to deliver hydrogen to fleet vehicleusers that bring their trucks or buses back to a central location each night.However, the problem of distributing hydrogen throughout the country for use in automobiles on a mass scale will be a huge and perhapseven insurmountable challenge. The United States right now is strugglingwith trying to get E85 ethanol-gasoline mix distributed widely around the
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country, which is proving to be a big challenge even though E85 is very similar to gasoline and can use the same types of tanks and pumps. Hydrogen,by contrast, is much more difficult to transport and store and it would takea huge effort to get hydrogen into a large number of fuel stations aroundthe country.The delivery process for fuel cells that use internal reformers and thatcan use natural gas or methanol is not as big of a stretch. Again, thereis already an industrial gas and chemical sales and distribution networkaround the world and delivery costs would not differ much from currentcosts. Large industrial gas companies such as Air Liquide SA (Paris: AI FP)and Air Products & Chemicals Inc (NYSE: APD) already deliver huge quantities of various industrial gases every day. There is also a large natural gasand propane sales and delivery network in operation throughout the world.Moreover, some small hand-held devices in development need no fuel to bedelivered since they are disposable and are used like common batteries.
Fuel Cell Costs and FeasibilityFuel cells have many advantages, but remain expensive to manufacture.Manufacturing costs have been steadily falling over the years due to intensive R&D efforts, reductions in material costs, improvements in themanufacturing process, and increased scale of production. Different applications are in different stages of cost reduction and some are alreadycommercially viable. However, other applications are still in the R&D stagewith no assurance that costs will fall far enough or that their practical limitations will be resolved in a cost-efficient way.The U.S. Department of Energy has a variety of programs in place topromote the development of fuel cells. One program is FutureGen, whichgrants subsidies to fund the research and development of fuel cells, amongother types of clean energy. In 2006, the program spent over $300 millionin Fuels and Power Systems, of which almost $60 million (20 percent) wasspent on developing fuel cells.26 Budget projections for fuel cell funding arefor $63 million in 2007 and $62 million in 2008.27 Recently, through the Advanced Energy Initiative, the U.S. government granted an additional $100million for fuel cell research in October 2006 to be distributed among 25projects over the next four years.28In the beginning, fuel cell technology was so expensive that only theNASA space program could afford it. During the space program in the 1960sand 1970s, fuel cells cost around $600,000 per kilowatt (kW).29 This costhas been lowered dramatically over the years and depending on the typeof fuel cells, the costs are now around $3,000/kW. This is still far moreexpensive than a diesel generator (which costs $800 to $1,500/kW) or a
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natural gas turbine (less than $400/kW).30 However, fuel cell costs continueto fall due to technology improvements and larger production scale.PEM fuel cells used as uninterruptible power supply systems are already competitive with incumbent battery technologies. The price of PEMfuel cell UPS systems (such as those sold by Plug Power) are still higherthan competing technologies, but the UPS market is willing to pay a premium for the higher reliability of the fuel cell systems. According to theDepartment of Energy, PEM fuel cells currently cost between $3,000 and$5,500/kW when manufactured in small scales.31 The U.S. government hasa target cost for high production scale of $300/kW by 2015, which represents a tenfold cut.Another commercially viable use for PEM fuel cells is the forklift market, although costs are still high at around $1,000/kW.32 Fuel cells can easilyenter and compete in this market, given their practical advantages such asthe high efficiency and reliability.PEM cell costs are expected to drop significantly over the next fewyears for all applications. Ballard Power Systems provides their own costestimates, taking into account sales volume predictions, as can be seen inTable 7.3.For the mass vehicle market, PEM cells are still a long way off. The U.S.Department of Energy estimates that commercialization of transportationPEM fuel cells will be feasible only after 2015.33 Transportation presents avariety of problems such as the need for a powerful and yet compact fuelcell system, along with the difficulties of setting up a nationwide refuelingsystem. Investing in this sector is a shot in the dark even though activeR&D efforts continue.High temperature fuel cells are much more expensive. For example, solid oxide fuel cells (SOFC), which are used for large-scale powergeneration, currently cost about $4,500/kW. The U.S. government’s SolidState Energy Conversion Alliance (SECA) Cost Reduction Program aims toreduce costs for SOFCs from $4,500/kW to about $400/kW by 2010.34 TheDOE has “strong confidence” they will achieve their 2010 cost target.35
TABLE 7.3 Ballard Projections for Fuel Cell System Costs (per kilowatt)
Materials Handling (forklifts)Backup Power
2006
2007 (target)
2009–2010(potential)
<$1,000-
$700–$900$2,000–$3,000
$500–$600$1,000–$1,800
Source: Ballard Power Systems, Ballard Power Systems: Making Fuel Cells aCommercial Reality, http://www.ballard.com/resources/documents/General%20IR%20PPT May%2010%202007.pdf.
