Geothermal Energy_Brief Overview

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Alpha Beta Investment Research LLC

R e g i s t e r ed I n v e s t m e n t A d v i s o r w i t h t h e S t a t e o f C a li fo r n i a

March, 2010

Lead Analyst:Mammad Sharifzadeh, PhD., [email protected]

(949) 933 0780Associate Analyst:Simin Hojat, [email protected]

GEOTHERMAL ENERGY AND ITS APPLICAION

What is Geothermal Energy?

Simply stated, geothermal energy is heat (therme) from the earth (Geo). Geothermal

energy is generated in the earth's core, about 4,000 miles below the surface. At theearth's core the temperatures may reach over 9,000 degrees Fahrenheit (F), or over4,982 degree Celsius (C). The earth consists of different layers. The center of the earth,or the core, consists of two layers; an inner solid iron core and an outer core calledmagma. Magma is made of very hot melted rock. Surrounding the magma is the mantlewhich is about 1800 miles thick and is made up of magma and rock. The outermost layerof the earth is called the crust. The crust can be three to five miles thick under theoceans and 15 to 35 miles thick on the continents.

Source: DOE: http://www.eia.doe.gov/kids/energyfacts/sources/renewable/geothermal.html

When magma comes close to the earth’s surface it heats up the underground watersand creates hydrothermal resources. Large areas of hydrothermal resources are calledgeothermal reservoirs, which are now utilized to convert their heat into other forms ofenergy, mostly electricity.

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http://www.eia.doe.gov/kids/energyfacts/sources/renewable/geothermal.html



http://www.eia.doe.gov/kids/energyfacts/sources/renewable/geothermal.html



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Sometimes geothermal energy finds its natural way to the earth surface throughvolcanoes, fumaroles (holes where volcanic gases are released), hot springs, andgeysers.

Earth’s potentially available reserve of geothermal energy is a quantity of amazing

magnitude. According to an estimate, geothermal resources beneath the earth amountto 50,000 times the energy of all oil and gas resources in the world (US Department ofEnergy, DOE/GO-102004-1985, Revised November 2004).

Because of these huge geothermal resources of the earth, geothermal energy isregarded as renewable energy. Besides, in areas where the source of geothermalenergy is hot water, the volume taken out can be re-injected back to the sourceproviding a non ending source of energy.

In the U.S., geothermal resources are mostly in Western States, in Alaska, and inHawaii. The Geysers dry steam reservoir in northern California is the largest known drysteam field in the world. The field has been producing electricity since 1960.

The following shows the map of U.S. geothermal resources. The geothermal resourcesmap of the United States below shows the estimated subterranean temperatures at adepth of 6 kilometers.

U.S. Geothermal Resource Map (Source: DOE, http://www1.eere.energy.gov/geothermal/geomap.html).

Applications of Geothermal Energy

Currently geothermal energy is used for three application categories, for electricityproduction, for direct use, and for geothermal heat pumps.



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Geothermal Energy for Electricity Production

To produce electricity from geothermal resource, wells are drilled into a hot reservoir,with temperatures as low as 135°C (275°F) to as hot as 230°C (448°F). Hot water or

steam is piped into a power plant to power the turbine/generator, just like in aconventional steam turbine/generator. The type of power plant to use for production ofelectricity from geothermal resource depends on the type of the resource and itstemperature.

There are three types of geothermal power plants technologies to convert hydrothermalfluids to electricity; dry steam technology, flashed-steam technology, and binary-cycletechnology.

The dry steam plant is the oldest type of geothermal power plant and was first used atLardarello in Italy in 1904. A dry steam plant technology uses the steam coming from the

geothermal reservoir to power the turbine-generator.

Source: DOE, http://www1.eere.energy.gov/geothermal/powerplants.

The flashed-steam plant utilizes reservoirs of water with temperatures greater than360°F ( 182°C). The hot water flows up through the wells because of its own pressure.Once it reaches the surface it loses pressure and some of the hot water flashes intosteam. The steam is then separated from the water and directed to power a turbine-generator unit. The remaining water and condensed steam are injected back into the

reservoir through a well.



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The binary-cycle power plant utilizes water at lower temperatures of about 225°F to360°F (107°C to 182°C ). This plant uses heat from the geothermal water to boil aworking fluid, usually an organic compound with a lower boiling point. The working fluidis vaporized in a heat exchanger and the vapor is directed to power a turbine-generator.The water is then injected back into the ground to be reheated.


