Equinox Blueprint Energy 2030

7/30/2019 Equinox Blueprint Energy 2030

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E Q U I N O X

E N E R G Y 2 0 3 0

B L U E P R I N T

A technological roadmap for a

low-carbon, electr ified future

Lead Authors: Jatin Nathwani and Jason Blackstock

Chapter Authors:Esther Adedeji, Will Catton, Zhewen Chen, Kerry Cheung, Felipe De Leon, Aaron A. Leopold, Marc McArthur,

Nigel Moore, Jakob Nygard, Lauren Riga, Vagish Sharma, Ted Sherk, Gita Syahrani, Miles Avery Ten Brinke, Jos Maria Valenzuela, Arthur Yip

Contributors: Jay Apt, Aln Aspuru-Guzik, Robin Batterham, Barry Brook, Jillian Buriak, Zo Caron, Lia Helena Demange, Jian hua Ding,Craig Dunn, Cathy Foley, Yacine Kadi, Velma McColl, Greg Naterer, Linda Nazar, Nicholas Parker, Walt Patterson, Tom Rand, Marlo Raynolds

William D. Rosehart, David Runnalls, Ted Sargent, Maria Skyllas-Kazacos, Wei Wei

Lead Writer and Editor:Stephen Pincock

Editor-in-Chief: Wilson da Silva

A report on the outcomes of the Equinox Summit: Energy 2030, convened by theWaterloo Global Science Initiative and held in Waterloo, Ontario, Canada on 5-9 June 2011

FEBRUARY 2012


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E Q U I N O X B L U E P R I N T : EN ERGY 2030

2 PAGE

Publisher: Waterloo Global Science InitiativeEditor-in-Chief:Wilson da SilvaLead Writer and Editor:Stephen PincockLead Authors:Jatin Nathwani, Jason BlackstockChapter Authors:Esther Adedeji, Will Catton,Zhewen Chen, Kerry Cheung, Felipe De Leon,Aaron A. Leopold, Marc McArthur, Nigel Moore,

Jakob Nygard, Lauren Riga, Vagish Sharma, TedSherk, Gita Syahrani, Miles Avery Ten Brinke, JosMaria Valenzuela, Arthur YipContributors: Jay Apt, Aln Aspuru-Guzik,Robin Batterham, Barry Brook, Jillian Buriak, ZoCaron, Lia Helena Demange, Jian hua Ding, CraigDunn, Cathy Foley, Yacine Kadi, Velma McColl,Nigel Moore, Greg Naterer, Linda Nazar, NicholasParker, Walt Patterson, Tom Rand, Marlo Raynolds,

William D. Rosehart, David Runnalls, Ted Sargent,Maria Skyllas-Kazacos, Wei WeiArt Director:Lucy GloverDeputy Editor:Kate ArnemanCopy Editor:Dominic CaddenIllustrator:Fern BalePicture Editor:Tara FrancisResearch Assistants:Zhewen Chen,Ganesh Doluweera, Miriel KoProofreaders:Heather Catchpole,Renae Soppe, Becky Crew, Fiona MacDonald

EQUINOX SUMMIT: ENERGY 2030PATRON His Excellency The Right HonourableDavid Lloyd Johnston, CC, CMM, COM, CD, FRSC(Hon)

Summit Moderator and Content TeamLeader:Wilson da SilvaContent Team: Ivan Semeniuk, Lee SmolinScientific Advisor: Jatin NathwaniForum Peer Advisor: Jason BlackstockFacilitator:Dan NormandeauRapporteur:Stephen PincockStrategic Advisors:Jason Blackstock, BlairFeltmate, Thomas Homer-Dixon, David Keith,David Layzell, Kevin Lynch, Jatin NathwaniEvent Producers:Sean Kiely and Frank Taylor,

Title Entertainment Inc.Presenting Media Partner:TVO

WATERLOO GLOBAL SCIENCE

INITIATIVEBOARDDr Neil Turok(Chair)Director, Perimeter Institute for TheoreticalPhysics

Dr Feridun Hamdullahpur (Vice-Chair)President and Vice-Chancellor, University ofWaterloo

Dr Arthur Carty (Secretary & Treasurer)Executive Director, Waterloo Institute forNanotechnology

Dr Tom Brzustowski, RBC Professor, TelferSchool of Management, University of Ottawa; andChair, Institute of Quantum Computing (IQC),University of Waterloo

Michael Duschenes,Chief Operating Officer,Perimeter Institute for Theoretical Physics

ADVISORY COUNCILMike Lazaridis (Chair)Founder & Chair of the Board, Perimeter Institutefor Theoretical Physics; and Founder and ViceChair of the Board, Research In Motion

Dr Tom Brzustowski (Vice-Chair)RBC Professor, Telfer School of Management,

University of Ottawa; and Chair, Institute ofQuantum Computing (IQC), University ofWaterloo

Dr David DodgeChancellor, Queens University; and Sr. Advisory,Bennett Jones

Dr Suzanne FortierPresident, Natural Sciences and EngineeringResearch Council of Canada

Peter HarderSenior Policy Advisor, Fraser Milner Casgrain

Dr Chaviva Hoek

President & CEO, Canadian Institute for AdvancedResearch (CIFAR)

Dr Huguette LabelleChancellor Emeritus, University of Ottawa

John PollockCEO, Electrohome; and Chancellor Emeritus,Wilfrid Laurier University

Dr Cal StillerChair, Ontario Institute for Cancer Research;and Former Chair, Ontario Innovation Trust andGenome Canada

John M. ThompsonChancellor, University of Western Ontario; andChairman of the Board, TD Bank Financial Group

