Geothermal Strategic Value Analysis: in Support of The

GEOTHERMAL
STRATEGIC VALUE ANALYSIS

IN SUPPORT OF THE
DRAFT STAFF PAPER

2005 INTEGRATED ENERGY POLICY REPORT
Elaine Sison-Lebrilla
Valentino Tiangco
Energy Generation Research Office
Energy Research and Development Division
California Energy Commission
DISCLAIMER
This paper was prepared as the result of work by a member of the staff of
the California Energy Commission. It does not necessarily represent the
views of the Energy Commission, its employees, or the State of California.
The Energy Commission, the State of California, its employees, contractors
and subcontractors make no warrant, express or implied, and assume no
legal liability for the information in this paper; nor does any party represent
that the uses of this information will not infringe upon privately owned
rights. This paper has not been approved or disapproved by the California
Energy Commission nor has the California Energy Commission passed
upon the accuracy or adequacy of the information in this paper.
JUNE 2005
CEC-500-2005-105-SD
Abstract
California has the largest geothermal potential of any state in the nation. According to a
1978 United States Geological Survey (USGS) report, California has an identified
geothermal gross potential of 12,000 megawatts (MW). California also has the largest
geothermal production and technical potential of any state in the nation with an installed
gross capacity of 1,870 megawatts (MW) and an estimated technical potential
generation capacity of 4,825 MW. Even though geothermal electricity generation has
declined in the past decade, an estimated 2,955 MW of generating capacity from
geothermal may still be available for development. Using the strategic value analysis
(SVA) methodology, this estimate can be further refined based on economic and
location filters. Certain drivers have emerged to encourage the development of
geothermal resources. The California Legislature adopted the Renewable Portfolio
Standard (RPS) and the federal government has made a production tax credit (PTC)
available to new geothermal generation facilities. Geothermal is a base load resource,
and developing currently untapped geothermal resources can contribute significantly to
RPS goals.
Keywords
Geothermal, dry steam resource, liquid dominated resource.
i
Acknowledgements
The Geothermal Strategic Value Analysis Staff Paper was prepared with the
contributions from the following:
Davis Power Consultants

Ron Davis
Billy Quach
McNeil Technologies
Jack Whittier
Additional Staff Contributors

Energy Generation Research Office
Namita Bhatt
ii
Introduction
California has a tremendous supply of renewable resources that can be harnessed to

provide clean and naturally replenishing electricity supplies for the state. Renewable
resources, currently provide approximately 11 percent of the state’s electricity mix.1
California’s Renewable Portfolio Standard (RPS) established in 2002 by Senate Bill
1078 (SB1078, Sher, Chapter 516, Statutes of 2002) requires electricity providers to
procure at least one percent of their electricity supplies from renewable resources so as
to achieve a 20 percent renewable mix by no later than 2017. More recently, the
California Energy Commission, the California Public Utilities Commission and the
California Power Authority approved the Energy Action Plan (EAP), which accelerated
the 20 percent target date to 2010.2
A 1978 USGS report3, identified California with a gross geothermal potential of 12,000
megawatts (MW). This staff paper provides estimates of the economically viable
geothermal resources located within California and potentially available to meet the
RPS and EAP goals. These estimates are the results of a project known as the strategic
value analysis (SVA). This paper updates and expands upon the resource information
provided in the staff paper, California Geothermal Resources Staff Paper, Publication
Number CEC-500-2005-070.
Geothermal Strategic Value Analysis
In 2002, the Public Interest Energy Research (PIER) Renewables Program undertook a
project known as the Strategic Value Analysis (SVA). It’s purpose was to guide the
program’s efforts to fund geothermal electric generation RD&D. After passage of the
RPS, the SVA assisted in California’s RPS implementation. The SVA was viewed as a
tool to provide a logical approach to integrating more renewable energy generation into
California’s electricity system while simultaneously providing non-energy benefits (e.g.
environmental, economic etc.). It is a multi-phased effort combining renewable resource
assessment, state-of-the-art power flow analysis, and filtering criteria to identify a set of
development priorities and sites within a GIS platform. The results also address the
magnitude and timeframe for transmission and distribution upgrades to California’s
electrical system to enable the addition of new renewable generation.
The SVA strives to develop a logical approach to integrating future geothermal capacity
into the California transmission grid by:
• Looking at the economics and timeframe for the development of geothermal for
maximum public benefits.
• Evaluating points of high strategic value to the grid.
• Providing significant non-energy benefits to the state.
• Providing solutions that help prioritize transmission needs that could defer
transmission upgrades.
The SVA team consists of Energy Commission staff, and consultants providing resource
1
assessments, power flow simulation and analysis, and data analysis. The primary
consultants involved in the geothermal portion of the SVA are GeothermEx, Davis
Power Consultants (DPC), McNeil Technologies, and the California Department of
Forestry (CDF). This section provides a description of the state’s SVA geothermal
resources approach.
• Identification and Qualification of the Resource.
• Calculation of the Cost of Geothermal Electricity Generation.
• Addition of New Geothermal Resource to the Grid.
Resource Identification and Qualification4

In July 2002, the Energy Commission executed a Public Interest Energy Research
Program (PIER) contract with the Hetch Hetchy Water and Power Division of the San
Francisco Public Utilities Commission (Hetch Hetchy/SFPUC) to fund studies and
projects relating to renewable energy. GeothermEx, Inc. (GeothermEx) was retained by
Hetch Hetchy/SFPUC to provide a geothermal resource assessment for California and
western Nevada. This section summarizes the findings of GeothermEx on the resource
assessment for California.
GeothermEx used prior research, exploration, and development results available in the
public domain. They also used data and information released by some developers into
the public domain for this study. Three baseline conditions were used to determine the
geothermal resource areas included in this assessment: geographic location, resource
temperature, and evidence of a discrete resource. In California, 22 geothermal resource
areas were included in the assessment.
Among the various geothermal resource areas, the amount and quality of technical data
are extremely variable. A uniform set of required resource criteria therefore needed to
be quantified to determine commercial feasibility for each resource area. For each
selected reservoir values for the following criteria were obtained or reasonably
estimated: temperature, area, thickness, porosity, and resource recovery factor.
To better capture the uncertainty of each resource, the minimum, most likely and
maximum values, were used for each criterion. These values were then used in
probabilistic simulation, (based on Monte Carlo random-number sampling,) to calculate
estimated generation capacity based on accessible heat at the resource area. Because
the generation capacity is estimated based on calculated heat in place, there is no
guarantee that sufficient permeability exists to allow commercial production for those
resources where little or no test drilling has occurred.
For the 22 California resource areas, the total estimated most-likely generation capacity
was calculated to be approximately 4,732 MW. The total generation capacity, minus the
installed gross capacity of existing generation, was 2,862 MW. Table 1 reflects the
estimated generation capacity for each resource area, grouped by geographical area
and county.
2
Table 1: Most-Likely Geothermal Resource Capacity
MLK-
MLK Existing Existing
Gross
Geothermal Resource Area County MW MW MW
Brawley (North, East South) Imperial 326 0 326
Dunes Imperial 11 0 11
East Mesa Imperial 148 73.2 74.8
Glamis Imperial 6.4 0 6.4
Heber Imperial 142 100 42
Mount Signal Imperial 19 0 19
Niland Imperial 76 0 76
Salton Sea (including Westmoreland) Imperial 1750 350 1400
Superstition Mountain Imperial 9.5 0 9.5
Imperial Total: 2487.9 523.2 1964.7
Coso Hot Springs Inyo 355 300 55
Sulfur Bank Field, Clear Lake Area Lake 43 0 43

Geysers [Lake & Sonoma Counties] Sonoma 1400 1000 400
Calistoga Napa 25 0 25
The Geysers Total: 1468 1000 468
Honey Lake (Wendel-Amedee) Lassen 8.3 6.4 1.9

Lake City/ Surprise Valley Modoc 37 0 37
Long Valley (mono- Long Valley) Mammoth Pacific
Plants Mono 111 40 71
Randsburg San Bernardino/ Kern 48 0 48
Medicine Lake – Fieldwide Siskiyou 304 0 304
Sespe Hot Springs Ventura 5.3 0 5.3
Total: 4825 1870 2955

Source: California Energy Commission Geothermal Resource
Staff Paper
3
Despite the steam production decline mentioned earlier, The Geyser still potentially has
400 MW of most-likely generation capacity available. The total proven reservoir at The
Geysers is nearly 40 square miles, as determined by the extensive shallow and deep
drilling in the region. For this area there is a portion of approximately 10 square miles
that has never been developed for continuous steam supply. Lying between the Aidlin
project area to the northwest and the areas of units 5-6, 7-8 and 11 to the southeast,
these 10 square miles comprise about 25 percent of the 40 square-mile total proven
area. In addition, about 2 square miles in the northeastern part of the field (within the
proven reservoir area) remain untapped at the former Bottle Rock project and the
contiguous area to the southeast. In these areas a reasonable estimate of average
installed capacity is 33 MW per square mile. The unutilized 12 square miles should
therefore be able to support about 400 MW under the right economic conditions.
California has the potential to produce an additional capacity from liquid-dominated

resources such as Coso Hot Springs, Imperial Valley, Glass Mountain and Mono/Long
Valley. Imperial County has 11 Known Geothermal Resource Areas (KGRA) including
Brawley, Salton Sea, and East Mesa, and has the largest potential resource base within
the state at about 2,488MW (see Table 2). Sonoma County also has a large resource
base estimated at 1,400MW.
Table 2: California Geothermal Potential5

Technical
County Potential %
(MW)
Imperial 2,488 52%
Inyo 355 8%
Lake 43 1%
Lassen 8 0%
Modoc 37 1%
Mono 111 2%
Napa 25 1%
San Bernardino/Kern 48 1%
Siskiyou 304 4%
Sonoma 1400 30%
Ventura 5 0%
TOTAL 4,825
Source: California Energy Commission Geothermal Resource Staff Paper
Electricity Generation-Performance Characteristic and Cost

