Penarroyo ADB Geothermal Presentation 2012
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Penarroyo ADB Geothermal Presentation 2012

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Presentation at the ADB Asia Clean Energy Forum 2012

Presentation at the ADB Asia Clean Energy Forum 2012

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Penarroyo ADB Geothermal Presentation 2012 Penarroyo ADB Geothermal Presentation 2012 Presentation Transcript

  • Overview  of  the  Global  Geothermal  Energy  Development  MarketplaceFernando  S.  Peñarroyo  Director    InternaAonal  Geothermal  AssociaAon    7th  Asia  Clean  Energy  Forum  08  June  2012,  Asian  Development  Bank  Manila    
  • The  InternaAonal  Geothermal  AssociaAon  (IGA)  promotes  the  development,  research  and  use  of  geothermal  energy.  The  associa=on  was  founded  in  1988  and  has  more  than  5,200  members  in  65  countries.  The  IGA  operates  as  a  non-­‐poli=cal,  non-­‐profit,  non-­‐governmental  organiza=on  in  a  special  consulta=ve  status  to  the  Economic  and  Social  Council  of  the  United  Na=ons  and  to  the  EU.  IGA  is  now  affiliated  to  the  Interna=onal  Renewable  Energy  Alliance  (REN  Alliance).  
  • Presenta,on  Outline  l  State  of  the  marketplace  l  Technology  l  Financing  schemes  l  Risk  mi=ga=on  l  Challenges  
  • World Geothermal Electricity (2005)Bertani (2005) WGC2005
  • 2010 Capacity and UseInstalled EnergyPower Use CapacityUse (MW) (GWh/yr) FactorElectric 10,715 67,246 0.72Direct-use 48,483 117,778 0.28Lund and Bertani, 2010, WGC and GRCGeothermal  energy  kept  its  promises!
  • May  29,  2012  6  1950   1960   1970   1980   1990   2000   2010  Bertani, 2010, WGC18,500 MWe in 2015World  Geothermal  Electricity  (2010)  
  • 2010 Worldwide Annual Use (TJ/yr)May 29, 2012Geothermal heatpumps 49.0%Others 0.2%Space Heating14.4%GreenhouseHeating 5.3%Aquaculture pondheating 2.6%Agricultural drying0.4%Industrial uses2.7%Cooling / snowmelting 0.5%Bathing andswimming 24.9%Lund and Bertani, 2010, WGC and GRC
  • 2010 Worldwide Installed Capacity (MWt)May 29, 20128Industrial uses1.1%Cooling / snowmelting0.7%Bathing andswimming13.2%Geothermal heatpumps69.7%Agricultural drying0.3%Aquaculture pondheating1.3%GreenhouseHeating3.1%Space Heating10.7%Others0.1%Lund and Bertani, 2010, WGC and GRC
  • Leading  Countries  in  Direct  Use  >1000  MWt  Country GWh/yr MWt Main UseChina 20,932 8,898 bathing/district heatingUSA 15,710 12,611 GHPSweden 12,585 4,460 GHPTurkey 10,247 2,084 district heatingJapan 7,139 2,100 bathing (onsens)Iceland 6,768 1,826 district heatingFrance 3,592 1,345 district heatingGermany 3,546 2,485 bathing/district heatingNorway 3,000 1,000 GHPNetherlands 2,972 1,410 GHPCanada 2,465 1,126 GHPSwitzerland 2,143 1,061 GHP
  •  IEA’s  Top  15  geothermal  energy  producing  countries,  electricity  and  heat  in  2009  
  • Great  East  Japan  Earthquake  •  Earthquake  and  tsunami  on  11  March  2012  •  Fukushima  I  Nuclear  Plant  and  other  nuclear  and  thermal  plants  were  severely  damaged  •  No  serious  effects  on  geothermal  plants  in  Tohoku  region  11 Photo:  TEPCO
