Geothermal Renewable Energy Growth Management

Shàn you shàn bào,

Kind deeds will normally generate good rewards.

What goes around comes around.

Executive summary

Geothermal renewable energy has grown globally especially in various emerging economies in East Africa, Central America, the Caribbean and the South Pacific. Over 80 countries, adjacent to the Pacific Ring of Fire or East African Rift, have been developing various new geothermal renewable resources which could potentially double the global geothermal power generation capacity. Looking ahead to 2020-2025, experts have estimated that the total geothermal renewable investments could reach some USD9 billion globally. There are considerable challenges for new technology advancements so geothermal renewables could become more cost competitive against fossil energy options. Details of the geothermal renewable developments in various emerging economies globally will be discussed more in this chapter with international examples.

Overviews of geothermal renewable developments

Geothermal renewable energy has been growing globally in recent years to reach over 12 GW of installed capacity globally. Various emerging economies in East Africa, Central America, the Caribbean and the South Pacific have become some of the countries with the fastest growing geothermal renewable energy applications worldwide. The UN Intergovernmental Panel on Climate Change, UN IPCC, has estimated that the global geothermal power potential could be over 200 GWe. Currently, only a small fraction of that total geothermal renewable potentials available have been tapped or developed for various technical and commercial reasons.

Over 80 countries, adjacent to the Pacific Ring of Fire or East African Rift, have been actively developing various new geothermal renewable energy resources. There are also developments of over 700 possible geothermal sites globally which could possibly double the global geothermal renewable power generation capacity in the near future.

Looking ahead to 2020-2025, experts have estimated that the total investments in geothermal renewable power projects globally could rise to some USD9 billion. These new investments will have to overcome considerable technical and commercial challenges. These challenges include the need for more technological innovations together with major new cost reductions so as to transform geothermal renewable power to become more cost competitive against other fossil energy options, such as coal, oil or gas (REN, Global Status Report, 2018).

Geothermal renewable energy developments have been facing various serious challenges globally. These included the inherent high risk of geothermal renewable energy exploration and project developments. There are also additional challenges in the lack of cost competitiveness of expensive geothermal energy relative to the lower costs of natural gas. In addition, there are serious challenges in finding suitable project financing for geothermal renewable projects. Despite these, some good progress has been made with new geothermal renewable projects in various key markets in emerging economies. Good geothermal renewable project examples included Indonesia and Turkey which have both added about 200 megawatts (MW) of geothermal renewable capacity in recent years.

Global geothermal renewable developments have seen measured progress in some key markets globally. Geothermal renewable power installations have provided both clean electricity and thermal energy services for heating and cooling applications. A good geothermal example is that in 2016 the estimated electricity and thermal output from geothermal sources was 567 PJi (157 TWh). The split between geothermal electricity and thermal outputs was approximately in equal shares of 50/50. Some geothermal renewable power plants have been producing both electricity and thermal outputs for various heating and power applications globally.

Globally, the countries with the largest numbers of installed geothermal renewable power generating capacities included the USA, the Philippines, Indonesia, New Zealand, Mexico, Italy, Turkey, Iceland, Kenya and Japan.

In Asia, the Philippines is second only to the USA for total geothermal renewable power capacities in operation. However recently, there has been little new geothermal renewable capacities being brought online. Philippine’s Geothermal Industry Association has called for its government to consider granting suitable FITs for geothermal renewable power. These will be similar to those FITs already granted to other renewable energy applications. These should help to spur the development of more challenging low-temperature expensive geothermal energy resources. These low-temperature geothermal resources might require deeper drilling and the application of the binary-cycle technology. These should increase the development risks and costs plus raise the ultimate cost of the geothermal energy produced.

The Asian Development Bank (ADB) has announced plans to back the issuance of the first Climate Bond in Asia and Oceania. The ADB has issued a 75% guarantee of principal and interest on a USD225 million bond. These bonds are

Geothermal renewable energy growth management 77 specifically to support the refurbishment of the Philippines’ Tiwi and Mak-Ban geothermal facilities.

Indonesia has been adding new geothermal capacities and had started commercial operations at its 110 MW Sarulla geothermal plant, which is one of the largest geothermal renewable plants in the world. The design of the Sarulla geothermal plant is notable for being a combined-cycle operation. The conventional flash turbines have been supplemented with a binary system so as to extract additional energy from the post-flash turbine steam. These improvements have helped to maximise the total energy extraction and efficiency of the geothermal plant. The existing installed geothermal capacities in Indonesia have been estimated to be only representing less than 6% of Indonesia’s total geothermal renewable power potentials. To promote further geothermal growths, the Indonesian government has announced plans to mitigate the risks of exploration and development with new digital mapping of the country’s geothermal resources. In addition, the Indonesian government has been considering a feed-in tariff (FIT) for new geothermal renewable energy supplies. These should help to provide a more predictable fixed supply price for geothermal energy. These should further reduce risks for new geothermal renewable projects and geothermal developers in Indonesia.

In Japan, the progress on geothermal renewable development has been mixed so far. The Japanese government has to deal with competing desires to develop viable clean energy alternatives to fossil and nuclear fuels. There arc also strong public concerns about the potential environmental and safety consequences. Many hot spring resort owners and local governments in Japan have also expressed serious concerns that the development of new geothermal power projects could put their traditional businesses at risk. To alleviate these concerns, the Japanese national government has established an expert advisory committee in 2016 to provide detailed information on geothermal energy development to local governments. The Japanese government also announced plans to cover some of the initial costs of geothermal exploratory drilling and data gathering. These should help to address and reduce the development risks for new geothermal projects. A combination of higher geothermal feed-in tariffs (FITs) and an exemption from having to prepare environmental impact assessments for small geothermal projects, which are of capacity less than 7.5 MW, have promoted interests in the development of new small-scale geothermal renewable power projects in Japan. A good example is that a small geothermal facility in Tsuchiyu in Japan was completed in 2015, and at least one small ORC generator came online in 2016. However, Japan currently has no large-scale geothermal renewable project under active development.