California’s geothermal power production is a mature technology with statewide
installed generating capacity of 1,870 MW gross. The gross technical potential for
further development in these geothermal resource areas is about 4,732 MW.
The three basic types of geothermal power generation technologies in California are dry
steam, dual flashed-steam and binary cycles with existing gross installed capacities
4
of 1,000 MW, 700 MW, and 170 MW, respectively. Each technology of choice has very
distinct characteristics which impose certain limitations on its use and, therefore, affects,
its present level of development. Depending on the type of resource, these limitations
are related to either the electrical generation systems or the technology to develop the
resource itself. Figure 1 shows the known geothermal areas in California.
Performance Characteristics
Geothermal resource characteristics define power generation technology. A dry steam

field like the Geysers allows for direct extraction of high-quality steam into a turbine.
While this combination of resource and technology is efficient, the absence of other
comparable geothermal resources limits applicability of the technology.
Flash steam power plants are the most common. Flash steam plants use geothermal
reservoirs of water with temperatures greater than 360°F. Hot water flows up through
wells, generally as a result of “stimulation” to the reservoir. As hot water flows upward,
the pressure decreases and some of the hot water vaporizes (“flashes”) into steam,
generally in a large vessel or flash tank. The high and low-pressure steam is
subsequently separated and sent to an appropriate inlet of a turbine. Leftover water and
condensed steam are injected back into the reservoir or used in the cooling cycle.
Binary-cycle power plants operate on water at lower temperatures of about 190°–360°F.
These plants use heat from the hot water to boil a working fluid, usually an organic
compound with a low boiling point. The working fluid is vaporized in a heat exchanger
and used to turn a turbine. The water is then injected back into the ground to be
reheated. The water and the working fluid are kept separated during the process so
there are little or no air emissions.
5
Figure 1: Known Geothermal Resource Areas
Source: California Energy Commission
6
Table 3 provides an overview of current (2003) technology characteristics for binary and
flash power plants. The technologies are mature with incremental R&D efforts, plant
performance is high with availability and capacity factors higher than 90 percent, annual
maintenance costs are low, considerable energy is generated with a relatively small
footprint, air emissions are either low or non-existent, and most other environmental
aspects are positive. Furthermore, economic performance characteristics allow existing
geothermal facilities to provide base load generation, albeit in relatively small
increments.
Table 3: Summary Technical Performance Characteristics for Geothermal Power
Plants, 2003
Binary
Technology Characteristics Flash Cycle
Cycle
Development Status
Development Status x
Demonstration x x
Performance
Rated full Load Net Capacity (MWe) 50 50
Power Plant Net Effectiveness (Wh/kg fluid) 27.5 N/A
Electric efficiency (%) N/A N/A
Expected Availibility (%) >99% >99%
Capacity Factor (%) 85% 85%
Operation
Operator Yes Yes
Dispatchable Yes Yes
Load Duty (base, intermediate, peak, intermittent, renewable) B Binary Cycle
Maintenance
Cold Start Up Time (minutes) hours hours
Annual Maintenance (hr/yr) 240
Time Before Intervention (oper. Hrs) 25,000 25,000
Typical Forced Outage Rate (%) 0.60% 0.60%
Sighting / Environmental
Power Plant Size
Footpring (ft/kW) 26 26
Infrastructure Needs
Water Service Yes Yes
Waste Water Service Yes Yes
Fuel Delivery No No
Air Emissions (lb/mWh)
CO 0.058 0
Nox 0.191 0
SO2 0.026 0
VOC 0.011 0
H2S 0.092 0
Other
Noise (db @ 1/2 mile) <65 <65
Water Consumption (acre-feet/yr) 25,000 25,000
Hazardous Materials (trace) As, Hg, Pb, Sb, B As, Hg, Pb, Sb, B
Other Hazards
Source: California Energy Commission staff with assistance
from McNeil Technologies under contract 500-00-031.
7
Cost
The technical opportunity for expansion of geothermal capacity in the state is about
2,955 MW (4,732 MW gross minus the gross capacity of existing generation).
Economics commands whether new geothermal power plants can be installed cost
competitively in California, within the 2005 to 2017 timeframe. An economic analysis
calculated the levelized cost of electricity (LCOE) for all technologies using the
economic methodology described in this report. Table 4 and 5 depict the summary of
the economic analysis performed for all technologies, site-specific to each known
geothermal resource areas in constant and current dollars, respectively. All economic
analysis that was performed excludes transmission cost and includes a 16 percent
return on equity at a 33 percent equity ratio.
The base case (as-in service year 2005) levelized cost of electricity (LCOE) for an
installation of new dry steam plant is $0.0691/kWh with production tax credit (PTC) and
$0.0781/kWh without PTC.
For dual flashed-steam systems, the base case (as-in service year 2005) LCOE’s with
PTC ranges from $0.0473/kWh to $0.889/kWh and LCOE’s without PTC range from
$0.0563/kWh to $0.0979/kWh.
The LCOE’s for the installation of new binary cycles (as-in service year 2005) with PTC
range from $0.040/kWh to $0.0931/kWh and the LCOE’s without PTC range from
$0.049/kWh to $0.1021/kWh.
8
Table 4: Summary of Geothermal – Levelized Cost of Electricity (2004
constant $/kWh).
Technology Dry Steam
Capital Cost
($/kW) LCOE (2004 Constant $/kWh)
Potential
Year Develop- 2005 Transmission No Transmission Transmission No Transmission Transmission No Transmission
Geothermal Resource
ment (MW)
Area Base Case PTC No PTC PTC No PTC PTC No PTC PTC No PTC PTC No PTC PTC No PTC
Geysers 400 3,725 0.0693 0.0783 0.0691 0.0781 0.0660 0.0750 0.0658 0.0748 0.0628 0.0717 0.0626 0.0716
Technology Dual Flash

Capital Cost
2005 2010 2017
Potential
Geothermal Resource
ment (MW)
Calistoga 25 3,403 0.0703 0.0793 0.0691 0.0781 0.0662 0.0752 0.0658 0.0748 0.0615 0.0705 0.0626 0.0716
Brawley
(North) 135 2,638 0.0620 0.0709 0.0542 0.0631 0.0573 0.0663 0.0496 0.0586 0.0521 0.0611 0.0446 0.0536
Brawley
(East) 129 4,195 0.0898 0.0988 0.0817 0.0907 0.0835 0.0925 0.0754 0.0844 0.0764 0.0854 0.0685 0.0775
Brawley
(South) 62 4,606 0.1059 0.1149 0.0889 0.0979 0.0990 0.1080 0.0823 0.0912 0.0912 0.1002 0.0748 0.0838
Coso 55 3,405 0.0689 0.0779 0.0677 0.0767 0.0635 0.0725 0.0623 0.0713 0.0575 0.0665 0.0564 0.0654
Lake City /
Surprise
Valley 37 3,146 0.0651 0.0740 0.0631 0.0721 0.0599 0.0689 0.058 0.067 0.0542 0.0632 0.0524 0.0614
Medicine
Lake
(Fourmile
Hill) 36 2,674 0.1383 0.1473 0.0548 0.0638 0.1328 0.1418 0.0502 0.0592 0.1259 0.1349 0.0452 0.0541
Medicine
Lake
(Telephon
e Flat) 175 2,275 0.0649 0.0739 0.0477 0.0567 0.0606 0.0696 0.0436 0.0526 0.0556 0.0646 0.039 0.048
Niland 76 3,249 0.0659 0.0749 0.065 0.0739 0.0607 0.0697 0.0598 0.0687 0.0549 0.0639 0.054 0.063
Randsburg 48 2,615 0.0571 0.0661 0.0538 0.0627 0.0525 0.0615 0.0492 0.0582 0.0475 0.0565 0.0442 0.0532
Salton Sea
(Low) 1400 2,250 0.0502 0.0592 0.0473 0.0563 0.0461 0.0551 0.0432 0.0522 0.0415 0.0505 0.0386 0.0476
Salton Sea
(High) 1400 4,500 0.0900 0.0990 0.0871 0.0961 0.0834 0.0924 0.0805 0.0895 0.0760 0.0850 0.0732 0.0822
Sulphur
Bank
Minimum 43 2,347 0.0507 0.0596 0.049 0.058 0.0464 0.0554 0.0448 0.0538 0.0417 0.0507 0.0401 0.0491
Range
Maximum 2,250 0.0473 0.0563 0.0432 0.0522 0.0386 0.0476
Range 4,606 0.0889 0.0979 0.0823 0.0912 0.0748 0.0838
Average 3,177 0.0638 0.0728 0.0588 0.0678 0.0534 0.0623
Technology Binary
Capital Cost
2005 2010 2017
Potential
Geothermal Resource
ment (MW)
Area Base Case PTC No PTC PTC No PTC PTC NO PTC PTC No PTC PTC NO PTC PTC No PTC
Long
Valley - M-
P Leases 71 2,034 0.0480 0.0570 0.04 0.049 0.0437 0.0527 0.0358 0.0448 0.0402 0.0492 0.0324 0.0414
Honey
Lake 1.9 2,684 0.0871 0.0961 0.0511 0.0601 0.0796 0.0886 0.0444 0.0534 0.0712 0.0802 0.0363 0.0453
Dunes 11 4,085 0.0813 0.0903 0.0751 0.0841 0.0718 0.0808 0.0657 0.0747 0.0602 0.0692 0.0542 0.0632
East Mesa 74.8 5,141 0.0941 0.1030 0.0931 0.1021 0.0827 0.0917 0.0818 0.0908 0.0686 0.0775 0.0677 0.0767
Glamis 6.4 4,953 0.1327 0.1417 0.0899 0.0989 0.1208 0.1298 0.079 0.0879 0.1067 0.1157 0.0653 0.0743
Heber 42 2,706 0.0531 0.0621 0.0515 0.0605 0.0463 0.0553 0.0447 0.0537 0.0382 0.0472 0.0366 0.0456
Mount
Signal 19 2,746 0.0594 0.0684 0.0522 0.0612 0.0524 0.0614 0.0453 0.0543 0.0441 0.0531 0.0371 0.0461
Sespe Hot
Springs 5.3 4,112 0.0885 0.0975 0.0755 0.0845 0.0789 0.0879 0.0661 0.0751 0.0671 0.0761 0.0545 0.0635
Superstitio
n Mountain
Minimum 9.5 3,211 0.0635 0.0725 0.0601 0.0691 0.0557 0.0647 0.0524 0.0614 0.0463 0.0553 0.0431 0.0521
Range
Maximum 2,034 0.04 0.049 0.0358 0.0448 0.0324 0.0414
Range 5,141 0.0931 0.1021 0.0818 0.0908 0.0677 0.0767
Source: California Energy Commission staff with assistance from McNeil Technologies under contract 500-00-031.
9
Table 5: Summary of Geothermal – Levelized Cost of Electricity (2004
current $/kWh).
Technology Dry Steam
Capital Cost
($/kW) LCOE (2004 Current $/kWh)
Potential
Geothermal Resource
ment (MW)
Geysers 400 3,725 0.0856 0.0967 0.0854 0.0965 0.0816 0.0927 0.0814 0.0925 0.0776 0.0887 0.0774 0.0885
Technology Dual Flash