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Small, portable fuel cells for hand-held devices are being developedby a number of companies. For instance, Toshiba (Tokyo: 6502 JP) has already developed a direct methanol fuel cell for use in electronic equipment,which they are currently integrating into several electronic prototypes, including digital music players and laptop computers.36 The main concernstoday are related to practical issues for consumers rather than costs pertaining to the refueling systems and to the overall design.The following guidelines are offered for investing in the fuel cell sector:
r Focus on fuel cell companies that are close to, or are already at, thestage of commercialization and mass production. These companieswill be closest to the fulcrum of accelerated revenue and earnings.r Focus on fuel cell companies that have the clearest path to profitability. By contrast, companies that have years to profitability will need tosell more stock to raise cash, thus diluting current shareholders anddampening the stock price.r Stay away from fuel cell companies that are still in an early development stage, or at least recognize that investing in these companies maybe a long shot.
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CHAPTER 8
GeothermalPowerDante’s Contribution to CleanEnergy
eothermal power involves the use of geothermal heat from belowthe earth’s surface to generate electricity or heat. Giovanni Contifirst discovered the process of generating electricity with geothermal heat in 1904 in Larderello, Italy, but geothermal energy has been usedfor heating and cooling as far back as early Roman times.Heat from the earth can be used in many ways, from utility-gradepower stations to simple heat pumps for residential applications. This heatenergy, known as geothermal energy, is a renewable source that can befound almost anywhere worldwide. The heat continuously flowing from theearth’s interior is estimated to be the equivalent of 42 million megawattsof power (which is equivalent to the electricity that would be used by31.5 billion homes).1 Tapping geothermal energy is a clean and affordable way to generate electricity and heat and avoid the use of fossil fuels.Figure 8.1 shows a geothermal power plant in the Sierra Nevada mountainsin California.
G
ADVANTAGES AND DISADVANTAGES OFGEOTHERMAL POWERAdvantagesr Low electricity generation costs; competitive with fossil fuel powerplant costs.r Cost of geothermal power is constant over the lifetime of the facilitysince no fuel is purchased and facility costs are largely fixed.163
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FIGURE 8.1 Mammoth Paciﬁc Geothermal Power Plant located in the SierraNevada Mountains, California, 28 megawattsSource: Geothermal Resources Council and National Renewable Energy Laboratory,Pix Number 10991, http://www.nrel.gov/.
r Continuous source of power 24/7 (i.e., not intermittent like wind andsolar).
r Renewable source of energy since the heat source is the earth’s coreand since fluids are recirculated back into the earth.
r Newer binary-cycle geothermal plants, which are described later, produce no greenhouse gas emissions and no pollution. Older geothermalfields produce about one-sixth of the carbon dioxide of a natural-gasfueled power plant and produce only minute emissions of nitrous oxideor sulfur-bearing gasses.r Geothermal plants are domestic sources of power and reduce dependence on foreign oil.Disadvantagesr Geothermal power plants are economically viable only in activegeothermal areas, for example, in the western United States (althoughgeothermal heat pumps can be used in a wide variety of areas).r Geothermal power generation involves high levels of capital investment for exploration, drilling wells, and construction of the plant.r Some geothermal plants do produce toxic solid materials, or sludges,that require disposal in approved sites.