The Hon. Pamela WallinSenator, Government of Canada; and ChancellorEmeritus, University of Guelph

Lynton Ronald (Red) WilsonChancellor, McMaster University; former CEO,Redpath; Chairman of the Board of BCE; andFormer Deputy Minister

MANAGEMENT TEAMJohn MatlockDirector, External Relations and Public Affairs,Perimeter Institute for Theoretical Physics

Tim JacksonVice-President, External Relations, University ofWaterloo

Ellen RthorAssociate Vice-President, Communications andPublic Affairs, University of Waterloo

Martin Van NieropSenior Director of Government Relations andStrategic Initiatives, University of Waterloo

Stefan PregeljSenior Analyst, Financial Operations, PerimeterInstitute for Theoretical Physics

STAFFWGSI Coordinator:Julie WrightWGSI Communications Liaison:RJ TaylorOperations Support: Jake Berkowitz, LisaLambert, Mike Leffering, Peter McMahon,Cassandra Sheppard, Graeme Stemp-Morlock, andthe staff of the Perimeter Institute for TheoreticalPhysics

February 2012 Waterloo Global ScienceInitiative. This work is published under a CreativeCommons license requiring Attribution andNoncommercial usage. Licensees may copy,distribute, display and perform the work and makederivative works based only for noncommercialpurposes, and only where the source is creditedas follows: produced by the Waterloo GlobalScience Initiative, a partnership between CanadasPerimeter Institute for Theoretical Physics and theUniversity of Waterloo.

Waterloo Global Science Initiative31 Caroline Street NorthWaterloo, ON, N2L 2Y5, Canada

Tel: +1 (519) 569 7600 Ext. 5170Fax: +1 (519) 569 7611Email: [email protected]: www.wgsi.org

Produced for the Waterloo Global ScienceInitiative by Cosmos Media Pty Ltd, a publishingcompany in Sydney, Australia. PO Box 302,Strawberry Hills NSW 2012, Sydney, Australia.

Tel: +61 2 9310 8500, Fax: +61 2 9698 4899.Email: [email protected]: www.cosmosmedia.com.au

A technological roadmap for low-carbon electr ici ty producti on


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8 PAGE INTRODUCTION

Q uorum membersduring the working sessions.

In the foreground, Cathy Foley, Chief of the

D ivision of M aterialsScience and Engineering

at AustraliasC ommonwealth Scientific and

Industrial Research O rganisation (CSIRO ) .NATASHAWAXMAN

A LOW CARBON ELECTRICITY ECOSYSTEMDuring Equinox Summit: Energy 2030, participants evolved their discussions

of technologies for generation, transport and storage of electricity into adetailed exploration of the societal contexts into which such technologiesmust be integrated.

From this emerged the concept of a Low Carbon Electricity Ecosystem. Ithighlights how a series of technological, economic and social innovations

in different contexts can contribute to transforming how we, as individualsand societies, think about and use energy. It also allows us to more clearly

consider how we might alter the future direction of our varied electricitysystems in a more sustainable direction.

Three of the Pathways focus on technologies that could help replace our

reliance on the burning of fossil fuels for the generation of constant, reliablebaseload power in long-established electrical systems: the deployment

of grid-scale battery storage to support renewable energy expansion; thedevelopment of Enhanced Geothermal power potential; and the accelerated

development of Advanced Nuclear Power technologies.A fourth Pathway focusses on opportunities for innovation in rapidly

expanding urban environments, which are already among the largest

contributors to greenhouse gas emissions. Taking advantage of ever-improving information and communication technologies, coupled with

emerging battery technologies, could allow the simultaneous improvementof urban transport systems and our cities electric grids. In addition,

emerging superconductor technology may allow a substantial increase in the

efficiency of electricity provision, allowing more energy to be delivered persquare metre of densely packed, power-hungry city cores. These together are

described as elements that could contribute to green urbanisation.Finally, an important Exemplar Pathway developed by participants

focusses on the billions of people who currently live without adequate accessto electricity. This Pathway proposes routes for encouraging the development

of affordable, off-grid power solutions for energy-poor regions.

Baseload

/argescale storage

for reneZable energy Geothermal$dvanced nuclear

Smart urbanisation

Enhanced grid)lexible solar Superconductors

Electrified transport

Storage

Off-grid

)lexible solar and

storage0icrogrids

INNOVATIONAND

WEALTHCREATION

Figure 3: A sdiscussionsprogressed, a new model for the global electricity landscape

emerged: the Low-Carbon Electricity Ecosystem. It allowed participantsto better

conceptualise the enormouschangesrequired, and how they could be integrated.


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9PAGEINTRODUCTION

BLUEPRINT STRUCTUREThe Equinox Blueprint contains two parts:

Part Onedetails the Exemplar Pathways developed by participants of the Equinox Summit: Energy2030, and incorporates specific proposals for addressing important aspects of the global energy problem.Each of these Exemplar Pathways identifies specific opportunities for action aspects of the energyproblem that are amenable to improvement with science or technology. They describe existing barriersto that improvement, and describe a series of steps to overcoming those barriers. Each Pathway includesinterventions and action points for generating change, as proposed by participants.

Part Two is a more detailed discussion of the scientific and technical context of each of these ExemplarPathways. It describes the science, technology and societal underpinnings of each proposed Pathway. Thefocus in this section is on clarifying the scale and nature of specific facets of the energy problem, and onidentifying the technological or societal developments needed to address those problems.

Part One is aimed at policy makers, the media and the general public, and provides a detailed discussion

of the proposals.Part Twodelves deeper into the technical and scientific challenges and opportunitiesof each proposal, and is aimed at the scientific, engineering and academic community.