Capital Cost
2005 2010 2017
Potential
Geothermal Resource
ment (MW)
Calistoga 25 3,403 0.0869 0.0980 0.0836 0.0948 0.0819 0.0930 0.0786 0.0897 0.0760 0.0871 0.0728 0.0839
Brawley
(North) 135 2,638 0.0766 0.0877 0.0669 0.0780 0.0708 0.0820 0.0613 0.0724 0.0644 0.0755 0.0551 0.0662
Brawley
(East) 129 4,195 0.1110 0.1221 0.1009 0.1121 0.1032 0.1143 0.0932 0.1043 0.0944 0.1055 0.0847 0.0958
Brawley
(South) 62 4,606 0.1309 0.1420 0.1099 0.1210 0.1224 0.1335 0.1017 0.1128 0.1127 0.1239 0.0925 0.1036
Coso 55 3,405 0.0852 0.0963 0.0837 0.0948 0.0785 0.0896 0.0770 0.0881 0.0711 0.0822 0.0697 0.0808
Lake City /
Surprise
Valley 37 3,146 0.0804 0.0915 0.0780 0.0891 0.0741 0.0852 0.0717 0.0828 0.0670 0.0782 0.0648 0.0759
Medicine
Lake
(Fourmile
Hill) 36 2,674 0.1709 0.1820 0.0677 0.0788 0.1641 0.1752 0.0621 0.0732 0.1556 0.1667 0.0558 0.0669
Medicine
Lake
(Telephon
e Flat) 175 2,275 0.0802 0.0913 0.0590 0.0701 0.0749 0.0860 0.0539 0.0650 0.0688 0.0799 0.0482 0.0593
Niland 76 3,249 0.0814 0.0925 0.0803 0.0914 0.0750 0.0861 0.0738 0.0850 0.0678 0.0789 0.0667 0.0778
Randsburg 48 2,615 0.0706 0.0817 0.0664 0.0775 0.0649 0.0760 0.0608 0.0720 0.0587 0.0698 0.0547 0.0658
Salton Sea
(Low) 1400 2,250 0.0621 0.0732 0.0585 0.0696 0.0570 0.0681 0.0534 0.0645 0.0513 0.0624 0.0478 0.0589
Salton Sea
(High) 1400 4,500 0.1112 0.1224 0.1076 0.1187 0.1031 0.1142 0.0995 0.1106 0.0940 0.1051 0.0904 0.1016
Sulphur
Bank
Minimum 43 2,347 0.0626 0.0737 0.0606 0.0717 0.0574 0.0685 0.0554 0.0665 0.0516 0.0627 0.0496 0.0607
Range
Maximum 2,250 0.0473 0.0563 0.0432 0.0522 0.0386 0.0476
Range 4,606 0.0889 0.0979 0.0823 0.0912 0.0748 0.0838
Average 3,177 0.0638 0.0728 0.0588 0.0678 0.0534 0.0623
Technology Binary
Capital Cost
2005 2010 2017
Potential
Geothermal Resource
ment (MW)
Area Base Case PTC No PTC PTC No PTC PTC NO PTC PTC No PTC PTC NO PTC PTC No PTC
Long
Valley - M-
P Leases 71 2,034 0.0594 0.0705 0.0494 0.0605 0.0540 0.0651 0.0443 0.0554 0.0496 0.0608 0.0400 0.0511
Honey
Lake 1.9 2,684 0.1077 0.1188 0.0632 0.0743 0.0984 0.1095 0.0549 0.0660 0.0880 0.0991 0.0449 0.0560
Dunes 11 4,085 0.1005 0.1116 0.0928 0.1039 0.0888 0.0999 0.0812 0.0924 0.0744 0.0855 0.0670 0.0781
East Mesa 74.8 5,141 0.1162 0.1274 0.1151 0.1262 0.1022 0.1133 0.1011 0.1122 0.0847 0.0958 0.0836 0.0947
Glamis 6.4 4,953 0.1640 0.1751 0.1111 0.1222 0.1493 0.1604 0.0976 0.1087 0.1319 0.1430 0.0807 0.0918
Heber 42 2,706 0.0657 0.0768 0.0636 0.0747 0.0572 0.0684 0.0553 0.0664 0.0472 0.0583 0.0453 0.0564
Mount
Signal 19 2,746 0.0734 0.0845 0.0645 0.0756 0.0647 0.0759 0.0560 0.0671 0.0545 0.0656 0.0459 0.0570
Sespe Hot
Springs 5.3 4,112 0.1094 0.1205 0.0934 0.1045 0.0975 0.1086 0.0818 0.0929 0.0830 0.0941 0.0674 0.0785
Superstitio
n Mountain
Minimum 9.5 3,211 0.0785 0.0896 0.0743 0.0854 0.0689 0.0800 0.0648 0.0759 0.0573 0.0684 0.0532 0.0643
Range
Maximum 2,034 0.04 0.049 0.0358 0.0448 0.0324 0.0414
Range 5,141 0.0931 0.1021 0.0818 0.0908 0.0677 0.0767
10
Dry Steam – Results of Economic Analysis
An economic analysis calculated the levelized cost of electricity LCOE for dry steam as-
in service years of 2005, 2010, and 2017 using the economic methodology described in
this report. The cost analysis is estimated at 2004 dollars and is site-specific to The
Geysers area. The simplified model calculates both the current dollars and constant
dollars levelized cost of electricity for dry steam geothermal plant.
Assumptions
The LCOE used in the paper are assumed to be from a project/owner developer
perspective. The dry-steam geothermal resource supply and the electricity generation
systems are integrated, physically connected, and base loaded in application. Table 6
shows the estimated capital costs, operation and maintenance (O&M) costs and
capacity factors. Table 7 shows the other inputs and parameters used in the model.
For as-in service in 2005, the assumed capital cost is $3,725/kW. The size of the dry
steam plant is assumed at 50 MWnet. The capital cost breakdown includes zero
exploration cost, $765/kW confirmation cost, and $2,960/kW site development cost. Site
development cost includes drilling costs for production and injection wells, and the cost
of the power plant and gathering system. Details of exploration, confirmation and
development costs can be found at http://www.energy.ca.gov/reports/500-04-051.PDF.
Capacity factor is assumed at 95 percent and 4 percent per year decrease in well
productivity. Fixed O&M Cost of $82.6/kW-yr (57 percent of this O&M cost from power
plant, 33 percent for field, general O&M rework, 8 percent for make-up wells, and 2
percent for injection wells). Other variable O&M expense is assumed to be at 5 percent
of fixed O&M cost. Royalty cost is assumed at 3 percent of revenue of the sale of
electricity. Wholesale price of electricity was assumed at $.0429/kWh. Accelerated
depreciation (MACRS – 5 yr property) and additional 30 percent depreciation and 10
percent investment tax credit were assumed. Federal tax and state tax rates were
assumed at 34 percent and 6.65 percent, respectively. Property tax rate (and also
insurance) is assumed to be 1 percent of the book value. Financing assumed 2:1 or 67
percent debt ratio, 8.4 percent interest rate on debt, 16 percent cost of equity, and 20
years economic life. General inflation and escalation rates for O&M and other expenses
are assumed at 2.8 percent. Production tax credit (PTC) is available for this project, at
least 5 years at $.018/kWh6. Capacity payments are provided under some contracts by
utilities or generators who can guarantee their facilities will operate with high reliability
during the year, especially during times of peak electricity demand. In the calculation of
LCOE, capacity payments were assumed to be zero.
The projected capital costs and O&M costs for as-in service years of 2010 and 2017 are
shown in Table 6. Capacity factors were assumed to be 95 percent and all other
estimates remain the same as in 2005. Levelized costs of dry steam plants were
calculated with and without PTC and no transmission costs.
11
Table 6: Capital and Operating & Maintenance costs and capacity
factors assumptions for dry steam technology (2004 constant $/kWh).
Technology Dry Stream
Year 2005 2010 2017