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r Construction of a geothermal plant can adversely affect land stabilityin the surrounding region and seismic activity can occur because ofwell drilling. Land subsidence can become a problem as older wellsbegin to cool down.r Heat sources for geothermal plants can be depleted if they are not carefully managed. At the Geysers geothermal site in California, operatorshave had to retire at least half a dozen generating plants, even thoughmost of the fields were developed as recently as the 1970s and 1980s.
GEOTHERMAL RESOURCESUnder the earth’s crust is a layer of hot and molten rock called magma.Heat is continuously produced there, mostly from stored heat, friction, andthe decay of naturally radioactive elements such as uranium and potassium. The amount of heat within 33,000 feet of the earth’s surface contains50,000 times more energy than all of the oil and natural gas resources inthe world.2The areas in the world with the highest underground temperaturesare regions with active volcanoes or geologically young (under 1 millionyears) volcanic events. These “hot spots” occur at tectonic plate boundaries or where the earth’s crust is thin enough to let the heat through.The Pacific Rim, with its many active volcanoes, has many hot spots, alongwith Alaska, Hawaii, and much of the western United States. These regionsare also seismically active with earthquakes and magma movement, whichbreaks up rock structures and allows water to circulate. As the water risesto the surface, natural hot springs and geysers occur. The water comingfrom these natural occurrences can have temperatures above 430 degreesFahrenheit.The Geothermal Resource map of the United States, shown in Figure8.2, illustrates the “hot spots” in the United States that make the best areas for geothermal power. The best U.S. geothermal resources are westof the Mississippi River, but the map shows there are also some attractivegeothermal resources in West Virginia, Pennsylvania, in a strip of land nearthe Atlantic seaboard from Virginia to North Carolina, and in the southaround Louisiana and east Texas. Figure 8.3 shows a map of the world’sgeological hot spots where geothermal energy tends to be the best. Thereis a good interactive map of the world’s main geothermal locations at theGeothermal Education Office Web site (geothermal.marin.org).3A 2006 report on geothermal energy by the Massachusetts Institute ofTechnology (MIT) found that enhanced geothermal systems (EGS) couldbe used to affordably produce at least 100 gigawatts of electricity in the
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FIGURE 8.2 U.S. Geothermal Resource MapSource: Union of Concerned Scientists, “Geothermal Resource,” http://www.ucsusa.org/assets/images/renewable energy/GeothermalMap-Big.jpg. See also U.S. Department of Energy, Oﬃce of Energy Eﬃciency and Renewable Energy, “U.S. Geothermal Resource Map,” Geothermal Technologies Program, http://www1.eere.energy.gov/geothermal/geomap.html.
FIGURE 8.3 Global Geothermal Hot SpotsSource: Chevron Corp, “Geothermal Energy,” 2005 Corporate Responsibility ReportWeb, http: / / chevron.com / GlobalIssues / CorporateResponsibility / 2005 / prioritiesprogress plans/climate change/supplemental/geothermal energy.asp.
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United States by the year 2050, which would be enough electricity to power75 million homes.4 The MIT report estimated there is enough energy in hardrocks 10 kilometers below the United States to supply all of the world’scurrent energy needs for 30,000 years. Enhanced geothermal systems involve drilling down at least 10 kilometers into the ground. Drilling down10 kilometers is routine today for the oil industry but is more of a challenge for the geothermal industry because the holes need to be larger toextract more steam for energy. At a typical EGS site, two holes are drilledand the rock between them at the bottom of the holes is broken up. Wateris then pumped down one hole and steam comes up from the other.