In China, the central government has planned to increase the sustainable use of geothermal renewable energy in various Chinese cities. These should help to reduce the serious local air pollutions and greenhouse gas emissions. China’s current geothermal renewable power capacity has been developed mostly in Tibet. China’s 13th Five-Year Plan (FYP) for geothermal energy has called for an additional new 500 MW geothermal renewable capacity in the 2020-2025

period. China geothermal companies have also been partnering with international geothermal project developers. These new partnerships should help to better develop new geothermal projects in China with the latest international technologies and best practices. Details of some new Chinese geothermal developments will be discussed in the China geothermal case study at the end of this chapter (PRC, 13th FYP, 2016).

Malaysia, unlike many other ASEAN countries, has still no geothermal plant in operation. It is currently constructing a new 30 MW geothermal renewable plant in the state of Sabah, on the island of Borneo. To support its new geothermal energy developments in Malaysia, the Malaysian central government has been setting up a new National Geothermal Resource Centre. It is hoping that this will help to create a new platform for collaboration by local geothermal project developers with international companies. In addition, the Centre should help to bring together stakeholders and specialists in geothermal energy to promote sharing of knowledge and best practices (REN, 2018).

In the Middle East, Turkey has been implementing new geothermal renewable applications. A good example is that Turkey has opened 20 new geothermal plants in recent years. With so much new additional geothermal capacity coming online, Turkey has seen continued rapid growth in clean electricity generation from geothermal renewable energy. Experts have estimated that clean electricity generation from geothermal renewable energy has risen to supply some 25% of Turkey’s total electricity demands. All the new geothermal plants have the binary Organic Rankine Cycle (ORCii) units, with capacity of up to 25 MW each. Turkey has also been developing new geothermal projects with the conventional flash turbine technology which is suitable for the country’s remaining high-temperature geothermal resources. A good example is the new 70 MW Unit 2 of the Kizildcre III geothermal plant in Turkey. It has combined a 51 MW flash-steam turbine to harness high-pressure steam with a 19 MW binary-cycle unit to maximise the recovery of usable energy from the flash turbine’s exhaust stream.

In Africa, Kenya has been active in developing and applying geothermal renewable energy. Kenya’s total installed geothermal capacity reached 690 MW in 2019. A good geothermal example is that Kenya has completed a new 29 MW addition to their Olkaria III geothermal complex. This has increased the facility’s total geothermal capacity to 139 MW.

Ethiopia has been sharing the rich geothermal resources of the Great Rift Valley with Kenya. Limited developments in geothermal renewable have occurred to date. The Ethiopian government is promoting new future geothermal developments. It has signed a 500 MW power purchase agreement PPA for the first phase of the Corbetti geothermal project. The project has been planned to be developed and built in two stages within the next eight to ten years. The International Finance Corporation (IFC) has been working with Ethiopian government to enact suitable new regulations to facilitate the engagement of more private investors in new geothermal projects. The Ethiopian government has also reclassified geothermal resources as renewable energy. This should help geothermal

Geothermal renewable energy growth management 79 energy users to grant exemption from the royalty payments which would be exacted under the Ethiopia’s mining laws, for extracting mineral resources.

In America, the USA has been the global leader in geothermal energy applications. However recently, the USA has seen little net increases in geothermal renewable capacity. The USA has about 0.8 GW of ongoing geothermal projects which are likely to be operational by 2020-2021. There are another 0.9 GW of geothermal projects which are under development with the potential to come online if some small hurdles could be overcome. However, progress has been reported to be slow and constrained by an unfavourable regulatory environment and by strong competition from lower priced natural gas supplies.

In Latin America, Mexico has been building new geothermal energy facilities. A good geothermal example is that a new 25 MW condensing flash unit has been added to the Domo San Pedro geothermal plant in Mexico. The net additions have helped to bring Mexico’s total geothermal capacity to about 950 MW. This geothermal plant has been the first private geothermal project in Mexico. Mexico has also awarded three additional exploration permits to private Mexican companies under the country’s new Geothermal Energy Law. The government has enacted the new law so as to better manage and control the exploration and use of geothermal resources in Mexico.

In the Caribbean, many of the Caribbean islands are volcanic with good geothermal resources. New local geothermal facilities will also help them to reduce their costly fossil fuel imports. Some Caribbean government has been working with international funds on financing their new geothermal projects. A good example is that the Abu Dhabi Fund for Development has announced a new loan to St Vincent and the Grenadines for the construction of a new 15 MW geothermal power plant. This is expected to reduce local power generation costs and should create new local jobs plus improve the reliability of local electricity supplies.

New Zealand has also signed a new geothermal partnership agreement with the Commonwealth of Dominica. It will support the construction of a 7 MW geothermal plant on the island. Plans also are under way to expand an existing 10 MW plant on the island of Guadeloupe.

In the EU, Croatia has initiated the construction of its first ever geothermal power project in 2016. The new 16 MW binary plant will utilise the 170°C geothermal brine and steam geothermal supplies from the Pannonian basin. This basin is one of the key geothermal areas in Europe.

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