Geothermal power plants are usually referred to as being clean, because unliketraditional steam plants they don’t burn fossil fuels to produce the steam required to turnthe turbines and thus do not have emissions harmful to the environment.



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Geothermal power plants are also reliable because they provide “base load” power 24hours/365 days a year. The geothermal plant sits on top of its heat source and,therefore, is immune to events, like weather conditions, natural disasters, or social andpolitical instabilities that cause disruption of fuel transportation. Power plants using coal,oil, or nuclear energy need to be shut down for periodic maintenance. Also, power plantsusing other renewable energy sources, like wind or solar power plants, can not produce

electricity when there is no wind or no sunshine. But a geothermal plant draws its heatfrom several wells. If one well needs to be serviced, the others can continue poweringthe turbines.

Because geothermal power plants are always available to produce power, they have thehighest capacity factor in comparison to all other power plants. The capacity factor of apower plant is a performance indicator that measures the actual electricity producedduring a period as a percentage of installed (or target) capacity for that period. Accordingto the U.S. Energy Information Agency (EIA) publication “Electric Power Annual 2007”,average capacity factor in 2007 was 91.8% for nuclear power plants, 73.6% for coalpower plants, 42.0% for natural gas power plants, and 36.3% for hydroelectric plants. Incontrast, the geothermal power plants have a capacity factor of 95% to 98%.

The capital expenditure required to produce geothermal electricity,consisting of siteexploration and development and power plant construction, is generally much higherthan capital expenditure required for producing electricity from other energy sources,because production of geothermal electricity requires going through the long andexpensive process of finding and developing the right geothermal resource. However,once the resource base is established and the geothermal plants is installed, theoperating and maintainace cost would be much smaller than those for traditionalplants.The average operating and maintenance cost for a geothermal plant is lower thanany other base load power and generally higher than what utility companies are payingfor base load power under their Power Purchase Agreements (PPAs).

Enhanced Geothermal Systems for Electricity

Thermal energy in the earth is distributed between the constituent host rock and thenatural fluid that is contained in its fractures and pores at temperatures above ambientlevels. However, naturally occurring geothermal reservoirs are limited in size, extent andduration. Most geothermal resources are not economically viable due to lack of waterand/or permeability. Enhanced Geothermal Systems (EGS) expand the geographicextent of geothermal energy for power production from limited naturally occurringhydrothermal places in the Western U.S. to larger areas of the western U.S., as well asinto new geographic areas of the entire U.S. According to U.S. Department of Energy“more than 100,000 MWe (megawatts of electricity) of economically viable capacity may

be available in the continental United States, representing a 40-fold increase overpresent geothermal power generating capacity”.

The idea behind EGS is to extract heat form the earth’s crust through creating asubsurface fracture system and then adding water through injection wells to developeconomically viable hydrothermal reservoir. An EGS consists of the following steps:

• Drill an injection well into the hot basement rock underneath the earth that haslow permeability and fluid content.



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• Inject water with sufficient pressure to fracture the basement rock or openexisting fractures.

• Water injection is continued to extend the fracture and open old fracture beyondthe wellbore and throughout the developing reservoir and hot basement rock.

• A production well is drilled to extract the heated water from the hot basementrock that now has improved permeability.

• Additional production wells are drilled to extract enough heat to meet powergeneration requirements. (Source: DOE)

The U.S. Department of Energy has established the Geothermal Technologies Programs(GTP) through which it supports R&D activities and partnerships in developing andadvancing EGS technologies.

Geothermal Energy for Direct Use

In direct application of geothermal energy a well is drilled into a moderate temperaturegeothermal reservoir to provide a steady stream of hot water. The water is then pumpedout and the heat is directly delivered for its intended use, such as, industrial processes,greenhouses, crop drying, heating buildings, or melting snow on sidewalks and bridges.

Geothermal Energy for Heat Pumps

Geothermal heat pumps (GHPs) use the shallow ground—which maintains a nearlyconstant temperature between 50° and 60°F. They transfer heat from the ground into a

building during the heating season and transfer heat from a building to the ground duringthe cooling season.

The following picture exhibits different application of geothermal energy at differenttemperatures



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Source: US Department of Energy, DOE/GO-102004-1985, Revised November 2004

Documents

Geothermal Energy_Brief Overview