THE EXTRACTION OF GEOTHERMAL ENERGYThe most common way of extracting energy from geothermal sources isto tap into naturally occurring hydrothermal convection systems wherecooler water seeps into the earth’s crust and is heated up before rising to the surface. Geothermal power plants drill holes into this heatedrock to capture this naturally created steam and then use the steam todrive a traditional turbine/generator system to create electricity. Geothermal fluid temperatures should be at least 300 degrees Fahrenheit, although geothermal plants are operating on fluid temperatures as lowas 210 degrees Fahrenheit. This book’s companion Web site at www.ProfitingFromCleanEnergy.com has a link to a video providing a tour andexplanation of a geothermal plant.There are three main designs for geothermal power plants: dry steam,flash, and binary cycle. The ideal type of system for any particular site depends on temperature, depth, and the quality of the water and steam inthe area. All three systems take hot water and steam from the ground, usethe steam to generate electricity, and then return the warm water into theground to prolong the life of the heat source.Dry steam. The dry steam power plant uses hot steam taken directly fromthe geothermal reservoir (usually above 455 degrees Fahrenheit) to directly run a turbine that powers a generator. This is the oldest type ofpower plant and is still in use today. See Figure 8.4.Flash steam. The flash steam power plant uses hot water (above 360 degrees Fahrenheit) from geothermal reservoirs. As the water is pumpedfrom the reservoir to the power plant, the drop in pressure causesthe water to vaporize into steam and it runs the turbine that powers thegenerator. Any water not flashed into steam is pumped back into thereservoir for reuse. See Figure 8.5.
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FIGURE 8.4 Dry Steam Geothermal PlantSource: U.S. Department of Energy, Idaho National Laboratory, “Geothermal Energy:What Is Geothermal Energy?” http://geothermal.id.doe.gov/what-is.shtml.
Binary cycle. The binary cycle power plant uses water that is cooler thanthat of a flash steam power plant. The hot water from the geothermal reservoir is passed through a heat exchanger that transfers heatto a separate pipe containing a fluid with a much lower boiling point.These fluids (usually Iso-butane or Iso-pentane) are vaporized to run aturbine that powers a generator. The main advantage of binary-cycle
FIGURE 8.5 Flash Steam Geothermal Power PlantSource: U.S. Department of Energy, Idaho National Laboratory, “Geothermal Energy:What Is Geothermal Energy?” http://geothermal.id.doe.gov/what-is.shtml.
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FIGURE 8.6 Binary Cycle Geothermal Power PlantSource: U.S. Department of Energy, Idaho National Laboratory, “Geothermal Energy:What Is Geothermal Energy?” http://geothermal.id.doe.gov/what-is.shtml.
power plants is their low cost and increased efficiency since theseplants do not emit any excess gas and are able to utilize lower temperature geothermal reservoirs, which are the most common. Mostnew geothermal power plants today are the binary cycle type. SeeFigure 8.6.
GEOTHERMAL POWER PLANT SYSTEMSUNDER DEVELOPMENTThere are three other advanced geothermal power plant systems that areunder development, but are not yet commercially feasible: Hot dry rock,Kalina system, and the Rankine cycle system.
r Hot dry rock system. Geothermal heat occurs everywhere under theearth’s surface, but the conditions that make water circulate to thesurface happen in less than 10 percent of the earth’s land area. Away to capture this energy is the hot dry rock system. This procedure produces electricity from hot dry rock by breaking up the hotrock by pumping high-pressured water through the rocks. Water is thenpumped from the surface down through the broken hot rocks. After thewater is heated, it is brought back to the surface to run a turbine thatpowers an electrical generator or provides heat. Research applications
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of this technology are being pursued by many countries, including theUnited States, to make hot dry rock technology commercially feasible.r Kalina system. The Kalina system uses an ammonia-water fluid mixthat claims higher efficiency. A small demonstration power plant usingthe Kalina system is in operation as part of Iceland’s Husavik GeoHeatProject.5 This system is not yet commercially viable.r Rankine Cycle. The Rankine Cycle System seeks to create geothermalenergy from cooler geothermal reservoirs to run a turbine and generator. The U.S. Department of Energy is using the Rankine Cycle systemtechnology to run a remote geothermal power system at the Chena HotSprings in Alaska. This is a demonstration project and is not yet commercially feasible.