  • Statement  by  Former  PM  Kan  at  the  G8  Summit  in  Deauville  on  26  May  2011 •  Japan  will  now  review  the  energy  basic  plan.  •  We  must  nurture  the  two  new  pillars  of    renewable  energy  and  energy-­‐efficiency,    in  addi=on  to  the  two  pillars  to  date  of    nuclear  power  and  fossil  fuels.    •  We  will  engage  in  dras=c  technological  innova=on  in  order  to  increase  the  share  of  renewable  energy  in  total  electric  power  supply  to  at  least  go  beyond  20  percent  by  the  earliest  possible  in  the  2020s.    •  We  aim  to  introduce  large  scale  offshore  wind  turbines,  next  generaAon  biomass  fuels  from  algae  etc.,  biomass  energy,  and  geothermal  energy  by  mobilizing  Japanese  technology.                      -­‐  Jiro  Hiratsuka,  Climate  Change  Policy  Div.,  Ministry  of  the  Environment,  Japan  
  • Closing the nuclear power plants inGermany•  Security tests•  Ethic Commission•  June 30th, decisionof the parliament toclose all nuclearpower plantsforever until 2022  -­‐  Prof.  Dr.  Horst  Rueter  •  March 11th, 2011 Earthquake, tsunami and nuclear accident inFukushima•  March 15th, Moratorium, closing of the 10 oldest plants (Merkel)•  Unterweser, Brunsbüttel, Krümmel, Biblis A und B, Philippsburg 1, Isar 1sowie Neckarwestheim 1.
  • Iceland’s  Primary  Energy  Consump,on  1940-­‐2009From an under-developed to a highly industrial country in few decades, Dr.  Bjarni  Pálsson
  • TECHNOLOGY
  • Innova,ve  explora,on  techniques  •  Magnetotellurics  •  Microseismic  interpreta=on  •  3D  modelling  •  High  temperature  logging  techniques  •  Infra-­‐red  for  surface  monitoring  •  Geochemical  modelling          -­‐  Dr.  Colin  Harvey,  GNS  Science,  Past  President  New  Zealand  Geothermal  Associa=on    
  • May  29,  2012  17  Enhanced  Geothermal  Systems  EGS  Source: http://hotrock.anu.edu.auMost  heat  is  contained  in  the  rock,  but:  if  rock  is  impermeable  how  do  you  circulate  water?  how  do  you  get  injector  and  producer  to  communicate?  è  fracturing    Some=mes  known  as  “Hot,  Dry  Rock”  In  Australia,  HFR  is  not  considered  as  a  risky  technology  …  the  appropriate  applica=on  of  HFR  techniques  is  regarded  as  the  best  geological  risk  mi=ga=on  
  • Direct  Use  Technology  Developments  •  Space  hea=ng  and  cooling  with  Geothermal  Heat  Pumps  (GHPs)  •  “Geostructures”,  e.g.  Energy  Piles  •   GHPs  for  large  building  complexes                -­‐  Ladislaus  Rybach,  Ins;tute  of  Geophysics  ETH  Zurich,  Switzerland    
  • Process  Heat  Innova,on  in    New  Zealand                  -­‐  Dr.  Colin  Harvey,  GNS  Science  Largest  industrial  direct  geothermal  heat  use  in  the  World  (~200  MWth  ;  5300  TJ/yr)  Norske  Skog  Paper  Mill  Two  World  class  pulp  mills  using  raw  geothermal  steam  for  drying  World  class  large  scale  greenhouses  and  for  milk  product  drying    
  • Globally  installed  geothermal  heat  pump  capacity                                                                                                                                                                                              Data  from  Lund  et  al.  (2010)  Growth rate: 20 % per year
  • Terminal  E,  Zurich  airport  •  85,200  m2  energy  supply  area    •  2120  MWh/a  hea=ng,  1240  MWh/a  cooling  load  •  310  energy  piles  à  30  m                -­‐  Ladislaus  Rybach,  Ins,tute  of  Geophysics  ETH  Zurich,  Switzerland    
  • •  Development  complex  Suurstoffi  at  Rotkreuz  near  Lucerne,  Switzerland  •  1st  development  stage  230  flats  +  11,000  m2    •  Hea=ng  and  DWW  1.8  GWh,  cooling  1.0  GWh                -­‐  Ladislaus  Rybach,  Ins,tute  of  Geophysics  ETH  Zurich,  Switzerland  Source: Wagner/Geowatt AG (2011)
  • Development  site  Suurstoffi  at  Rotkreuz  near  Lucerne,  Switzerland  Status  in  September  2011          -­‐  Ladislaus  Rybach,  Ins,tute  of  Geophysics  ETH  Zurich,  Switzerland    