Installed Capital Costs ($/kW)
Exploration Costs
Confirmation Costs 765 743 720
Site Development Costs 2960 2874 2787
Total Capital Cost 3,725 3,617 3,507
Operation and Maintenance Costs ($/kW-yr)
Field, General O&M & Rework 27.8 25.0 22.3
Makeup Wells 10.5 9.4 8.4
Relocate Injection Wells 2.3 2.1 1.9
Power Plant O&M 42.0 37.9 33.7
Total Operating Costs 83 74 66
Capacity Factors (%) 95 95 95

Sources: For capital costs see http://www.energy.ca.gov/reports/500-04-051.PDF (New Geothermal Site
Identification and Qualification). For O&M costs see Capacity and Ownership: CAISO, Generation
Facilities Summary 2003-2004 and Navigant assumptions at http://www.energy.ca.gov/reports/2003-11-
24_500-03-080F.PDF
12
Table 7: Economic model base case assumptions for dry steam
Year online: 2005, no Production Tax Credit (PTC)
CAPITAL COSTS and
PERFORMANCE ESCALATION/INFLATION
Capital Cost ($/kW) 3,725 General Inflation (%) 2.80
Net Plant Capacity (kW) 50,000 Escalation--Fuel (%) 0.00
Availability/Capacity Factor 95% Escalation--Other (%) 2.80
Annual Decrease In Well
Productivity 4%
Total Transmission Cost - FINANCE

Annual Production (kWh) 416,100,100 Debt Ratio (%) 67.00
Annual Hours 8,322 Equity Ratio (%) 33.00
Interest Rate On Debt (%) 8.40
Life Of Loan (Y) 20
Cost Of Equity (%) 16.00
Cost of Money (%) 10.91
Total Cost of Plant ($) 186,250,000
EXPENSES Total Equity Cost ($) 61,462,500
Electricity Sales Price (For
Royalty Calculation)
($/Kwh) 0.043 Total Debt Cost ($) 124,787,500
Royalty Rate (% of Capital Recovery Factor
revenue) 4% (Equity) 0.1687
Operations and Capital Recovery Factor
Maintenance ($/kW-yr.) 82.6 (Debt) 0.1049
Variable Cost (% Of Fixed
Cost) 5.0 Annual Equity Recovery ($/y) 10,366,697
Annual Debt Payment ($/y) 13,090,535
Debt Reserve ($) 13,090,535
Annual Debt Reserve Interest
($/y) 916,337
Annual Capacity Payment
($/y) 0
Loan Origination Fee (one
TAXES time) 1%
Federal Tax Rate (%) 34.00
ACRS DEPRECIATION (5 yr
State Tax Rate (%) 6.65 property)
Combined Tax Rate (%) 38.39 Year 1 0.2000
Investment Tax Credit (%) 10% Year 2 0.3200
Production Tax Credit
(0.018 $/kWh) five years) $ 0.0 Year 3 0.1920
Property Tax Rate (%) 1% Year 4 0.1152
Year 5 0.1152
Year 6 0.0576
Total 1.0000
INCOME (other than
energy) Additional depreciation (%) 30%
Capacity Payment ($/kW-y) 0
Interest Rate on Debt
Reserve (%) 7.00
13
Dual Flash - Results of Economic Analysis
Using the economic methodology described in this report, LCOE’s were calculated for
dual flashed-steam for site specific geothermal resource areas such as Brawley (north,
east and south), Niland, Salton Sea, Coso, Sulfur Bank field, Clear Lake, Calistoga,
Lake City, Surprise Valley, Randsburg, and Medicine Lake. The cost analysis was
estimated at 2004$. The simplified model calculates both current dollars and constant
dollar LCOE’s.
Assumptions
The LCOE presented here are assumed to be from a project/owner developer
perspective. The dual flashed-steam geothermal resource supply and the electricity
generation systems are integrated and physically connected and are base load
application. Table 8 shows estimated capital costs, operation and maintenance (O&M)
costs and capacity factors for dual-flash for as-in service years 2005, 2010 and 2017.
The size of the dual flashed steam is assumed at a module of 50 MWnet or whatever is
available in a given resource. As shown in Table 8, capital cost breakdown includes
exploration cost, confirmation cost, and site development cost. Site development cost
includes drilling costs for production and injection wells, and cost of the power plant and
gathering system. Details of the exploration, confirmation and development costs can
be found at http://www.energy.ca.gov/reports/500-04-051.PDF. Capacity factors were
assumed at 90 percent, 91 percent, and 93 percent for as-in service years of 2005,
2010 and 2017, respectively. Four percent per year decrease was assumed in well
productivity. Fixed O&M costs (57 percent of this O&M cost from power plant, 33
percent for field, general O&M rework, 8 percent for make-up wells, and 2 percent for
injection wells) were assumed at $82.6/kW-yr, $74.4/kW-yr, and $66.3/kW-yr for 2005,
2010, and 2017. Variable O&M expense is assumed to be at 5 percent of fixed O&M
cost. Royalty cost is assumed at 3 percent of revenue of the sale of electricity. Average
wholesale price of electricity was assumed at $.0429/kWh. Accelerated depreciation
(MACRS – 5 yr property) and additional 30 percent depreciation and 10percent
investment tax credit were assumed. Federal tax rate and state tax rate were assumed
at 34 percent and 6.65 percent, respectively. Property tax rate (and also insurance) is
assumed to be 1 percent of the book value. Financing assumed 2:1 or 67 percent debt
ratio, 8.4 percent interest rate on debt, 16 percent cost of equity, and 20 years
economic life. General inflation and escalation rates for O&M and other expenses were
assumed at 2.8 percent. Production tax credit (PTC) is available for this project, at least
5 years at $.018/kWh7. Capacity payments are provided under some contracts by
utilities or generators who can guarantee their facilities will operate with high reliability
during the year, especially during times of peak electricity demand. In the calculation of
LCOE, capacity payments were assumed to be zero. Levelized costs of dual flash
steam plants were calculated with and without PTC and no transmission costs.
14
Table 8: Capital cost, O&M cost, capacity factors for dual flash (2004$)
Technology Flash
Lake
Sul-
Braw- City / Med. Med. Rands- Salton Salton
Field/Area Calistoga Brawley Brawley Coso Niland phur
ley Surprise Lake Lake burg Sea Sea
Bank
Valley
South Field- Field- Field-
Brawley
East Brawley wide Fourmil Telepho wide wide Clear
Area/Power Plant Calistoga (North Lake City Niland Randsburg
Brawley (Mesquite Summar e Hill ne Flat summar summar Lake
Brawley)
field) y y y
Potential Development
25 135 129 62 55 37 36 175 76 48 1400 1400 43
(MW)
Year 2005
Exploration Costs 1 1 9
Confirmation Costs 375 107 596 662 541 287 292 139 385 244 130 208
Site Development Costs 3,028 2,531 3,598 3,943 2,864 2,859 2,382 2,136 2,864 2,362 2,120 2,139
Total Capital Cost 3,403 2,638 4,195 4,606 3,405 3,146 2,674 2,275 3,249 2,615 2,250 4,500 2,347
Operation and Maintenance Cost ($/kW-yr)
Field, General O&M and
27 27 27 27 27 27 27 27 27 27 27 27 27
Rework
Makeup Wells 7 7 7 7 7 7 7 7 7 7 7 7 7
Relocation Injection Wells 2 2 2 2 2 2 2 2 2 2 2 2 2
Power Plant O&M 47 47 47 47 47 47 47 47 47 47 47 47 47
Total Operating Costs 83 83 83 83 83 83 83 83 83 83 83 83 83
Capacity Factor (%) 90 90 90 90 90 90 90 90 90 90 90 90 90
Technology Flash
Lake
Sul-
Bank
Valley
Brawley
Brawley)
field) y y y
25 135 129 62 55 37 36 175 76 48 1400 1400 43
(MW)
Year 2010
Exploration Costs 0 0 1 1 0 0 0 0 0 9 0 0 0
Confirmation Costs 364 102 565 628 513 272 277 132 365 231 123 0 197
Site Development Costs 2,940 2,401 3,413 3,741 2,717 2,712 2,260 2,026 2,717 2,241 2,011 0 2,029
24 24 24 24 24 24 24 24 24 24 24 24 24
Rework
Makeup Wells 6 6 6 6 6 6 6 6 6 6 6 6 6
Power Plant O&M 42 42 42 42 42 42 42 42 42 42 42 42 42
Capacity Factor (%) 91 91 91 91 91 91 91 91 91 91 91 91 91
Technology Flash
Lake
Sul-
Bank
Valley
Brawley
Brawley)
field) y y y
25 135 129 62 55 37 36 175 76 48 1400 1400 43
(MW)
Year 2017
Exploration Costs 0 0 1 1 0 0 0 0 0 8 0 0 0
Confirmation Costs 353 96 535 594 486 258 262 125 346 219 117 0 187
Site Development Costs 2,851 2,271 3,229 3,539 2,570 2,566 2,138 1,917 2,570 2,120 1,903 0 1,920
22 22 22 22 22 22 22 22 22 22 22 22 22
Rework
Makeup Wells 6 6 6 6 6 6 6 6 6 6 6 6 6
Power Plant O&M 38 38 38 38 38 38 38 38 38 38 38 38 38
Capacity Factor (%) 93 93 93 93 93 93 93 93 93 93 93 93 93
15
Binary – Results of Economic Analysis
LCOE’s were calculated for binary cycle power plants for site specific geothermal
resource areas such as Dunes, East Mesa, Glamis, Heber, Mount Signal,
Superstition Mountain, Honey Lake, Long Valley, and Sespe Hot Springs. The cost
analysis was estimated at 2004 dollars. The simplified model calculates both the
current dollars and constant dollars LCOE’s.
Assumptions
The LCOE presented here are assumed to be from a project/owner developer
perspective.
The binary power plants, geothermal resource supply, and the electricity generation
systems are integrated and physically connected. Typically, binary plants operate as
base load power. Table 9 shows the estimated capital costs, operation and
maintenance (O&M) costs and capacity factors for dual-flash for as-in service years
2005, 2010 and 2017.
The potential MW of the binary cycles for different resource areas are also shown in
Table 9. As shown in Table 9, capital cost breakdown includes exploration,
confirmation, and site development costs. Site development cost includes drilling costs
for production and injection wells, and the cost of power plant and gathering systems.
Details of these estimated costs can also be found at
http://www.energy.ca.gov/reports/500-04-051.PDF. Capacity factors were assumed at
93 percent, 95 percent, and 96 percent for as-in service years of 2005, 2010 and 2017,
respectively. Four percent per year decrease was assumed in well productivity in all
sites. Fixed O&M costs (57 percent of this O&M cost from power plant, 33 percent for
field, general O&M rework, 8 percent for make-up wells, and 2 percent for injection
wells) were assumed at $72/kW-yr, $64/kW-yr, and $57/kW-yr for 2005, 2010, and
2017, respectively. Variable O&M expense was assumed to be at 5 percent of fixed
O&M cost. Royalty cost was assumed at 3 percent of revenue of the sale of electricity.
Wholesale price of electricity was assumed at $.0429/kWh. Accelerated depreciation
(MACRS – 5 yr property) and additional 30 percent depreciation and 10 percent
investment tax credit were assumed. Federal tax rate and state tax rate were assumed
at 34 percent and 6.65 percent, respectively. Property tax rate (and also insurance) is
assumed to be 1 percent of the book value. Financing assumed 2:1 or 67 percent debt
ratio, 8.4 percent interest rate on debt, 16 percent cost of equity, and 20 years
economic life. General inflation and escalation rates for O&M and other expenses were
assumed at 2.8 percent. Production tax credit (PTC) is available for this project, at least
5 years at $.018/kWh8. No capacity payments were assumed in the calculation.
Levelized costs of binary plants were calculated with and without PTC and exclude
transmission costs.
16
Table 9: Capital cost, O&M cost, capacity factors for binary cycle
(2004 dollars)
Technology Binary
Long Valley
Honey East Mount Sespe Hot Superstition
Field/Area - M-P Dunes Glamis Heber
Lake Mesa Signal Springs Mountain
Leases
Field- Field-
M-P Lease Area-wide Mount Sespe Hot Superstition
Area/Power Plant Dunes wide Glamis wide
Summary Summary Signal Springs Mountain
summary Summary
Potential Development (MW) 71 1.9 11 74.8 6.4 42 19 5.3 9.5
Year 2005
Installed Capital Costs ($/kw)
Exploration Costs 35 76 142 23 178 89
Confirmation Costs 124 458 585 734 656 222 242 493 539
Site Development Costs 1,875 2,226 3,424 4,407 4,155 2,484 2,481 3,441 2,583
Total Capital Cost 2,034 2,684 4,085 5,141 4,953 2,706 2,746 4,112 3,211
Field, General O& M and Rework 24 24 24 24 24 24 24 24 24
Makeup Wells 6 6 6 6 6 6 6 6 6
Relocate Injection Wells 1 1 1 1 1 1 1 1 1
Power Plant O&M 41 41 41 41 41 41 41 41 41
Total Operating Costs 72 72 72 72 72 72 72 72 72
Capacity Factor (%) 93 93 93 93 93 93 93 93 93
Technology Binary
Long Valley
Leases
Field- Field-
summary Summary
Year 2010
Exploration Costs 33 0 69 0 129 0 21 162 81
Field, General O&M and Rework 21 21 21 21 21 21 21 21 21
Makeup Wells 5 5 5 5 5 5 5 5 5
Relocation Injection Wells 1 1 1 1 1 1 1 1 1
Power Plant O&M 37 37 37 37 37 37 37 37 37
Capacity Factor (%) 95 95 95 95 95 95 95 95 95
Technology Binary
Long Valley
Leases
Field- Field-
summary Summary
Year 2017
Exploration Costs 31 0 58 0 109 0 18 137 68
Field, General O&M and Rework 19 19 19 19 19 19 19 19 19
Makeup Wells 5 5 5 5 5 5 5 5 5
Relocation Injection Wells 1 1 1 1 1 1 1 1 1
Power Plant O&M 33 33 33 33 33 33 33 33 33
Capacity Factor (%) 96 96 96 96 96 96 96 96 96