GEOTHERMAL HEAT PUMPSGeothermal heat pumps (GHP’s) are simple pumps that take advantage ofthe relatively constant temperature of the earth’s interior and use it as asource of both heat and cooling. In the summer, the ground is cooler thanthe air and a geothermal pump can be used for cooling. In the winter, theground is warmer than the air and the geothermal pump can be used forheating. A simple water pump and underground pipe system operate tocirculate the fluids from the surface to the ground in a continuous cycle.Geothermal pumps can be used anywhere on the planet and are usedmost often in residential settings. In regions with temperature extremes,such as the northern United States in the winter and the southern UnitedStates in the summer, geothermal heat pumps are the most energy efficient and environmentally clean heating and cooling systems available. Astudy by the U.S. Environmental Protection Agency found that geothermalheat pumps are 72 percent more efficient than standard electrical heatingand air conditioning systems.6 The U.S. Department of Energy found thatgeothermal heat pumps could save a typical homeowner hundreds of dollars a year in energy costs, with the system paying for itself in 2 to 10 yearsdepending on a variety of factors.7The advantages of geothermal heat pumps include attractive economics compared to natural gas or electrical heating/cooling, and cleanoperation with no waste products. Drawbacks include high up-front costs,the need for space to install the pipelines in the ground, and the fact that thesystem only works well when temperature differences between the groundand the air are large. Geothermal heat pumps are particularly economicalin rural areas that do not have access to natural gas pipelines and must usepropane or electricity for heating and cooling. Geothermal heat pumps are
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most easily installed when a building is being constructed since the underground pipe system can be installed at the same time as the foundation isbeing dug.
ECONOMICS OF GEOTHERMAL POWERGeothermal power plants are currently generating electricity in over 24countries worldwide with a total output of about 8.9 gigawatts (which isenough electricity to power about 6.7 million homes).8 The United Statesis the world’s largest geothermal energy producer with output of about 2.8gigawatts. However, on a percentage basis, Iceland in 2006 produced 26.5percent of its electricity from geothermal sources compared to just 0.36percent for the United States.9Geothermal energy is a capital-intensive technology that is characterized by high costs for exploration, drilling wells, and plant installation, butlow costs for operation and maintenance. The initial cost for constructinga geothermal power plant is about $2,500 per installed kilowatt, which ishigher than a comparably sized natural gas plant, according to the U.S. Department of Energy.10 However, a natural gas plant has a high operationscost since it must buy natural gas on an ongoing basis. Geothermal powerplants are already competitive with fossil fuel plants and will become evencheaper on a relative basis if CO2 emissions costs are eventually added tofossil fuel plants.At current market prices, new projects for natural gas power plantscost 8 to 9 cents per kilowatt-hour, compared to just 4.5 to 7.5 cents perkilowatt-hour for a new geothermal power plant.11 In fact, analysis bythe U.S. Energy Information Administration places geothermal energy ata lower levelized cost (i.e., total facility costs including construction cost,operation costs, and fuel costs, divided by the estimated lifetime electricityoutput) than new facilities for natural gas combined-cycle, wind, open-loopbiomass, nuclear, solar thermal, or solar photovoltaic energy.12It is important to note that geothermal electricity generation costs arestable and will show little increase over time because of the low operating costs and the fact that the fuel source is free and renewable. The costof electricity powered by natural gas power plants, by contrast, can risesharply if natural gas prices rise.The cost of building a new geothermal power plant depends on a variety of factors, including (1) the temperature of the heat resources (highertemperature, lower costs); (2) the chemistry of the geothermal water thatcomes to the surface (high scaling or corrosive properties increase costs);(3) the depth and permeability of the well being drilled (a shallow well
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with a porous rock formations would be cheaper to build); and (4) laborand construction costs in the local area. Geothermal plants that use highertemperature resources can cost 25 percent less than a plant that uses lowertemperature resources. In a typical binary-cycle geothermal plant (whichis the most common plant being built today), the equipment can cost10 percent less if the geothermal resource temperature is higher at 300 degrees versus 250 degrees Fahrenheit.13 Another cost for geothermal poweris running transmission lines from the plant to the grid since most geothermal plants are located in remote areas, although sometimes the local utilitywill bear the costs of transmission.Most geothermal power plants use Power Purchase Agreements(PPAs) to sell power on a long-term contract to the local utility, thus giving the geothermal power plant operator a guaranteed source of stablerevenue. A geothermal power plant operator can enter a power purchaseagreement with the local utility before the geothermal plant is even built,thus allowing the operator to obtain financing based on the collateral ofthe power purchase agreement, which represents a virtually guaranteedsource of revenue.