Within each of these two major sections, chapters have a similar structure: they each detail theOpportunitiesandChallengesof each proposal, and the suggestedPathway to Innovation. These arefollowed by proposedActions, or other suggested initiatives to help make the recommendations a reality.

The chapters are built around the five Exemplar Pathways, which are the core pillars of the proposalscontained herein. In Part One, they are:

REPLACING COAL FOR BASELOAD POWERChapter 1: Large-scale Storage with Renewables 12Chapter 2: Enhanced Geothermal 18Chapter 3: Advanced Nuclear 24

REENGINEERING ELECTRICITY USEChapter 4: Off-grid Electricity Access 30Chapter 5: Smart Urbanisation 36

In Part Two, which focuses on the scientific and technical discussion of each of the five Exemplar Pathways,the chapters follow a similar structure:

REPLACING COAL FOR BASELOAD POWERChapter 6: Large-scale Storage with Renewables 54Chapter 7: Enhanced Geothermal 64

Chapter 8: Advanced Nuclear 72

REENGINEERING ELECTRICITY USEChapter 9: Off-grid Electricity Access 80Chapter 10: Smart Urbanisation 90


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C H A P T E R 2 : ENHANCED GEOTHERMAL POWER


18 PAGE

TO DATE, GEOTHERMAL POWER facilities have beendeployed only where naturally occurring heat, water androck permeability allow easy energy extraction. Enhanced

Geothermal is a new approach. It does not require naturalconvective hydrothermal resources, but seeks to enhance

or create geothermal power from hot, dry rock sites through hydraulicstimulation, pumping high-pressure cold water down an injection well

into the rock. This increases fluid pressure in the naturally fractured rock,

mobilising shear events that enhance permeability, a process known ashydro-shearing, which is very different from hydraulic tensile fracturing used

in the oil and gas industries.When natural cracks and pores in a site do not allow economic flow

rates, permeability can thus be enhanced, allowing geothermal power tobe extracted in a larger number of locations and to function as a baseload

station producing power 24 hours a day, much like a fossil fuel plant.

ENHANCEDGEOTHERMAL POWER


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19PAGE

1M assachusettsInstitute of T echnology. The Future of G eothermal Energy: Impact of Enhanced Geothermal System ( EGS) on the United Statesin the 21st C entury, 2006.

OPPORTUNITIESIf it could be tapped for electricity production, the heat of the Earth offersan essentially inexhaustible supply of energy with negligible emissions. For

example, the estimated Enhanced Geothermal resource base in the UnitedStates is some 13 000 times the current annual consumption of primary

energy in the country. Using reasonable assumptions regarding how heatwould be mined from stimulated Enhanced Geothermal reservoirs, the

extractable portion still amounts to 2 000 times that of annual consumption.1

Geothermal power is an attractive source of abundant baseload electricitywith almost no CO

2emissions. With deep enough drilling, every country could

potentially have access to a large amount of this renewable energy resource.Enhanced Geothermal Systems (EGS) aim to use the Earths heat in a wider

range of locations than existing geothermal resources, where there is insufficientnaturally occurring steam or hot water and where the permeability of the

Earths crust is low.

Krafla Geothermal Power Plant in Iceland.


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20 PAGE

It has been estimated that geothermal generation could reach 1 400 TWhper year representing as much as 3.5% of worldwide electricity supply

within four decades, avoiding almost 800 Mt of CO2

emissions.2

CHALLENGESRecent efforts to harness conventional geothermal resources have not

yet translated into large-scale commercial development of EnhancedGeothermal Systems.

Major barriers to this expansion have been the high front-end capital costsof geothermal projects, and the lack of investor confidence due to the paucityof available drilling data only a small number of wells have been drilled

worldwide to date. Until the technology is sufficiently de-risked to overcomethe natural conservatism of private capital, exploration of the resource will

be limited to isolated, government-supported development. Engagementby major financial and energy players will also be needed to make the cost

projections attractive to investors.There is also a large degree of inherent resource uncertainty associated

with drilling geothermal projects. With current understanding, the size and

characteristics of individual resources is difficult to assess accurately before

drilling begins. As with oil and gas drilling, scores of exploration wells needto be drilled to ascertain the size and profile of any geothermal resourcebeneath the ground.

The local environmental impacts of engineered geothermal systems alsoneed to be studied and better understood, to assess actual risk as well asaddress potential negative public perceptions of risk.

There are technical issues to overcome, such as the ability to create aclosed water circuit, avoidance of mineralisation and channelling (leading to

localised cooling), and integrity of rock fracturing.

PATHWAY TO INNOVATIONLarge-scale demonstration projects are a potentially powerful meansof building confidence and improving technological understanding to

encourage the uptake of the technology. These would not only establishwhether the projects are technically feasible, but also de-risk the construction

and operation of commercial-scale facilities.Ten collaborative, deep-drill demonstration projects in a variety of

locations around the world could reduce uncertainty, facilitate transfer ofdrilling expertise and lower costs.

Geologic resource mapping and programs to review drilling and

geotechnical mechanisms and processes should also be launched.