17
Conclusion
The technical opportunity for expansion of geothermal capacity is about 2,955 MW.
With regard to dry steam resources, development at The Geysers should be planned
with more caution. Recent geothermal resource assessment conducted by
GeothermEx at The Geysers (Lake and Sonoma Counties) shows that 400 MW can be
most likely developed. The total proven reservoir at The Geysers is nearly 40 square
miles, as determined by the extensive shallow and deep drilling in the region. For this
area, there is a portion of approximately 10 square miles which has never been
developed for continuous steam supply. This 10 square miles, lying between the Aidlin
project area to the northwest and the areas of units 5-6, 7-8 and 11 to the southeast,
comprises about 25 percent of the 40 square miles total proven area. In addition, about
2 square miles in the northeastern of the field (within the proven reservoir area) remain
untapped at the former Bottle Rock project and the contiguous area to the southeast. In
these areas, a reasonable estimate of average installed capacity is 33 MW per square
mile. Therefore, the unutilized 12 square miles should be able to support about 400
MW under the right economic conditions. This will be eight 50-MW dry steam power
plants.
GeothermEx’s study shows that about 2,178 MW of dual flash systems may be most
likely developed in California now and in the future depending on economic
conditions. The undeveloped geothermal resource areas with no existing power
plants but which have great potential for development using dual-flash system
include; 135 MW in North Brawley, 129 MW in East Brawley, 62 MW in South
Brawley, 76 MW in Niland, 43 MW in Sulfur Bank field, Clear Lake, 25 MW in
Calistoga, 37 MW in Lake City, Surprise Valley, 48 MW in Randsburg, 36 MW in
Fourmile Hill, Medicine Lake, and 175 MW in Telephone Flat, Medicine Lake. High
likelihood of further development for geothermal resource areas with existing dual
flash system includes a potential of 1,400 MW in Salton Sea and 55 MW in Coso.
For binary systems, GeothermEx’s study shows that about 284 MW may most likely
be developed in California. The technical opportunity for binary cycles development
Imperial County is about 163 MW, including: 11 MW in Dunes, 74.8 MW in East
Mesa, 6.4 MW in Glamis, 42 MW in Heber, 19 MW in Mount Signal, and 9.5 MW in
Superstitions Mountain. Technical opportunities for binary cycles can also be
developed at Honey Lake, Lassen County for 1.9 MW, Long Valley, Mono County for
71 MW, and Sespe Hot Springs, Ventura County for 5.3 MW.
Adding New Geothermal Generation to the Grid

As stated in the previous section, economics determine whether new geothermal
power plants can be installed cost competitively. The SVA approach includes
transmission costs in the economic analysis and a locational value analysis. The
locational value analysis evaluates the advantages and disadvantages of new
18
geothermal generation in relation to existing generation, loads and the transmission
grid.
In order to evaluate interaction of the various transmission and power plant additions
on California’s transmission system, a transmission power flow model of the entire
state was created. This was developed by the Davis Consultants (DPC) team. This
team consisted of Davis Power Consultants, PowerWorld and Anthony Engineering.
Briefly, the DPC team collected load flows from PG&E, SCE and SDG&E and
merged the datasets. Several problems were encountered. Since each IOU does not
consider the inter- and intra-state flows of the other IOUs, determining proper power
flows was a problem. Problems also existed with bus numbering and connection
point modeling between control areas. Ultimately, these problems were resolved.
DPC’s next task was to develop the methodology for the locational value analysis.
DPC wanted to develop an approach that could be easily completed and also
allowed for comparison of various power plant locations on an even and unbiased
basis. The goal was to weight site options by their respective benefits to system
reliability.
In running contingency analysis on more than 5,000 transmission lines, transformers

and power plants, a contingency outage could cause more than one transmission
element to become overloaded at one time. Since an element could be overloaded
more than once during the 5,000 contingency outages, a methodology must be
developed that recognizes these multiple occurrences and weights their respective
impacts to the total reliability of the transmission grid.
DPC developed a factor called the Weighted Transmission Loading Relief Factor
(WTLR). This represents a single indicator of the effectiveness of overload mitigation
at each bus. It is the expected contingency megawatt overload reduction if 1 MW of
new generation is injected at that bus. For example, a bus with a WTLR of 4 means
that for every 1 MW of installed generation there will be a corresponding 4 MW
reduction in the contingency overload. Since there are transmission overloads
across transmission lines rated from 69 kV to 500 kV in different utility control areas,
a methodology is needed that compares the transmission benefits of locating power
plants at different locations on an unbiased basis.
In basic terms, the methodology uses the number of violation occurrences, operating
voltage of the element and the average percent overload over all of the occurrences
to calculate the WTLR for each element. All the individual WTLRs added together,
make up the Aggregated Megawatt Contingency Overload (AMWCO).
The result is an independent methodology for prioritizing locations for new power
plants (conventional and renewable). This allows a comparison in the reduction of
the AMWCO for generation located at different WTLR locations. For example, the
AMWCO is 10,000 MW. If there are two plant locations, one at 500 kV with a WTLR
of 2 that reduces the AMWCO down to 9,500 and the second at 115 kV with a
19
WTLR of 4 that reduces the AMWCO to 9,000, then the 115 kV site would be
selected as the priority location.
An AMWCO is an indication of the reliability of the transmission grid. It should not to