THE FUTURE OF GEOTHERMAL ENERGYGeothermal energy has the potential to play a major role in satisfying new electricity demand worldwide and in replacing aging fossil fuelfacilities. Geothermal is one of the few renewable energy technologies thatcan supply continuous base load power. The cost of geothermal powerhas dropped sharply by 50 percent from costs back in the 1980s, and newgeothermal facilities can now produce electricity for between 4.5 and 7.5cents per kilowatt-hour.14The U.S. Geological Survey estimates that the geothermal resourcebase in the United States is between 95 to 150 gigawatts, of which 22gigawatts has been identified as suitable for electric power generation(22 gigawatts is enough electricity to power 16.5 million homes).15 Asof today, only a small part of this resource is currently utilized, withan installed capacity of 2.8 gigawatts. However, geothermal development is likely to develop fairly rapidly due to the low costs and utilities’ need for clean power to satisfy renewable energy mandates. Overthe next decade, new geothermal projects are expected to cause U.S.capacity to more than triple to 8 to 15 gigawatts.16 In addition to electric power generation, which is primarily focused in the western UnitedStates, there is a bright future for the residential and commercial use of
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geothermal pumps as a heating and cooling source for homes and businesses everywhere.
Major Players in the Geothermal Energy Marketr Calpine Corporation (Pink Sheets: CPNLQ). Calpine Corporation(www.calpine.com) is the world’s largest producer of geothermalpower and operates approximately 50 percent of the geothermal plantcapacity in the United States. Calpine is a large, unregulated wholesalepower company that had 25 gigawatts of electricity generating capacityas of December 31, 2006, and produced $6.7 billion in revenue in 2006.Calpine was still operating under bankruptcy protection as of mid-2007(which is why the company is quoted on the Pink Sheets). Calpine filedfor Chapter 11 bankruptcy protection in December 2005 due to heavylosses tied to a high debt load, the overbuilding of merchant power assets in some areas in the 1990s, and volatile natural gas prices (whichcaused losses at its natural gas power plants).Calpine owns and operates 19 of the 21 geothermal power plantsin the “Geysers” area of California with generating capacity of 750megawatts of electricity, which is enough to power about 560,000homes. The Geysers, comprising 30 square miles along the Sonoma andLake County borders in California, is the largest complex of geothermal power plants in the world. The Geysers are a “dry steam field,”as opposed to most other geothermal reservoirs, which are liquiddominated and recharge naturally. No water flows naturally in theGeysers geothermal system. The Geysers facility therefore pumps 11million gallons of treated wastewater daily from nearby Santa Rosa,California for injection into the Geysers geothermal system, therebyincreasing its sustainability. The Geysers have produced electricity for47 years and geothermal facilities at the Geysers are expected to beeconomically profitable for at least several more decades. Calpine iscurrently developing new geothermal projects in northern Californianear the California-Oregon border.r Ormat Technologies Inc. (NYSE: ORA). Ormat Technologies(www.ormat.com) operates approximately 15 percent of geothermal power plant capacity in the United States. In addition, its OrmatEnergy Converter (OEC) geothermal system is patented and licensedfor commercial use in 71 countries around the world. Ormat’s OECtechnology supplies over 800 megawatts of geothermal power, whichenables geothermal developers to use a wide range of geothermalresources, from low temperature geothermal water to high-pressuresteam.
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In the United States, Ormat operates the geothermal facility atPuna, Hawaii, that supplies the city with 25 percent of its electricalneeds. Ormat owns several facilities in Nevada and California and50 percent of the Mammoth Pacific geothermal plant in California. Inaddition to its existing projects, Ormat has signed two power purchaseagreements with the Southern California Public Power Authority forthe purchase of electrical power from its geothermal projects at theOrmesa and Heber geothermal facilities. In May 2007, Ormat signed a20-year power purchase agreement with the Nevada Power Company,a unit of Sierra Pacific Resources,