# Presentation: 166728

## NREL PresentationGolden, Colorado  13 August 2001

**NREL Presentation****Golden, Colorado  13 August 2001**

## Gary McKay, PrincipalGlobal Power Solutions, LLC

- One of the Founders and Principals of Global Power Solutionsa Consulting Firm serving the Power Industrywith an emphasis on Geothermal Energy
- BSME in Mechanical Engineering from Purdue UniversityMBA (Finance) from University of Colorado, Denver
- Our clients include NREL, the World Bank/IFC, PacifiCorp, CalPine Corp., El Paso Natural Gas, Lihir Gold, Stone & Webster Management Consultants and many others.

## Global Power Solutions, LLC

**- Development Assistance**
**- Performance Engineering **
**- Management Consulting**

## Analysis in Support of an Expanded Role for RenewablesinRegional Electricity Markets

## Geothermal Technology Status

- Status of Geothermal Technology
- Challenges / Barriers Facing the Industry
- Requisite Analytical Tools

## Geothermal Energy:

- Solution Mining HeatGenerally 350-650F

## Geothermal Power Cycles

## Flash Steam Plant Schematic

- HP FlashVessel

- LP FlashVessel

- Turbine

- Generator

- Condenser

- Cooling Tower

- Injection Pumps

- Hot Well Pumps

- Production Wells

- Injection Wells

## BinaryPlant Schematic

- Turbine

- Generator

- Condenser

- Cooling Tower

- Production Pumps

- Circ Water Pumps

- Production Wells

- Injection Wells

- BinaryPlant Schematic

- Feed Pumps

- Evaporator

## Mature Technology

- Plant Costs Declining
- Production Costs Falling
- Environmental Preference

## Slide 11

## Table 5. U.S. Electric Generating Capacity, 1994-1998 (Megawatts)						

**Source**			**1994**	**1995**	**1996**	**1997**	**1998**
- Hydroelectrica		78,042	78,563	76,437	79,788	79,573
- Geothermal		3,006	2,968	2,893	2,853	2,917
- Biomass			10,468	10,283	10,560	10,538	10,269
- Solar/Photovoltaic		333	333	333	334	365
- Wind			1,745	b1,731	1,678	1,579	1,698
**Total Renewables**		**93,594**	**93,877**	**91,900**	**95,093**	**94,822**
- Nonrenewablesc		670,420	675,640	683,972	683,409	681,062
**Total**			**764,014**	**769,517**	**775,872**	**778,502**	**775,884**
- aExcludes pumped storage, which is included in "Nonrenewables." bExcludes 6.6 megawatts of utility capacity and 35 megawatts of nonutility capacity that were not captured by EIA sources. cIn addition to fossil-fired and nuclear capacity, includes hydrogen, sulfur, batteries, chemicals, spent sulfite liquor, and hydroelectric pumped storage. R = Revised data. Note: Capacity ratings for nonrenewables have been revised to reflect estimated net summer capability rather than nameplate capacity. The methodology for estimating net summer capability from reported nameplate capacity is presented in Energy Information Administration, *Inventory of Electric Utility Power Plants in the United States 1999 with data as of January 1, 1999*, DOE/EIA-0095(99) (Washington, DC, November 1999), p. 271. Sources: Energy Information Administration, Form EIA-860, "Annual Electric Generator Report;" Form EIA-867, "Annual Nonutility Power Producer Report.;" Form EIA-860A, "Annual Electric Generator Report-Utility;" and Form EIA-860B, "Annual Electric Generator Report-Nonutility."

## Geothermal Benefits:

- Reliable Base-load Generation
- Environmentally Benign, “Renewable”
- Minimal Land Disturbance
- Lower Greenhouse Gas Emissions

## Slide 14

## Mature Technology

- Integrating Plant and Field Technologies
- Industry Consolidation
- Understanding Reservoir Production

## Integrating Plant & Field

- Oil Companies - Early (1970s) Field Owners: Unocal, Shell, Chevron, Sun,
- Utilities - Early Power Plant Owners: PGandE, SCE, SDG&E, Utah Power & Light

## Industry Consolidation

- CalEnergy <- Magma <- Unocal
- CalPine <- Freeport, PGandE  Calistoga <- SantaFe <- Oxy
- Caithness <- CalEnergy  Oxbow

## Understanding Reservoir Production

- Production: Drilling Techniques (high temperature, directional drilling)
- Injection (in-field) for Pressure Support
- Supplemental Water: The Geysers

## Challenges / Barriers

- Long-Term Contracts
- Transparent Processes
- Transmission

## Selling Four Commodities

- Energy
- Capacity
- Green Power
- Hedge Against Gas

## Selling Four Commodities

- Energy				Well Understood
- Capacity
- Green Power
- Hedge Against Gas

## Selling Four Commodities

- Energy				Well Understood
- Capacity 			Somewhat
- Green Power
- Hedge Against Gas

## Selling Four Commodities

- Energy				Well Understood
- Capacity 			Somewhat
- Green Power			Learning
- Hedge Against Gas

## Selling Four Commodities

- Energy				Well Understood
- Capacity 			Somewhat
- Green Power			Learning				   0.5 - 1.25 ¢/kW
- Hedge Against Gas

## Selling Four Commodities

- Energy				Well Understood
- Capacity 			Somewhat
- Green Power			Learning
- Hedge Against Gas	Limited Visibility

## Requisite Analytical Tools

- Forecast of Marginal Fuel (Natural Gas)
- Value of Natural Gas Hedge
- Customer Preference

## Natural GasAnticipated to be the United States’ Marginal Fuel for at least two decades.

- Natural GasAnticipated to be the United States’ Marginal Fuel for at least two decades.

## “Before building new capacity, utilities are expected to use other options to meet demand growth—maintenance of existing plants, power imports from Canada and Mexico, and purchases from cogenerators. Even so, assuming an average plant capacity of 300 megawatts, 1,310 new plants with a total of 393 gigawatts of capacity (excluding cogenerators) are projected to be needed by 2020 to meet growing demand and to offset retirements. Of this new capacity, 92 percent is projected to be combined-cycle or combustion turbine technology, including distributed generation capacity, fueled by natural gas.” 

## Table 1. Average Absolute Percent Errors for AEO Forecasts, 1982-1998 

**Variable** 					**Average Absolute Percent Error**	**Consumption**
- Total Energy Consumption 					1.7
- Total Petroleum Consumption 				2.9
- Total Natural Gas Consumption 				5.7
- Total Coal Consumption 					3.0
- Total Electricity Sales 					1.7
**Prices and Economic Variables**
- World Oil Prices 						51.3
- Natural Gas Wellhead Prices 					72.1
- Coal Prices to Electric Utilities 				35.3
- Average Electricity Prices 					11.0
- Gross Domestic Product 					5.0
*AEO* = *Annual Energy Outlook*. Source: Tables 2 through 17.
- Natural gas prices at the wellhead have had the highest average absolute percentage forecast errors in the *AEO*s, with an overall average error of 72.1 percent

## Summary

- Geothermal - A Mature Technology
- Firm, Environmentally Friendly Power
- Need Long-Term Contracts/Transparency
- Analytical Tool - Value Natural Gas Hedge