be confused with the amount of generation or transmission needed to be added to
the system. Used in combination, the WTLR indicates the effectiveness of installing
new generation at a bus while the AMWCO indicates the overall reduction that the
new generator has on the reliability of the entire system.
Using the California transmission power flow model they developed, DPC selected
the most logical transmission routing (with respect to kV from the geothermal
resources to the nearest hot spots) e.g., metropolitan areas. They calculated the
cost of necessary transmission upgrades (e.g. re-conductoring lines up to new
transmission lines and/or new substations) to bridge the distance from geothermal
resources to hot spots. DPC made some basic assumptions on the size of the power
plant(s) to be installed (typically 50MW) but also depended on the resource potential
at the site. Transmission costs were distributed over the total number of power
plants (e.g. if two 50 MW power plants were installed, the transmission costs were
distributed to the total 100MW). Analyzing these costs, the economic model and the
GIS maps, staff pinpointed which hot spots could be alleviated using geothermal
resources and the amount of MW injection needed for the years indicated.
DPC developed generic transmission and substation costs for various transmission
voltages (Table 11). These costs were developed for a double circuit tower with only
one transmission line under its initial construction. A second line would increase the
projected cost by 25 percent. The transmission costs include the costs for
connecting the new line(s) at its respective interconnection point (Table 10). No
attempt was made at this level of analysis to adjust the transmission costs for
terrain, right-of-way acquisition, or specific conductor size. If the total economics of
the power plant are competitive to market prices while lowering the Aggregated
Megawatt Contingency Overload (AMWCO), then a more extensive transmission
planning analysis must be undertaken. A negative AMWCO impact with a negative
Impact Ratio indicates that the AMWCO decreases (reliability improves) with the
new generator addition and provides a benefit to the overall reliability of the system.
A positive AMWCO with a positive Impact Ratio worsens the reliability of the system.
Table 10: Projected Cost Components for Transmission Lines

(2003 Dollars per Mile)
Line Voltage (kV) Single Circuit Double Circuit

60-69 $375,000 $468,750
115-138 $800,000 $1,000,000
230-345 $1,700,000 $2,125,000
500-765 $3,300,000 $4,125,000
Source: California Energy Commission Consultant Report written by Davis Power Consultant under contract 500-00-031.
20
Table 11: Projected Substation Costs (2003 Dollars per MVA)
Substation (kV) Substation Costs

60/115 $27,500
115/230 $14,000
230/500 $13,600
Economic and Location Analysis of Geothermal Sites

Twenty specific geothermal sites were selected for evaluation. The megawatts
reflect results from GeothermEx’s study described previously. Some of these sites
are an expansion of existing geothermal fields while others are new locations which
have not been developed to date.
The analysis was completed for 2010 and 2017. For small power plant
developments the power flow analysis used the year 2010. This was selected since
it provides a better format from which to develop lead times for step increases in unit
additions. For large power plant developments, the power flow analysis used the
year 2017 since transmission lead times will probably delay commercial operation
after 2010.
Analysis of the renewable energy technologies was divided into technology groups.
The base-loaded renewables are generators that will have annual average capacity
factors of 85 percent or higher. Geothermal technologies were evaluated first and
the best locations selected that have both economic and locational value. Some
sites may be economical but have little or no value in improving reliability of the
overall system. Since the objective of the study is to locate new renewable
technologies at locations that provide reliability improvements, some economical
sites may not be selected. Furthermore, there may be sites that could provide
reliability benefits but have excessive economic costs that eliminated the project
from further development until economic factors are not as important.
CDF provided maps of the general location of the geothermal fields and a table
showing the closest transmission substation to the field. CDF made an attempt to
circle a ten mile area around the field so that new power plants could be located
easier.
Since the type of terrain on which new transmission lines would be constructed is
unknown, as well as the exact size and configuration of existing substations, general
transmission line and substation costs were developed. As more detailed information
is known regarding the terrain and the line configurations, these costs should be
updated. For now, these generic costs are useful in comparing alternatives and
prioritizing site development. In all of the analysis completed, the configuration of the
21
substations was not considered. There was not any review of the physical
configuration of substations as to bus or land space availability.
Out of the 2,955 MW of geothermal sites studied in 2010, 895 MW were eliminated
due to high LCOE or positive impact ratios. Table 12 lists the transmission impact
ratios. As stated previously, negative impact ratios indicate a reliability benefit to the
grid. A positive impact ratio means a detriment to the grid.
Table 12: Geothermal Resource’s Transmission Impact Ratios

2010 LCOE w/PTC &
Geothermal Trans. Costs
Trans. Impact Ratio Trans. Costs
Resource Million$
(cents/kWh)
Salton Sea $233 -0.6 5.70
Dunes $4 -4.2 8.88
Glamis $16 -1.02 14.93
Superstition Mountain $1.9 -15.83 6.89
Heber $4 -4.55 5.72
Niland $4 -3.97 7.50
Mount Signal $8 -4.5 6.47
Long Valley Mono County $33.4 0.64 4.37
Coso Hot Spring Inyo County $53.1 5.17 7.85
Randsburg $9.1 5.35 6.49
Brawley $59.5 -4.42 9.17
Medicine Lake Siskiyou County $170 -0.48 7.49
Geysers Sonoma County $53.2 -2.23 8.16
Lake County Geysers and Sulfur Bank Field $55.9 -2.91 5.74
Calistoga Napa County $3.8 -1 8.19
Honey Lake $3.8 0.375 9.84
Lake City/Surprise Valley Modoc County $4 -1.05 7.41
East Mesa $4 -5.6 10.22
Total $679.5
The analysis identifies the resource area and the maximum amount of MW that can
be developed to provide the regional/bulk power to areas with generation needs,
economically within reach of the geothermal resources, for the target years. For
resources with technical potential greater than 50 MW, staff assumed that
transmission costs are equally distributed over the entire resource potential capacity
instead of, say, the first 50 MW developed. During the transmission modeling,
developing certain resources was found to have a detrimental impact on grid
reliability i.e. Honey Lake, Coso Hot Springs, Long Valley, Randsburg and Sespe
Hot Springs. In addition, despite a high AMWCO benefit, the Dunes, Glamis, and
Superstition Mountain sites have small potential.
Geothermal SVA Results

Staff compared the estimated LCOE of the selected resource areas to the LCOE of
combined cycle natural gas forecast9, E3-CPUC8 forecast, and the Energy
Commission’s 2003 wholesale price forecast10 to obtain the economic potential for
geothermal. The following summary tables show the LCOE values for 2010 and
2017 for the combined cycle natural gas, the E3-CPUC, and Energy Commission
forecasts. It also includes the CPUC market price referent11. The economic potential
22
was further reduced by eliminating resource areas with a detrimental impact ratio if
developed and connected to the grid.
Table 13: Summary Tables
Constant Dollars ($/kWh)

Wholesale Price Wholesale Price LCOE
CEC 2003 E3-CPUC* Combined Market Price
Year forecast Forecast Cycle* Reference
2005 $0.0316 $0.0605

2006 $0.0674 $0.0693 $0.0605
2010 $0.0426 $0.0630 $0.0742 $0.0605
2017 $0.0587 $0.0716 $0.0915 $0.0605
Source: California Energy Commission, CPUC, Energy and Environmental Economics.
* The analysis for the E3-CPUC and Combined Cycle LCOE was completed by
Energy and Environmental Economics, Inc. (E3), and is consistent with the
methodology and inputs adopted for the California Public Utilities Commission
Avoided Cost proceeding in Rulemaking 04-04-025, April 7, 2005. Details of the
methodology and input assumptions can be found on the E3 website at
http://www.ethree.com/cpuc_avoidedcosts.html.
2004 Constant Dollars

($kWh)
LCOE Combined
Year Cycle
2005
2006 0.06563
2010 0.06286
2017 0.06392
Source: Energy and Environmental Economics
In summary, the analysis conducted by Energy Commission staff, in conjunction with

DPC, McNeil Technologies and CDF, resulted in the following estimated economic
potential for geothermal using current dollars:
• 1802 MW by 2010, 2638 MW by 2017 (combined cycle comparison)
• 1485 MW by 2010, 1783 MW by 2017 (E3 comparison)
• 0 MW by 2010, 1485 MW by 2017 (wholesale electricity price comparison)
• 1485 MW by 2010, 1513 MW by 2017 (MPR comparison)
Tables 14, 15, 16 and 17 have the breakdown by geothermal resource areas.
Using strategic value analysis methodology, an additional 1485 to 2638 MW can be
economically developed by 2017 depending upon what price forecast the calculated
LCOEs use for comparison.
23
Table 14: LCOE Compared To Combined Cycle
Current, PTC,w/trs Const, PTC, w/trs

2010 2017 2010 2017
Known Geothermal Technical
Resource Area County MW MW ¢/kWh MW ¢/kWh MW ¢/kWh MW ¢/kWh
Brawley (sum of
Brawley, East
Brawley, and South
Brawley Imperial 326.0 326.0 8.35 326.0 6.76
Dunes Imperial 11.0 11.0 7.44 11.0 6.02
East Mesa Imperial 74.8 74.8 8.47 74.8 6.86
Glamis Imperial 6.4
Heber Imperial 42.0 42.0 5.72 42.0 4.72 42.0 4.63 42.0 3.82
Mount Signal Imperial 19.0 19.0 6.47 19.0 5.45 19.0 5.24 19.0 4.41
Niland Imperial 76.0 76.0 7.50 76.0 6.78 76.0 6.07 76.0 5.49
Salton Sea (including
Westmoreland) Imperial 1400.0 1400.0 5.70 1400.0 5.13 1400.0 4.61 1400.0 4.15
Superstition
Mountain Imperial 9.5 9.5 6.89 9.5 5.73 9.5 5.57 9.5 4.63
Imperial Total: 1964.7 1546.5 1958.3 1546.5 1958.3
Calistoga Napa 25.0 25.0 7.60 25.0 6.15

Geysers [Lake and Lake &
Sonoma] Sonoma 400.0 400.0 7.76 400.0 6.28
Sulfur Bank Field,
Clear Lake Area Lake 43.0 43.0 5.74 43.0 5.16 43.0 4.64 43.0 4.17
The Geysers
Total: 425.0 43.0 468.0 43.0 468.0
Lake City/ Surprise