  • Geothermal  stores  at  Science  City,  ETH  Zurich                                            (now  in  construc,on)  -­‐  Ladislaus  Rybach,  Ins,tute  of  Geophysics  ETH  Zurich,  Switzerland    Total  4  mio  m3,    >700  BHEs  à  200  m,  Total  cost    ~  40  MCHF  
  • FINANCING
  • The  Challenge:  Accessing  Capital  •  Geothermal  developers  who  wish  to  access  capital  must  meet  several  investor  requirements:    -­‐  Strong  geothermal  resource  prospects    -­‐  Understanding  the  developer’s  “game  plan”  to  gain  comfort  with  risks    -­‐  Investors  demand  experience,  which  is  rare  in    this  nascent  industry  
  • Selec,on  of  instruments  depend  on  project  structure  and  financing  needs  •  The  long-­‐term  project  financing  and  risk  guarantee  are  cri=cal  for  scaling-­‐up  clean  energy  •  The  boundaries  between  private  and  public  financing  of  clean  energy  are  less  clear  cut  than  in  conven=onal  energy  projects  •  Carbon  finance  instruments  (and  similar  “green  financing”  instruments)  complement  both  public  and  private  financing  •  Blending  of  financial  instruments  will  be  beneficial  in  balancing  economic  viability  and  financial  viability  World Bank Group Energy
  • RISK MITIGATION
  • Insurance  -­‐  geothermal  project  phases:  Explora=on  phase:    •  Insurance  (on  site):    building  and  installa=on  insurance  (operator)  •  Insurance  (downhole):          -­‐  drilling,  opera=onal,  technical  insurance  for  drilling          contractor      -­‐  explora=on  risk  insurance  (operator)        -­‐  produc=vity  guarantee  insurance  (operator)    Opera=ng  phase:      •  Insurance  (on  site)  -­‐    “all  risk  insurance”  includes:      -­‐  property  insurance,  catastrophic  insurance  (operator)      -­‐  opera=onal  and  environmental  liability  insurance  (operator)      -­‐  infrastructure  (e.g.  turbines)  insurance  (operator)      -­‐  business  interrup=on  insurance  (operator)                            -­‐  Michael  Schneider,  KONSENS  KG,  Germany    
  • Insurance  and  risk  coverages  –    different  approaches:  •  Geological  risk  insurance  system  (France)  •  Risk  guarantee  system  (Switzerland,  Germany)    •  Explora=on  risk  insurance  (1  Unterhaching)    •  Produc=vity  guarantee  insurance  -­‐  insures  the  risk  of  finding  geothermal  reservoirs,  which  do  not  have  sufficient  discharge  for  the  feasible  economic  development  of  a  geothermal  project.                                          -­‐  Michael  Schneider,  KONSENS  KG,  Germany    
  • Philosophy  of  Resource  Risk  Management  in  the  US  •  Although  resource  risk  is  similar  world-­‐wide,  the  economic  and  physical  environments  in  the  US  probably  lead  to  more  acceptance  of  risk  than  elsewhere    •  Commercial  /  business  solu=ons  are  preferred  in  the  US      -­‐  Joint  ventures  and  equity  partnerships  -­‐  Risk  pooling  (via  a  porrolio  of  projects)  -­‐  Power  price  supports            -­‐  Ann  Robertson-­‐Tait,  Roger  Henneberger  and  Subir  Sanyal,  GeothermEx    
  • Commercial  Approaches  to  Resource  Risk  Mi,ga,on  in  the  US  •  Risk  Pooling  –  by  developers  themselves,  by  equity  investors,  by  financiers  •  Porrolios  within  one  company  •  A  porrolio  developed  from  projects  of  several  companies  •  Risks  can  be  hidden  without  good  due  diligence    •  Mechanisms  used  by  oil  &  gas  developers  and  mineral  resource  developers  to  auract  risk  capital  •  Equity  partners  who  understand  resource  risk  •  Can  tolerate  a  few  dry  holes    •  Shared  royalty  pools  for  specific  projects            -­‐  Ann  Robertson-­‐Tait,  Roger  Henneberger  and  Subir  Sanyal,  GeothermEx    
