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GEOTHERMAL: THE ENERGY TO CHANGE THE WORLD

INVESTING

IN

GEOTHERMAL ENERGY

Horst Kreuter, Colin Harvey & Orhan Mertoglu 17. May 2010, Qatar

CONTENTS

Introduction Technology Geothermal Potential Investing in Geothermal Energy
Cost Earnings Funding Schemes Risk Mitigation Schemes

Research & Development

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WHY G EOTHERMAL ENERGY ?

• • • • • •

Power and Heat (Heating & Cooling) Base Load / “Around the Clock” > 90% Availability Renewable Energy Inexhaustible Reservoir Non-Polluting (Climate Change) No Fuel Necessary (Independent) Supporting Home Economy (no imports) Largest Potential of all Renewables

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ENVIRONMENT 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 4 .

H I S T O RY 17.2010 Horst Kreuter – Investing in Geothermal Energy 5 .05.

05.POTENTIAL ( G ERMANY) 50% Biogas Generation potential O F T H E P O W E R G E N E R AT I O N O F Gross power generation 2006 2006 Liquid Biomass Final energy potential Solid Biomass Hydropower Photovoltaics Wind Power Geothermal Potential in TWh/a 17.2010 Horst Kreuter – Investing in Geothermal Energy 6 .

H E AT S O U R C E 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 7 .

2010 Horst Kreuter – Investing in Geothermal Energy 8 .05.S PAT I A L D I S T R I B U T I O N O F G E O T H E R M A L A C T I V I T Y 17.

DIFFERENT RESOURCES • • • Conventional Geothermal: Natural Steam Reservoirs A well produces steam or a mixture of steam and water.05. 17. Medium Temperature Geothermal: Hot Water Reservoirs A well produces hot brine for power generation and heating. Temperatures 120° .120° C C. Temperatures 60° .200° C C. Temperatures above 200° C. Low Temperature Geothermal: Hot Water Reservoirs A well produces hot brine for heating and cooling.2010 Horst Kreuter – Investing in Geothermal Energy 9 .

CONVENTIONAL G EOTHERMAL 17.2010 Horst Kreuter – Investing in Geothermal Energy 10 .05.

CONVENTIONAL G EOTHERMAL 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 11 .

05.2010 Horst Kreuter – Investing in Geothermal Energy 12 .M E D I U M T E M P E R AT U R E G E O T H E R M A L 17.

2010 Horst Kreuter – Investing in Geothermal Energy 13 .05.M E D I U M T E M P E R AT U R E G E O T H E R M A L Binary USA Binary Hawaii 17.

2010 Horst Kreuter – Investing in Geothermal Energy 14 .05.HYDROTHERMAL 17.

2010 Horst Kreuter – Investing in Geothermal Energy 15 .05.EGS 17.

2010 Horst Kreuter – Investing in Geothermal Energy 16 .05.DRILLING 17.

2010 Horst Kreuter – Investing in Geothermal Energy 17 .05.ELECTRICITY AND … BLUE LAGOON I CELAND 17.

EXAMPLES OF H E AT U S E 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 18 .

G EOTHERMAL ON THE WORLD SCENE (10 GWe Operational. .2010 Horst Kreuter – Investing in Geothermal Energy 19 .05.Rapid Expansion Underway) 17.

05.2010 Horst Kreuter – Investing in Geothermal Energy 20 .FUTURE POTENTIAL 17.

G EOTHERMAL POTENTIAL E S T I M AT E D GLOB AL ELECTRICITY AND DIRECT USE POTENTI AL 10000 Electrical generation GWe 1000 Direct Use GWth 100 10 1 Installed 2008 2050 Minimum 2050 Median 2050 Maximum Identified technical Inferred theoretical 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 21 .

2010 Horst Kreuter – Investing in Geothermal Energy 22 .COSTS 50MW Development US$150 to $200 million 17.05.

1 M / MWe ~US $ 2.05.4 M / MWe ~US $ 2. 17.0 MWe (in 2010) Remark: Costs in NZ are extremely low.2010 Horst Kreuter – Investing in Geothermal Energy 23 .COSTS ( EXAMPLE) Cost of Recent Large (100 MWe) Conventional Geothermal Projects in New Zealand • • • • Kawerau: Nga Awa Purua: Tauhara I: New projects ~US $ 2.8 M to 3.4 M / MWe ~US $2. Expect more in other parts of the world for conventional geothermal.

5 MWe) Medium Temperature Geothermal Projects in Germany • • Landau (3MW): ~US $ 10 M / MWe New projects (3-5 MW): ~US $8 M to 10 M MWe (in 2010) • Reasons: Deep wells (3000 to 5000m) Low Temperature (140 – 180° C) 17.2010 Horst Kreuter – Investing in Geothermal Energy 24 .COSTS Cost of Small (3 .05.

F E E D .I N TA R I F F ( E X A M P L E G E R M A N Y ) • Basic Tariff • 160 €/MWhr up to 10 MW • 105 €/MWhr > 10 MW • Bonuses • Early Bird: 40 €/MWhr • Heat use: 30 €/MWhr • EGS: 40 €/MWhr • Maximum Tariff: 270 €/MWhr 17.2010 Horst Kreuter – Investing in Geothermal Energy 25 .05.

2010 Horst Kreuter – Investing in Geothermal Energy 26 .05.EARNINGS • Market Price (Example NZ) • Geothermal is economically competitive at the current wholesale electricity price in NZ (~ US$ 60 / MWhr) • • Subsidized Price • Power Purchase Agreement (PPA) • Bonus • Feed-In Tariff (Example Germany) Carbon Credits 17.

05. Marsh) 17.2010 Horst Kreuter – Investing in Geothermal Energy 27 . Germany.g.g. France) Private Insurance • • Insurance (e. Swiss Re.g.R I S K M I T I G AT I O N • • • • • • Exploration Risk Technical Drilling Risk World Bank Risk Mitigation Schemes Funding Bank (e. Munich Re.g. Axa) Insurance Broker (e. KfW) Schemes Government Schemes (e.

S U C C E S S FA C TO R S • Sales Prices (Electricity/Heat Price) • • Environmental Benefit Price Increase of Conventional Heat and Electricity generation • • • • Risk Mitigation Country Risks Learning Curve Electricity and Heating/Cooling 17.05.2010 Horst Kreuter – Investing in Geothermal Energy 28 .

05. Germany) All Resources • • • • Conventional Low and Medium Temperature Steam and Hydrothermal EGS All Technologies All Risk Levels Greenfield and Brownfield Portfolio ! 17.2010 Horst Kreuter – Investing in Geothermal Energy 29 .P R O J E C T A VA I L A B I L I T Y • • • • • • Many Countries (NZ. Turkey.

R&D CHALLENGES AND O PPORTUNITIES • GOALS • • • • • • • • EFFICIENCY RISK REDUCTION TOPICS EGS PUMPS DRILLING TECHNOLOGY BINARY POWER PLANTS SEISMICITY Horst Kreuter – Investing in Geothermal Energy 30 17.2010 .05.

Orhan Mertoglu 17.THANK YOU FOR YOUR ATTENTION ! Horst Kreuter. May 2009. Qatar . Colin Harvey.