Valley Modoc 37.0 37.0 7.41 37.0 6.70 37.0 5.99 37.0 5.42
Medicine Lake
(Fieldwide including
Fourmile Hill and
Telephone Flat) Siskiyou 304.0 175.0 7.49 175.0 6.88 175.0 6.06 175.0 5.56
Total: 2857.0 1801.5 2638.3 1801.5 2638.3

24
Table 15: LCOE Compared to E3
Current, PTC,w/trs
2010 2017
Known Geothermal Resource Technical
Area County MW MW ¢/kWh MW ¢/kWh
Brawley (sum of Brawley, East
Brawley, and South Brawley Imperial 326.0
Dunes Imperial 11.0
East Mesa Imperial 74.8
Glamis Imperial 6.4
Heber Imperial 42.0 42.0 5.72 42.0 4.72
Mount Signal Imperial 19.0
Niland Imperial 76.0 76.0 6.78
Westmoreland) Imperial 1400.0 1400.0 5.70 1400.0 5.13
Superstition Mountain Imperial 9.5 9.5 5.73
Imperial Total: 1964.7 1442.0 1527.5
Calistoga Napa 25.0

Geysers [Lake and Sonoma] Lake & Sonoma 400.0
Sulfur Bank Field, Clear Lake Area Lake 43.0 43.0 5.74 43.0 5.16
The Geysers
Total: 425.0 43.0 43.0
Lake City/ Surprise Valley Modoc 37.0 37.0 6.70

Medicine Lake Caldera (includes
Fourmile Hill and Telephone Flat) Siskiyou 304.0
Fourmile Hill separately Siskiyou 36.0
Telephone Flat separately Siskiyou 175.0 175.0 6.88
Total: 3068.0 1485.0 1782.5

25
Table 16: LCOE Compared to Wholesale Price (2003)
Current, PTC,w/trs
2010 2017
Resource Area County MW MW ¢/kWh MW ¢/kWh
Brawley (sum of Brawley,
East Brawley, and South
Brawley 326.0
Dunes Imperial 11.0
East Mesa Imperial 74.8
Glamis Imperial 6.4
Heber Imperial 42.0 42.0 4.72
Mount Signal Imperial 19.0
Niland Imperial 76.0
Westmoreland) Imperial 1400.0 1400.0 5.13
Superstition Mountain Imperial 9.5
Imperial Total: 1964.7 0.0 1442.0
Calistoga Napa 25.0

Geysers [Lake and
Sonoma] Lake & Sonoma 400.0
Sulfur Bank Field, Clear
Lake Area Lake 43.0 43.0 5.73
2010 0.0 43.0
Lake City/ Surprise Valley Modoc 37.0

Medicine Lake (includes
Fourmile Hill and
Telephone Flat) Siskiyou 304.0
Total: 2432.0 0.0 1485.0

26
Table 17: LCOE Compared to MPR
Current, PTC,w/trs
2010 2017
Resource Area County MW MW ¢/kWh MW ¢/kWh
Brawley (sum of Brawley,
East Brawley, and South
Brawley Imperial 326.0 . .
Dunes Imperial 11.0 . .
East Mesa Imperial 74.8 . .
Glamis Imperial 6.4
Heber Imperial 42.0 42.0 5.72 42.0 4.72
Mount Signal Imperial 19.0 . . 19.0 5.45
Niland Imperial 76.0 . . . .
Westmoreland) Imperial 1400.0 1400.0 5.70 1400.0 5.13
Superstition Mountain Imperial 9.5 . . 9.5 5.73
Imperial Total: 1964.7 1442.0 1470.5
Coso Hot Springs Inyo 55.0 . .
Calistoga Napa 25.0 .

Geysers [Lake and
Sonoma] Lake & Sonoma 400.0 .
Sulfur Bank Field, Clear
Lake Area Lake 43.0 43.0 5.74 43.0 5.16
The Geysers
Total: 425.0 43.0 43.0
Honey Lake (Wendel-

Amedee) Lassen 2.0 .
Lake City/ Surprise Valley Modoc 37.0 .
Long Valley (mono- Long
Valley) Mammoth Pacific
Plants Mono 71.0 .
Medicine Lake (sum of
Fourmile Hill and
Telephone Flat) Siskiyou 304.0 .
San Bernardino/
Randsburg Kern 48.0 .
Sespe Hot Springs Ventura 5.3 .
Total: 2857.0 1485.0 1513.5

27
Out-of-State Prospects
Several adjoining states within the Western Electricity Coordinating Council (WECC)
have both considerable geothermal potential and an installed base of current
capacity. Nevada's geothermal resources presently support twelve electric power
plants at ten sites representing approximately 238 MW of electricity capacity (gross).
A current study funded by the California Energy Commission PIER Program
suggests that Nevada has approximately 2,400MW of technical potential. Indeed, in
Nevada’s Greater Reno area alone, there is an estimated 1,025MW of technical
potential. Utah has 40MW of installed geothermal capacity while Oregon has the
technical potential for approximately 2,000MW. In all, there are approximately
7,000MW of potential geothermal capacity in the WECC states.
Table 18 Technical Geothermal Potential, WECC States12

