUS OF GEOTHERMAL ENERGY
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2. Drivers for Development of Geothermal Energy
Locally available in energy poor countries
Proven technology transfer to LDC and high local content
Need to diversify from reliance on hydro
Base load capability
Uncertainly of imported fuel cost
CO2 trading and clean developing mechanism (CDM)
RPS legislation and tax incentives (PTC)
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Barriers to Financing in Developing Countries
COMMERCIAL FINANCING: barriers due to relatively small sizes and high initial investment costs
CREDIT ISSUES: barriers due to risks: political, resource and off-takers
INSTITUTIONAL ISSUES: barriers due to fossil fuel subsidies, accounting for GHG emissions avoided, and societal costs of fossil fuels
STRUCTURAL ISSUES: Need mechanisms enabling market entry of renewables under deregulated structures
3. CONSTRAINTS ON DEPLOYMENT OF GEOTHERMAL POWER PLANTS (CONT.)
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Hurdle: Lack of Institutional will
Local politicians and civil servants should have a thorough understanding of why their countries need private investment, in infrastructure in general and Renewable Energy (RE) in particular
Must also have a firm will to implement policies and measures needed for private infrastructure and RE development
- regulatory framework
- technical capacity – building
- financial incentives, especially for RE
- enable financiability of projects
Need to have the institutional ability and strength of purpose to focus on long-term solutions such as the project development cycle; challenges and benefits are also long term
Relevant for both national government agencies and multilateral institutions
3. CONSTRAINTS ON DEPLOYMENT OF GEOTHERMAL POWER PLANTS
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Comparison of Public and Private Sector Financingof Green field geothermal plants in developing countries
Assumptions:1. Discount rate
Public sector: 3-8% Private sector: 13-18%% (in case of 30% equity, and 70% debt financing)
2. Resource risk allocation (drilling success rate not more than 70%) Public sector: generally assumed by the IFI Private sector: fully accounted for
3. Commercial risk Public sector: none Private sector: fully accounted by investors
4. Political risk Public sector: none Private sector cost of insurance: 2-3%
5. Soft costs Public sector: often not budgeted to project Private sector: fully accounted by investors
3. CONSTRAINTS ON GEOTHERMAL POWER PLANTS DEPLOYENT3. CONSTRAINTS ON DEPLOYMENT OF GEOTHERMAL POWER PLANTS (CONT.)
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4. Success Stories
1000 MW of renewable energy in less than ten years:
- The Philippine Geothermal Program
The right division of tasks in the right sequence- UNITAR / UNDP (exploration and technology transfer)
- GEF / WBG (drilling of wells)
- PRIVATE IPP’s supported by EXIM (power plants)
101495b
ECA = US EXIMBANK (PUBLIC)
BOT
Award June 1995
Contract Effectivity Aug. 1995
Financial Closing May 1996
Construction Started Jan. 1997
Commercial Operation Nov. 1997
Example of an ORMAT Project49 MW Leyte Geothermal Power Plant, the
Philippines
BOTBOT
4. SUCCESS STORIES (CONT.)
111495b
BOO
Example of an ORMAT Project24 MW Zunil Geothermal Power Plant, Guatemala
Award May 1995
Contract Effectivity October 1997
Financial Closing August 1999
Construction Started June 1999
Commercial Operation September 1999
BOOBOO
4. SUCCESS STORIES (CONT.)
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Example of ORMAT Projects48 MW Olkaria III Geothermal Power Plant, Kenya
PROJECT STRUCTURE: BOO
Phase 1+ 13 MW ORC. Wells for 120% of full capacity Phase 2
Phase 2 Nominal Capacity: 48 MW
Net maximum deliverable capacity: 53 MW, including steam turbine and ORC
Design Steam Flow 80 kg/s (average NCG: 3.5%)
Design Gross Output 53 MW
Design Net Output 48 MW
Award Feb. 1998
Contract Effectivity Oct. 1999
Start Construction Oct. 1999
MIGA Policy May 2000
Commercial Operation (Ph.1) July 2000
Commercial Operation (Ph.2) Q2 - 2006
4. SUCCESS STORIES
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5. Acceleration of DeploymentKey Points for Success
for Public – Private Partnerships
Financial Institutions to Seek Innovative FAST TRACK Solutions• Streamline the review process – avoid micro management• One stop financing - one lead agency to act as financing coordinator• Innovative technologies should be welcomed (performance guaranteed by private sector)• Harmonize cooperation in IFI’s between public and private sector departments
Risk Sharing• Private industry to underwrite risks in construction, performance, and operation• MFIs and ECAs and national agencies to underwrite other risks: country, payment• Resource development risks: to be borne by public sector
National Policy Legislation: level the playing field• Finance oriented, portfolio–based models should be promoted to take advantage of renewables in
the generation mix• Price should reflect environmental value of energy mix (WB Carbon Fund), base load
dependability, price stability (no oil imports)• Educate the stakeholders (important role for IEA-GIA, and UNEP)• Set asides for renewable energy technologies, e.g. RPS• Adapt deregulation to renewables (merchant plant issue)