THE PROMISE OF GEOTHERMALThe vast amount of heat energy stored within our planets crust could if

tapped potentially replace a large proportion of the fossil fuels we currently

burn to generate baseload power within a few decades.Enhanced Geothermal Systems are a technology that aims to use the heat

of the Earth in a much wider range of locations than are currently suitable forgeothermal generation. It has been estimated that geothermal generation

could reach 1 400 TWh per year representing as much as 3.5% of worldwideelectricity within four decades, avoiding almost 800 Mt of CO

2emissions.3

For these technologies to be widely implemented, the high upfront costs of

2 International Energy Agency, Geothermal Road M ap 2011.3 Ibid.


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21PAGE

1.05

1.00

0.95

0.90

0.85

0.80

0.75

0.70

LEARNINGCURVEINFLUENCEONDRILLINGCOST

Fractionofbasecasecost

0 2 4 6 8 10

Number of wells drilled in formation

1.2

1.1

1.0

0.9

0.8

0.7

0.6

Normalised

drillingandcompletioncosts

Well field 1 Well field 2 Well field 3

Individual

well cost

Averagewell cost

Enhanced Geothermal power will need to be addressed, geothermal resourcesmore accurately mapped, and legal and regulatory frameworks put in place.

Geothermal power development faces a range of risks, includingtechnology, scheduling, financing, politics and exchange rates. Private

investors distance themselves from taking on such risks independently.Effective measures to reduce these risks and cost uncertainties are needed to

increase geothermal energy development within the energy sector.

Demonstration projectsIn order to reduce the risks of large-scale engineered geothermal technology both technically and financially the Equinox Summit proposes the

establishment of a public-private partnership to roll out 10 commercial-scale,50 MW demonstration projects in various sites around the world.

These projects would be internationally collaborative efforts, marryingindustry leaders and government partners, and gathering international

stakeholders for information sharing, assessmentof the opportunities and the de-risking of thegeothermal technologies and techniques.

These projects would serve multiple purposes:

Q Help reduce risks and uncertainties for

drilling by bringing down the learning curve.Accessing proportionally larger amounts of thegeothermal resource base is expected to result

in greater economies of scale for deliveredpower. This will translate into lower average

costs per well, as a function not only of wellsdrilled per field, but wells drilled regionally.

This learning curve concept has been assessedand applied successfully in the oil and gasdrilling technologies.4

Q Contribute to existing records of well-drilling.

Q Lower prospecting and surveying costs by

information sharing, with all data derived fromthe projects to be made publicly available.

Q Facilitate transfer of drilling technologiesand expertise internationally, and building

confidence between the government andprivate investors.

4M IT 2006.

Figure 1: Learning curve influence on drilling cost.

Figure 2: D rilling-cost learning curve illustrating

the learning processthat occurswithin each well

field. Base case includesa 20% contingency factor

to account for non-rotating costs.

A D A P T E D F R O M :

M I T 2 0 0 6


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22 PAGE

Resource mappingWithin the same timeline, geologic resource mapping and programs to review

drilling and geotechnical mechanisms and processes should be launched.Information sharing is vital to the development and scaling up of Enhanced

Geothermal Systems. Accurate exploration of geothermal reservoirs andgathering of information on the reservoir properties are also vital before

drilling commences.As drilling of deep geothermal wells is an expensive proposition, most

developers will not drill their first borehole before there is some degree of

certainty that geothermal resources with a specific flow rate will be foundat a specific depth. Publicly available databases, protocols and tools could be

developed to assess, access and exploit geothermal resources and therebyaccelerate its development.

Drilling technologyAs a part of this model, the drilling experience and expertise of the oil and gasindustries would be tapped to help accelerate Enhanced Geothermal drillingtechnique development. Financial incentive structures such as tax exemption

regimes and alternatives for accelerated depreciation on capital expenditure

can be put in place to co-opt the oil and gas industries, which already possessvast expertise and experience in deep-well drilling and extraction.

Environmental and social concernsReducing risk profile also means addressing environmental and socialconcerns. Geothermal plants seem, on the face of it, to be the most

environmentally benign means of generating baseload electricity.However, there have been instances of induced seismicity associated with

geothermal drilling hence, any large-scale deployment of the technologywill require this phenomena to be better understood. Induced seismicity

are earthquakes and tremors typically of an extremely low magnitude caused by drilling activity which may alter the stresses and strains on theEarths crust. They are not unique to geothermal drilling, but have also been

noted in oil and gas exploration and CO2

sequestration projects. It is believedthat induced seismicity can be mitigated, if not overcome, using modern

geoscientific methods to thoroughly characterise potential reservoir targetareas before drilling and stimulation begin.5

There are also other technical criteria that carry environmental and socialimplications, such as compatible land use, drinking water and aquatic lifeprotection, air quality and noise standards, which will need to be addressed.

Yet these impacts are not unmanageable. Geothermal power plant facilitiescan be designed and operated to minimise them, and those currently in

operation are already much more benign than those associated with fossilfuel power generation.

There are necessary prerequisites to secure agreement of local inhabitants,

such as the prevention of adverse effects on peoples health, minimisationof environment impacts and creation of direct and ongoing benefits for the

resident communities.6

5M IT 2006.6 International Panel on Climate Change. Special Report on Renewable Energy Sourcesand C limate Change Mitigation 2011.


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23PAGE

ACTIONSThe Waterloo Global Science Initiative (WGSI) has a unique opportunity

to act as a catalyst in instigating and guiding a conversation aroundcollaborative, global efforts required to accelerate large-scale development

and adoption of geothermal through the instigation of 10 commercial-scalegeothermal projects, to be developed by public and private stakeholders.

To this end, it is proposed that WGSI host a small, focussed and privatemeeting of relevant public and private stakeholders from a number of

potential partners from around the world. The outcome of the meetingwould be three-fold:

Q To validate the central hypothesis that 10 Enhanced Geothermal Projectsis timely and relevant

Q To motivate initial funding and collaborative, global working structure

Q To establish an association to take ownership of project development andfund-raising.

Note that the role of WGSI is limited to acting as a catalyst, serving to hostthe meeting, guide the discussion, and perhaps to motivate the formation ofan association or network to which ownership of the project is passed.

