Page 261 - Geothermal Energy Renewable Energy and The Environment

13 Use of Geothermal Resources:

Economic Considerations

The economics of geothermal utilization depend on many factors, each of which is specific to the
type of application. Ground source heat pump installations, for example, face many market chal-
lenges that differ significantly from those that affect direct use applications or power generation.
These differences reflect differences in the scale of the project, the customer base, the state of the
technology, the competitive milieu, and the policy and regulatory environment. In the following
discussion the focus will be on the large-scale considerations that affect the economic viability of
geothermal power generation. Particular attention will be paid to metrics and criteria used to evalu-
ate competitive position, and how those compare across conversion technologies. The purpose of
this discussion is to provide perspective regarding geothermal power generations cost relative to
other options. Although the economics of other types of geothermal applications will not be specifi-
cally discussed since they have been treated directly in the chapters that detail their technological
and scientific dimension, this chapter closes with a discussion of the necessary steps for completing
an economically successful geothermal project of any type.

economIcs oF GeoThermal power

The economic viability of a specific geothermal power generating facility will depend on local
market conditions, the engineering approach being used at the site and the resource it is utilizing.
As a result, it is not possible to describe universally applicable economic constraints or attributes
that would pertain to all geothermal power projects. However, there are sufficient data, derived over
several decades of experience, to allow description of the general economic attributes of geothermal
systems that make them suitable sources of energy. Recent economic analyses contribute to these
results, allowing a broad comparison of power generating technologies.

capaciTy facTors
In general, a power generating facility converts some form of energy (kinetic, thermal, nuclear, etc.)
into electricity. Each conversion technology has particular characteristics that determine efficien-
cies, size of the power generating facility, and so on. One of these characteristics has come to be
known as the capacity factor.
The capacity factor of a given conversion technology is the ratio between the amount of
power that technology produces over a given amount of time to the amount of power that would
be produced if the technology was producing its maximum amount of power over that entire
time period

c = p realized ideal , (13.1)
/p
f
where c is the capacity factor that has a value between 0 and 1, p realized is the power output that is
f
realized over the given time period, and p ideal is the power output that would be achieved if the power
plant had operated at 100% of its rated capacity for 100% of the time. Multiplying c by 100 converts
f
the capacity factor to a percentage. The capacity factor is based on historical experience, aggregated

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