  • US  Resource  risk  management  tends  to  be  handled  by  a  combina,on  of:    •  Technical  approaches  (applica=on  of  best  prac=ces  for  explora=on,  development  and  resource  management,  based  on  a  significant  body  of  resource  development  experience)    •  Commercial  approaches  (risk  pooling,  joint  ventures,  equity  funding)    •  Government  /  regulatory  /  legisla=ve  approaches  (price  supports  and  tax  mechanisms,  cost-­‐shared  funding)      -­‐  Ann  Robertson-­‐Tait,  Roger  Henneberger  and  Subir  Sanyal,  GeothermEx  
  • CHALLENGES
  • Technical  barriers    •  While  some  high  temperature  hydrothermal  are  compe==ve,  many  geothermal  technologies  are  more  expensive  than  fossil  plants  (but  may  be  less  expensive  than  other  RE  sources  like  solar  and  wind)  •  Large  differences  and  cost  ranges  per  technology  make  it  difficult  for  project  finance  •  Some  new  technologies  have  yet  to  be  developed  and  tested  commercially  •  According  to  the  Interna=onal  Energy  Agency,  EGS  will  only  become  commercially  available  aver  2030  •  Data  from  unconven=onal  geothermal  and  EGS  geothermal  heat  deployment  are  scarce    
  • Risk  Factors  •  Foreign  equity  ownership  •  Availability  of  geo-­‐scien=fic  informa=on  and  professionals  •  Area  status  and  clearance,  conflict  with  other  land  use,  surface/land  ownership  •  Procedural  efficiency  and  clarity  between  government  agencies  •  Judicial  interven=on  and  opposi=on  by  some  sectors  of  civil  society
  • Market  facilita,on  and  transforma,on  •  Development  of  more  compe==ve  drilling  technology    •  Introduc=on  of  guarantee  schemes  •  Development  of  publicly  available  database  protocols  and  tools  for  geothermal  resource  assessments    •  RE  Financial  Program  –  geologic  risk  insurance,  facilitate  access  to  risk  capital  
  •  Development  of  guidelines  for  the  following  mechanisms    •  Renewable  Porrolio  Standard    •  Inclusion  of  the  following  technology  for  Feed-­‐in  Tariff  Rates  •  Acid  well  u=liza=on  •  Enhanced  geothermal  systems  •  Low  enthalpy    
  • Conclusion  •  Since  2005,  a  geothermal  renaissance.  New  countries  and  new  companies  have  joined  the  geothermal  community.  •  New  technologies  have  been  implemented.  Lower  resource  temperatures  are  now  recoverable.  EGS  widens  the  accessibility  of  geothermal  energy.  •  BUT:  Regulatory  framework  should  be  long  term,  transparent,  predictable  and  independently  administered  •  As  long  as  costs  are  higher  than  fossil  fuel  plants,  economic  and  financial  incen=ves  are  appropriate  •  Public-­‐private  partnerships  must  foster  private  sector  investments  in  new  technologies  
  •  About the Speaker  •  BS  Geo,  Bachelor  of  Laws  (UP),  Master  of  Laws  (Univ.  of  Melbourne)  •  Director,  Interna;onal  Geothermal  Associa;on  •  Trustee,  Na;onal  Geothermal  Associa;on  of  the  Philippines  •  Director,  Clean  Rock  Renewable  Energy  Resources  Corp.  (Na;b  and  Daklan  RE  Service  Contract  areas)  •  Professorial  Lecturer,  UP  Na;onal  Ins;tute  of  Geological  Sciences  •  Managing  Partner,  Puno  and  Penarroyo  Law  (www.punopenalaw.com)