A potential list of participants could include: pension fund managers,government decision-makers, captains of industry who indicate a first-moverinterest, large engineering/technology firms, utility executives, existing

geothermal project developers, government scientists and senior geologicalengineers.

A geothermal power station

harnessing heat energy in Earthscrust.

iSTOCK


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64 PAGE

GEOTHERMAL POWER ISan attractive source ofclean, abundant baseload electricity. With deep enoughdrilling (more than 4 km), every country in the world could

potentially have access to a large amount of this renewableenergy resource.

Geothermal power currently represents only 0.3% of the worlds electricity

supply, although it has enormous potential. Some of the benefits fordeveloping geothermal power include energy security, the reduction of

pollution, its low ecological footprint and job creation.One critical challenge facing geothermal power includes the large upfront

capital cost for geothermal projects. Costs for geothermal electricity

generation can be a competitive resource if deployed on a large scale.Closely linked to the economic constraints is a widespread perception

that commercially exploitable sites are too limited in their distribution.In addition to this is a public concern that drilling for geothermal power

increases the potential for induced seismic risks.This chapter identifies the various forms and current status of geopower,

as well as the future potential of Enhanced Geothermal Systems.

ENHANCEDGEOTHERMAL POWER

S O U R C E :

W I K I M E D I A

The Krafla geothermal power plant in

Iceland produces60 M W of energy.

Icelandsfive major geothermal power

plantsproduced approximately 26.2%

of the nationsenergy in 2010.


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65PAGE

1International Energy Agency,Geothermal Road Map 2011. 2G eological Survey of Canada 2011: G rasby, S.E. et al.Geothermal Energy Resource Potential of Canada.3Pike Research 2011:Renewable Energy Generation from Conventional, Enhanced Geothermal Systems, and Co-Produced Resources: Market Analysis and Forecasts.4Renewable and Sustainable Energy Reviews 2002: Barbier, Enrico. G eothermal energy technology and current status: an overview . 5U.S. Department of Energy 2009:Cross, J. et al. Geothermal T echnologiesM arket Report. U .S. N ational Renewable Energy Laboratory 2011: Salmon, J.P. et alGuidebook to Geothermal Power Finance. GEG lobal Research 2010: High-Potential W orking Fluidsfor N ext G eneration Binary Cycle Geothermal Power Plants. U .S. D epartment of EnergysO ffice of Energy Efficiencyand Renewable Energy, G eothermal T echnologiesProgram ProjectsD atabase see http://apps1.eere.energy.gov/geothermal/projects/projects.cfm/ProjectID = 177

OPPORTUNITIESGeothermal energy is a large resource capable of providing a

significant proportion of the global energy demand. It makesuse of the immense heat content of the Earth, either directly in

applications such as heating or as a means of generating electricity.Geothermal energy has been used to generate electricity since

1904. It currently provides around 10.7 GW of power in26 countries.1 Most of that existing capacity comes from

geothermal sources in regions where geological conditionspermit water or steam to transfer the heat from deep hot zonesto near the surface, thus giving rise to geothermal resources.

In order for geothermal energy to be economically exploited,however, special geologic conditions are required. These

conditions range from shallow rock and sediments saturatedwith groundwater, to hot water and hot rocks several kilometres

below the Earths surface.2 It has been estimated that we havenot accessed all of those conventional geothermal resources,and that a global minimum of 190 GW equivalent to roughly

250 nuclear power plants remains to be exploited, even using

current technology.3 Conventional geothermal systems arederived predominantly from resources with high enthalpyrelated to hydrothermal systems (enthalpy is a measure of the

total energy in a thermodynamic system; in this instance, higherthan 150C/300F). Hydrothermal systems may be either water-dominated, vapour-dominated, or a mixture of the two. Water-

dominated fields can be recognised at the surface at temperaturesnear boiling point or in the presence of thermal springs or geysers.

In exploiting this resource, hot water is withdrawn from thereservoir through a production well and f lashed (or vaporised) in

a flash steam plant.Some water-dominated hydrothermal systems that have already

been exploited include those of the Pannonian basin (Hungary),

the Paris basin (France), the Aquitanian basin (France), the Po River valley(Italy), Klamath Falls (Oregon, USA), and in Tianjin (China).4 In addition to

these conventional resources, there are several emerging technologies in thegeothermal arena for generating electricity. They include:

Q Enhanced Geothermal Systems (EGS) designed to enable cost-effective production of electricity at sites that lack sufficient rock

permeability and/or water for conventional geothermal technologies

Q Co-produced systems that use hot water extracted during the oil andgas recovery process to produce electricity; these systems are innovative

in their use of water but can use either conventional or emerging

generating technologies to produce electricity

Q Advanced binary-cycle plantsthat use organic fluids with evenlower boiling points than traditional binary-cycle plants, enabling more

efficient power conversion at low temperatures or from fluids extractedusing EGS.5

Asthenosphe

re

Lithosphere

Mantle

Crust

Not to scale

Inner core

Outer core

Mantle

Earth crust

6,370

km

2,900 km

Figure 1: W ith deep enough drilling, almost any

country could accessgeothermal energy.

ADAPTEDFROM:

BARBIER

RENEWABLEANDSUSTAINABLEENERGYREVIEW

S

2002


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66 PAGE

ENHANCED GEOTHERMAL SYSTEMSWithin the ecosystem of geothermal energy applications and technologies,

the Equinox Summit identified Enhanced Geothermal Systems as one of themore promising options for meeting the requirement of baseload generation

on a large scale. Enhanced Geothermal Systems aim to use the heat of theEarth in a much wider range of locations where there is insufficient steam

or hot water, and where permeability is low. (See Figure 2 below)Enhanced Geothermal Systems involves enhancing the permeability of the

Earths crust by opening pre-existing fractures and/or creating new fracturesdeep into the ground, typically more than 1.5 km below the surface. Heat isextracted by pumping a transfer medium, typically water, down a borehole into

the hot fractured rock and then pumping the heated fluid up another boreholeto a power plant, from where it is cooled and recirculated to repeat the cycle.

While conventional geothermal power plants are limited to the few areaswhere suitable hydrothermal resources exist, Enhanced Geothermal Systems

can be implemented over vast areas of the globe where hot dry rocks are found.With established capacity for drilling up to depths of approximately 4 km,every country in the world could have access to this renewable energy resource.

Power

Insulatingsediments

HOTSEDIMENTARYAQUIFER ENHANCEDGEOTHERMALSYSTEM

Power

Insulatingsediments

Underground

water

reservoir Closed

system

Sandstone or carbonates

Hot fractured graniteHeat source

Figure 2: Enhanced G eothermal

Systemscompared to Hot

Sedimentary Aquifer.6

The second image at left showsthatone well isdrilled and pressurised

to create fractures, while a second

well isdrilled into the far side of the

fracture zone. Cold water isthen

pumped down one well and steam

isextracted from the other. 7

6Sustainable Energy Without The Hot Air 2008: M ackay, D avid J.C ., U IT Cambridge. ISBN 978-0-9544529-3-37Australian G eothermal Energy Association 2010:G eothermal Energy for Victoria, Presiding O fficersScience SeriesN ote N o. 2. http://www.agea.org.au/news/.

ADAPTEDFROM:

AGEA,

2010


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67PAGE

Based on stored heat estimates, it has beenestimated that 118-146 EJ/year of geothermal

energy could be generated at 3 km depth, and318-1 109 EJ/year at 10 km.8(See Figure 3)

Geothermal generation could reach 1 400TWh per year as much as 3.5% of worldwide

electricity within four decades, up from 0.3%today, avoiding almost 800 Mt of CO

2emissions.10

As a source of energy, geothermal is independentof weather conditions in contrast to solar, wind,or hydroelectric applications. It has an inherent

storage capability and can be used both for baseloadand peak power plant.11 Geothermal energy has the

virtue of even distribution around the globe and isthereby accessible to almost every nation.

Even a landlocked state such as Rwanda,without a rich endowment of natural resources,has prospective areas for geothermal energy

exploitation. Developments currently underway

will enable Rwanda to produce 310 MW of power by2017 with the possibility of an increase to 700 MW.12Figure 4 shows the geothermal potential for various regions.

Demonstration phase Enhanced Geothermal Systems projects are underway,with one small plant operating in France and another pilot project in Germany.Considerable investment has been made in Enhanced Geothermal Systems

exploration and development in Australia in recent years, while the U.S. hasrevived a national geothermal program for Enhanced Geothermal Systems

research, development and demonstration.14 Geothermal energy has beenidentified by the Australian Academy of Technological Sciences and Engineering

(ATSE) as one of the most important energy resources, and one that is likely tobe of strategic interest to Australia over the next few decades. There appearto be some issues with the maturity of the technology that will require further

research, development and demonstration activities to reduce the risk of

0

200

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1 200

10 5 3

Electricorthermal(EJperyr)

Electricity Thermal

Depth (km)

Direct uses

Max

Min

Figure 3: G eothermal technical potentialsfor

electricity and direct uses( heat). D irect usesusually

do not require development to depthsgreater than

about 3 km.9

Figure 4: G eothermal technical potentialson

continentsfor the IEA regions.13

REGION

Electric technical potential (EJ/yr) at depths to: Technical potentials(EJ/yr) for direct uses

3 KM 5 KM 10 KM

Lower Upper Lower Upper Lower Upper Lower Upper

OECD North America 25.6 31.8 38.0 91.9 69.3 241.9 2.1 68.1

Latin America 15.5 19.3 23.0 55.7 42.0 146.5 1.3 41.3

OECD Europe 6.0 7.5 8.9 21.6 16.3 56.8 0.5 16.0

Africa 16.8 20.8 24.8 60.0 45.3 158.0 1.4 44.5

Transition economies 19.5 24.3 29.0 70.0 52.8 184.4 1.6 51.9

Middle East 3.7 4.6 5.5 13.4 10.1 35.2 0.3 9.9

Developing Asia 22.9 28.5 34.2 82.4 62.1 216.9 1.8 61.0

OECD Pacific 7.3 9.1 10.8 26.2 19.7 68.9 0.6 19.4

Total 117.5 145.9 174.3 421.0 317.5 1 108.6 9.5 312.2

8EJdenotesexajoules; 1 EJisequal to 1018 joules. 9 Intergovernmental Panel on C limate Change (IPC C) 2011:Special Report on Renewable Energy Sources and ClimateChange Mit igation. 10 International Energy Agency 2011,Geothermal Road Map. 11W orld Energy Council 2007:Survey of Energy Resources 2007.http://www.worldenergy.org/publications/survey_of_energy_resources_2007/geothermal_energy/default.asp. 12Smith School of Enterprise and the Environment,University of O xford, 2011: King, D .National Strategy on Climate Change and Low Carbon Development for Rwanda: Baseline Report. 13See 9. 14 Ibid.

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the technology for commercial applications on a large scale. If successfullyimplemented at scale, geothermal offers significant economic benefits and

will have a positive impact on Australias stationary energy emissions.15Geothermal reservoirs in areas that were previously considered

non-commercial for conventional hydrothermal power generationhave now been given renewed research attention. They include sites

such Rosemanowes in the United Kingdom, Hijiori and Ogachi inJapan, and Basel and Geneva in Switzerland.16

OTHER USES OF GEOTHERMAL ENERGYBesides electricity production, geothermal energy can be used for commercial,

industrial and residential direct heating purposes, and for efficient homeheating and cooling through geothermal heat pumps.

Q Heating uses: Geothermal heat is used directly, without involving apower plant or a heat pump, for a variety of applications such as spaceheating and cooling, food preparation, hot spring bathing and spas,agriculture, aquaculture, greenhouses, and industrial processes.

Q Geothermal Heat Pump: Geothermal Heat Pumps take advantage ofthe Earths relatively constant temperature at depths of about 3-90 m.Geothermal Heat Pumps can be used almost everywhere in the world,

as they do not require fractured rock and water as do conventionalgeothermal reservoirs. Geothermal Heat Pumps circulate water or otherliquids through pipes buried in a continuous loop, either horizontally or

vertically, under a landscaped area, parking lot or any number of areasaround a building.17

CHALLENGES TO OVERCOMERecent efforts to harness conventional geothermalresources have not yet translated into large-scalecommercial development of Enhanced Geothermal

Systems. An important challenge would be to provethat EGS can be deployed economically, sustainably and

widely. The barriers fall within three broad categories:access to private sector capital to undertake high-risk

capital intensive projects, without longer term investmentincentives, such as a price on carbon; lack of proof ofresource for many geothermal prospects, and; a lack of

technically and commercially proven projects.18The opportunities for expansion of geothermal

electricity generation beyond rift zones or volcanicallyactive regions on a global scale will be reliant on

technology from the oil and gas sectors. If the experience

of the oil and gas sectors gained over a century can beexploited for extraction of geothermal energy, there is

good potential for a reduction of risk, cost and complexity.A major barrier to this expansion has been the large

upfront cost of geothermal projects, a result of the need todrill wells and construct power plants. For lower-grade

Enhanced Geothermal Systems, the cost of the well

Preliminary

work

Two wells Pilot plant

25MWe

More wells Scale-up

to 100MWe

Risk

Requiredcapitalinvestment

Additional capital required

Private sector capital

CAPITALSHORTFALL

Figure 5: Capital shortfall for geothermal

energy investment.19

15Allen Consulting G roup 2011:Australias Geothermal Industry: Pathways for Development, prepared for the Australian Centre for Renewable Energy. Geothermal ExpertG roup 2011: Batterham, R .Australias Geothermal Industry: Pathways for Development. 16M assachusettsInstitute of Technology 2006.The Future of Geothermal Energy:Impact of Enhanced Geothermal System (EGS) on the United States in the 21st Century. 17 G eothermal Energy Association 2009: Blodgett, L. et. al.Geothermal 101: Basics ofGeothermal Energy Production and Use. 18 See 15. 19See 16.

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field can account for 60% or more of the totalcapital investment. Estimates of drilling and

completion costs to depths of at least 5 000 mare needed for all grades of Enhanced Geothermal

Systems resources in order to make economicprojections. The scant number of wells drilled

worldwide thus far, however, has contributed tothe insufficient quantity of drilling records for

making such projections.20 Due to the similaritybetween oil and gas wells and geothermal wells,it is possible, however, to gain insight into

geothermal well costs by borrowing fromexperience in the established industries and

developing a cost index that can be used tonormalised geothermal well costs.

In the beginning of the learning process,additional capital is critical to instil confidence andcertainty, and it cannot only be matched solely by

private sector capital. See Figure 6 at right, which

shows gaps in the required capital investment.Additional information on the costs and risks

associated with different stages of Enhanced

Geothermal Systems development as they relateto geologic assessment and permits; explorationand drilling; production and reservoir simulation,

and; power production and market performancehave been categorised and described in MITs

The Future of Geothermal Energy: Impact ofEnhanced Geothermal System (EGS) on the UnitedStates in the 21st Century.21

From the perspective of integration into thegrid, the investment costs of a geothermal-electric

project comprise the following components:(a) exploration and resource confirmation

(b) drilling of production and injection wells(c) surface facilities and infrastructure

(d) the power plant.The first component includes lease acquisition, permitting, prospecting

and drilling of exploration and test wells, and represents between 10 and

15% of the total investment cost (but may be 13% for expansion projects).The second component drilling of production and injection wells has a

success rate of 6090%, representing 20 to 35% of the total investment. Thethird component can account for 10 to 20%, while the fourth component varies

between 40% and 81% of the investment.22 There is also a large degree of

inherent resource risk and cost uncertainty associated with drilling. Sourcesof uncertainty include injection optimisation, scaling/corrosion inhibition, and

reservoir simulation modelling, energy recovery and sustainable generation.The remoteness of some geothermal resources means that a significant

investment will be necessary to provide and augment transmission linesrequired to supply electricity to the market. Because of this constraint, some

companies have sought tenements and resources that are closer to the grid.

20See 15. 21See 12. 22 See 9.

0.1

0.3

1

3

10

30

100

0

Completedwellcosts(millionsperyear2004US$

)

Depth (metres)

2 000 4 000 6 000 8 000 10 000

Geothermal

well model

predictions

Oil and gas

average

10 000 15 000 20 000 30 00025 0005 000

(ft)

1. JAS = Joint Association Survey on drilling costs2. Well costs updated to US$ (year 2004) using index mede from 3-year moving average

for each depth interval listed in JAS (19762004) for onshore, completed US oil and gas

wells. A 17% inflation rate was assumed for years pre-1976.

3. Ultra deep well data points for depths greater than 6 km are either individual wells or

averages from a small number of wells listed in JAS (19942000).

4. Other Hydrothermal actual data include some non-US wells (Source: Mansure 2004).

JAS oil and gas average

JAS ultra deep oil and gas

The geysers actual

Imperial Valley actual

Other Hydrothermal actual

Hydrothermal predicted

HDR/EGS actual

HDR/EGS predicted

Soultz/Cooper Basin

Wellcost lite model

Wellcost lite base case

Wellcost lite specific wells

Figure 6: Complete oil, gas, and geothermal well costs

asfunction of depth ( in 2004 US dollars) , including

estimated costsfrom the Well Cost model. The

red line providesaverage well costsfor the base

case used in the assessment.

1. JAS = Joint Association Survey on drilling costs

2. Well costs updated to US$ (year 2004) using index mede from 3-year moving average

for each depth interval listed in JAS (19762004) for onshore, completed US oil and gas

wells. A 17% inflation rate was assumed for years pre-1976.

3. Ultra deep well data points for depths greater than 6 km are either individual wells oraverages from a small number of wells listed in JAS (19942000).

4. Other Hydrothermal actual data include some non-US wells (Source: Mansure 2004).

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23See 15. 24See 9. 25See 15. 26See 16. 27 Ibid.28G eothermal Expert G roup 2011: Batterham, R.Australias Geothermal Industry: Pathways for Development.

In some cases this may come at the expense of resource quality.23 Technologyimprovement and innovation could reduce some of these costs. For example,

advanced geophysical surveys using tools such as satellite- and airborne-based hyper-spectral, thermal infrared, high-resolution panchromatic

and radar sensors could make exploration efforts more effective andreduce resource risks.24 Improvements in drilling, power conversion, and

reservoir technology can also enable access to more economically acceptableformations and higher reservoir performance and efficiency.

As the geothermal power industry is still in the early stages of development,and significant investment by governments is required to facilitate furtherdevelopment, the industry requires a broad and open approach to the

dissemination of information. It is important that information is fullyutilised and shared by the sector, including the research community. The

proprietary interest of companies can be protected through the informationbeing shared with appropriate confidentiality agreements through

government.25 For the longer term, using CO2

as a reservoir heat-transferfluid for EGS could also offer the additional benefit of providing an alternativemeans to sequester larger amounts of carbon in stable formations.26 These

developments are within reach; insight can be drawn quickly from the

oil and gas well-drilling industries, which employ very similar extractiontechnologies. Furthermore, experience from the oil and gas sector tells us

that investments made in research to develop

extractive technology for EGS would follow anatural learning curve that lowers developmentcosts and leads to higher energy recovery.

Technical problems or limitations exist forEnhanced Geothermal Systems. Key issues such

as flow short-circuiting, a need for high injectionpressures, water losses, geochemical impacts and

induced seismicity can be managed with propermonitoring and operational changes.27 Localenvironmental impacts can arise from geothermal

development, including gas and liquid emissionsduring operation, potential hazards of seismicity,

as well as land use issues. A rigorous siting andpermit approval processes for specific projects

will be necessary to prevent and minimise theseimpacts to obtain social acceptance.

LARGE-SCALE IMPLEMENTATIONGiven the high requirements for capital and the

current low level of contribution of geothermalenergy to the global energy supply mix, a significant

policy commitment with the right combination of

financial and tax mechanisms will be necessary forit to play an important role to de-carbonise the

energy system. Mechanisms such as feed-in tariffs,a carbon price, or other financing and tax incentives,

and direct co-investment by government and theoil and gas sector (with its drilling and exploration

expertise) will increase the appetite of the private

Large-scale geothermal

power generation

Specific market

mechanisms, e.g.

a feed-in tariff for

first 3 500 GWh

Government provides 10% tofund first 50 MW of power plant

$30 million for up to two pilot plants

of around 5 MW

Government funds 50% towards drilling 2nd well

based on meeting success criteria

Up to $50 million available

Funding for drilling first geothermal wells

Selection of projects encompassing different geological settings

Government funds 75% of well costs

Approximately $140 million for eight wells

Figure 7: Summary of the graded co-investment

model for geothermal power.28

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29See 15.

sector. Similar national strategic programs have been recommended byexperts groups such as MIT and ATSE in the U.S. and Australia respectively.

An example of a co-investment model is captured in Figure 7.Within a national framework, a number of mechanisms are available to

assist with or accelerate the development of geothermal. Their differentcharacteristic are summarised below:

MECHANISM EGS HSA Direct use

Market-based incentives

Geothermal feed-in tariffs

Flexible price adjustment mechanism N/A

Targeted venture capital N/A N/A

Extended REC scheme and RET

Demonstration

Full scale demonstration projects N/A

Cost subsidies

Drilling rig N/A

Increased subsidies

Loans and loan guarantees N/A

Tax incentives N/A

Figure 8: Support mechanismsfor addressing key barriers.29

NHAN

TH MAL

CONCLUDING REMARKSThe Enhanced Geothermal Systems technologies we describe in this

report stand out within the spectrum of geothermal energy resourcesbecause they can provide near-inexhaustible decarbonised baseload

power. The usage of geothermal energy is, however, not limited toelectricity generation; we have listed other applications and technologies

within the geothermal arena.

For the large-scale commercial deployment of EGS, some economiccertainty needs to be established. The barriers to geothermal

development are not insurmountable, but there needs to be a basket ofrisk-diversifying approaches in place, as well as adequate development

framework and strategy.

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Equinox Blueprint Energy 2030

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