State MW GWh/yr %
AZ 601 5,000 8%
ID 601 5,000 8%
NM 360 3,000 5%
NV 2,403 20,000 34%
OR 2,043 17,000 29%
UT 1,081 9,000 15%
Total 7,090 59,000
Barriers to Geothermal Development
Technical
High Temperature: Practically all components of any hardware system – materials,
electronics, mechanical seals, or sensors – are more expensive and more likely to
fail when operated at high temperature. Although technology is available to solve
some of these problems, the difficulty in designing geothermal equipment is not
linear with increasing temperature because there are threshold temperatures for
electronics, batteries, seals, and some sensors; these thresholds are below the
limits needed for many geothermal resources.
Hard Rock: Drilling hard rock presents a much more challenging environment for
almost all geothermal drilling components. The immediate effects are significantly
higher forces, impact loads, and vibration levels. Characteristic rock properties also
lead to greater wear (geothermal formations often have very high quartz content)
and more time spent penetrating in a given interval.
28
Fractured Rock: The fractured, unhomogeneous nature of geothermal formations
requires Wellbore Integrity (WI) technologies to keep the wellbore open, both during
drilling (plugging lost-circulation zones and preventing borehole collapse) and after
drilling (improved casing cements). WI technologies have been borrowed from other
drilling environments – oil and gas, civil engineering, environmental remediation –
but these technologies must be upgraded and validated for high temperatures.
For geothermal development, technical challenges to the increased utilization of
geothermal resources encompass four distinct aspects of geothermal technology: (1)
resource exploration, (2) resource development and completion, (3) drilling, and (4)
power generation technology.
Resource Exploration: Improved geophysical methods will lead to a substantial
reduction in the number of exploratory and production wells that need to be drilled,
thereby dramatically affecting production costs. Improvement will be achieved
through increased knowledge of local geology, in large measure gleaned from cross-
comparisons to other geothermal fields, but also as a result of more accurate
temperature gradient holes. Advances in computer simulation (i.e., fracture
mapping) of reservoirs will foster greater accuracy in the identification of large water-
filled fractures, thereby reducing risk associated with wildcatting. Further, improved
sensors will provide for more accurate and timely information on long-term
production processes.
Resource Development: There is a generally limited ability to modify subsurface
conditions in order to create sufficient heat flow to recover large amounts of energy.
This is a result of the depth from which the energy must be recovered, the relatively
low conductivity of rock, and the technical difficulty of engineering satisfactory flow
paths in the remote environment.
Drilling. Geothermal drilling is generally conducted in a more hostile environment
than wells drilled to a similar depth for oil or gas. Consequently, geothermal well
costs are higher than comparable oil and gas wells. Drilling cost reductions are
largely a function of the “spill over” from the oil and gas industry. Geothermal well
costs should be reduced over the next decade with introduction of advanced drilling
technologies (i.e., improved diamond compact bits and mud circulation control),
particularly for deep wells as the relative cost of shallow wells will be less impacted.
Furthermore, an additional challenge to the drilling industry will be the changing
nature of geothermal reservoirs. A majority of today's geothermal industry believes
that the easily accessible resources have already been developed, and that further
expansion of the resource base will require deeper drilling as well as engineered
reservoir technologies (directional drilling, hydraulic fracturing, fracture mapping,
"smart" downhole production technologies, etc.).
Power Generation Technology: Geothermal energy conversion plants face
challenges either unique to or exacerbated by the nature of the geothermal fluids
and the location of the plants, such as:
• Brine chemistry requires special attention to prevention of fouling, often with
inclusion of hazardous materials within the precipitated material. This can
29
also can be viewed as an opportunity to convert dissolved minerals and
metals into valuable by-products to provide an additional revenue stream for
the plant.
• Materials of construction can be a challenge because of the corrosive nature
of geothermal brines and some of the dissolved materials within a geothermal
plant. Enhanced materials are required for cost-effectiveness.
• Cycle efficiency is lower for a geothermal plant than for a fossil fuel plant
because the brine extracted from the earth is lower in temperature than the
heat source for a fossil fueled plant or a nuclear powered plant. Because of
this lower cycle efficiency and the costs associated with fluid delivery and
disposal, maximizing use of the energy extracted from the geothermal fluid is
an important factor in establishing economic viability. Geothermal power
plants can benefit greatly from better conversion cycles, components, and
operating schemes.
• Heat rejection in a geothermal plant is often a challenge because of the lack
of water for cooling, necessitating air-cooling for the plant. Geothermal power
plants reject a large amount of heat (about ten times the amount of power
generated). This makes a geothermal power plant much more sensitive to the
ambient temperature for heat rejection. As a result, the requirement for
sensible heat rejection will produce a significant decline in plant output when
the ambient temperature becomes elevated, thus enhancing heat rejection or
reducing the “sink” temperature.
• Plant size is usually modest for a geothermal plant (typically 30 to 50 MW),
necessitating automatic control of plants to minimize operating expense.
Plants must be designed for robust operation across a variety of time
dependent conditions, reflecting factors such as a decline in reservoir
temperature or pressure. It is necessary to minimize operating and
maintenance costs via optimized operation.
Incremental improvements in turbines produced for all generation technologies will
help reduce costs for geothermal plants. Higher temperature flash systems will not
likely experience a large decrease in cost since the technology is reasonably
mature. However, binary systems should experience cost reductions associated with
improvement in working fluids, more efficient energy conversion with the adoption of
“topping” and “bottoming” cycles, and improvement in computer-assisted
instrumentation and controls.
Environmental
Air Pollution: Similar to vapor dominated systems, flashed steam plants use
evaporative cooling. The sources, types and effects of emissions from flashed steam
plants and the abatement technology are nearly identical to those for dry steam
plants. Hydrogen sulfide (H2S) concentrations in liquid-dominated geothermal
reservoirs appear to be lower than those found at The Geysers. It is unlikely that
30
H2S impact or abatement costs will significantly constrain electrical development in
these resource areas. The power plants at Coso Hot Springs are designed to abate
100 percent of H2S emissions. These include hydrogen sulfide (H2S), particulates
and sulfates. Others are non-criteria pollutants which have potential health effects,
but for which no AAQS have been established. These include arsenic, ammonia,
benzene, boron, mercury, radon 222, silica, and vanadium. Emissions of
noncondensable gases from the geothermal steam, particularly H2S, can be
controlled by external abatement systems that "scrub" the steam before it enters the
turbine as well as the condensate when it exits the turbine and before it enters the
cooling towers. Hydrogen sulfide is ultimately converted to sulfate particulates and
sulfuric acid in the atmosphere. Thus, H2S has immediate local impacts, and
potential regional effects.
Injecting hydrogen peroxide into the vented system controls emissions of H2S during
drilling operations. Steamfield operations also result in H2S emissions when the
power plant is shut down and steam is vented to the atmosphere. H2S emissions
from stacking are controlled by using automatic well throttle controls and interties
between units or with a turbine bypass, which channels steam around the turbine to
the condenser and subsequent abatement systems.
In addition, the evaporative cooling systems typical at The Geysers release
chemicals which have been added to the condensate to reduce corrosion, scaling,
and the growth of algae and bacteria. These compounds, which include chromates,
chlorine, and acids, may potentially cause significant public health impacts. Other
gases emitted from geothermal systems include benzene, mercury, radon,
ammonia, and boron.
The design for power plants at the various reservoirs will need to address the
potential conflicts between water availability and emissions. Depending on the
quality of cooling water used, other emission problems may be encountered. The
agricultural wastewater used in plants in the Imperial Valley contains herbicides,
pesticides, fertilizers, salts, and other agricultural chemicals. These chemicals are
likely to be in cooling tower emissions and deposited on surrounding land. Whether
or not cooling tower drift could be a serious problem is not known at this time.
Waste Disposal: Substantial volumes of waste are generated during all phases of
geothermal resource development, power plant construction and operation. Toxic
wastes are generated from the operation of air pollution abatement systems. The
disposed toxic residue from the H2S abatement process was minimized at the
Imperial Valley resource. All hazardous waste must be disposed of in Class I Waste
Management Units, and designated wastes can be disposed of in either Class I or II
waste sites.
Waste is also produced during drilling; these wastes include drilling mud, rock
cuttings, drilling mud additives, lost circulation materials, cement, H2S abatement
chemicals, and oily residues. In addition, the sludge deposited in cooling towers and
produced from water treatment is contaminated with lead, zinc, arsenic, mercury,
and other compounds. These wastes must be treated as hazardous.
31
Water Pollution: Water quality issues include potential contamination of surface
water and groundwater from extraction and reinjection wells, and possible
consumption of surface water resources to recharge the geothermal reservoir. Most
high temperature geothermal waters are saline and contain toxic trace contaminants
such as boron, arsenic, mercury, ammonia, and lead. These fluids also contain iron
and manganese, which produce acidity.
Construction of roads, well pads, and power plants can accelerate erosion, which
increases stream turbidity and sediment deposition. Soil losses from disturbed areas
have been estimated at 20 times predisturbance erosion rates, although
revegetation and site stabilization decrease long-term erosion rates. In addition,
spills from power plant and field operations have been a source of stream water
quality degradation. However, recent changes in plant operation practices and
controls, combined with a reduction in the quantity of transported hazardous
materials, have reduced the number of spills.
Noise Pollution: Noise limits and requirements to use the best available control
technology (BACT) for noise abatement are generally dictated by the local county
through use permits. Generally, as geothermal development moves closer to
sensitive receptors, the required performance levels and costs of BACT will increase
proportionately. High frequency noise emissions as a result of drilling may be a
factor. Noise levels from different activities can range from 75 to 120 decibels, 50
feet from the source.
Destruction / Disturbance of Habitat: Most of the habitat loss is attributable to the
construction of roads, wellpads, and steam lines. Surface erosion, ground water
siltation, and habitat disturbance may result from resource development. Like other
large-scale engineering projects, geothermal field development results in disruption
of land surfaces and ecosystems, increased erosion, and dust generation. Common
land disruptions occur from the grading and construction of roads and geothermal
plant sites. The severity of these impacts depends upon the project's scale, its
location, and mitigating measures taken. A primary effect on land is the area
required for exploration and facility siting. While energy production may require only
about 20 to 100 acres, the exploration drilling, construction, and operation together
require from 500 to 3,000 acres.
The potential for such alteration to conflict with natural scenic qualities is increased
by engineering and economic factors that often argue for the siting of geothermal
facilities at visually prominent locations (e.g., ridgelines). Methods available for
reducing these conflicts include minimizing cuts and fill, contouring with natural
topography, clustering wells on single well pads, routing pipelines along roads,
painting facilities natural colors, and using vegetation for screening.
Land Subsidence: The withdrawal of large quantities of underground water can
cause ground subsidence. This disruption can cause tilting and stressing of pipelines
and surface structures. Land subsidence can occur on extensively irrigated and
drained farm land. Reinjection of water into the ground, or reinjection of geothermal
fluids, can counter this problem. Less subsidence is expected with harder reservoir
rock.
32
Subsidence of the ground surface has been observed at several areas where
extraction of geothermal fluids has caused the subsurface reservoir to contract. The
resource area most sensitive to subsidence is the Imperial Valley where the
extensive irrigation and wastewater drainage agricultural development could be
adversely affected by subsidence. Imperial County has a policy requiring 100
percent injection of the fluids withdrawn from a geothermal reservoir, but permits
most power plants with an injection requirement of 80 percent or more.
Lack of Suitable Sites: Due to the mountainous terrain of The Geysers area and
the need to site power plants relatively close to steam resources, there is a growing
shortage of suitable sites for large central plants. Preferred sites have historically
been on ridgetops where solid bedrock can provide a strong foundation. Ridgetops,
however, can pose visual, erosion, and sedimentation problems. As development
moves to less preferred sites, the costs to mitigate these problems will increase.
Additional suitable sites exist for smaller modular plants. As the required space
decreases, the availability of sites increases. The cost of required mitigation
measures decreases.
Availability of Water: Surface and groundwater is very limited in Lake and Sonoma
counties. Geothermal developers must compete not only with commercial and
agricultural interests but also, in the case of Lake County, with neighboring
jurisdictions with rights to surface and groundwater. Current power plant design uses
condensed steam as cooling water. Most is lost through evaporation and only 15 to
20 percent is injected back into the aquifer. This has resulted in reservoir pressure
drops at some sites.
At The Geysers, production declines could be substantially improved by injection of
water from external sources. However, during a multi-year drought, competition with
rural farms and urban residences for water led to shut-in capacity rather than
recharging of the aquifer. Use of treated sewage effluent has supplied needed
recharge via the Santa Rosa and the Southeast Geysers Pipeline projects.
Institutional
Environmental Impact Statement and Permitting / Leasing: Significant facility
siting issues are impeding development of geothermal energy resources throughout
the United States. The entire process, from site exploration through plant operation
could take more than a decade with permitting processes accounting for a large
fraction of the time. In particular, the environmental impact statement (EIS) may take
over two years, while permitting and leasing can take even longer. It is not unusual
for firms to redo EIS work because information has become out of date during the
entire process.
Several federal and state agencies are prominent in the geothermal siting process,
including the U.S. Department of the Interior (U.S. Bureau of Land Management,
Fish and Wildlife Service and the Bureau of Indian Affairs), U.S. Department of
Agriculture (U.S. Forest Service), and in California the California Energy
Commission (which sites all facilities >= 50MW including those on Federal lands).
33
The diversity of decision makers leads to a long process in which conflicting goals
may be encountered.
Further, compliance with Section 106 of the Historic Preservation Act is often cited
as a time-consuming process.13 Of particular significance in California, Section 106
concerns were instrumental in the recent efforts by Calpine to develop the resource
at Telephone Flat. Recognition of the Medicine Lake Area Traditional Cultural Places
District was responsible for relocation of transmission lines and new road
construction to minimize impact.
Low End User Awareness for New Technologies (i.e. Kalina Cycle, Hybrid air
cooled and water cooled condensers): These machines are radically different
than steam or vapor turbines normally used to generate electrical power from
geothermal sources. They are maintained and operated differently, and operators
and developers may be resistant to adopting this technology.
Environmental Benefits: Few studies have tried to assign value to geothermal
energy externalities (e.g., benefits/costs of environmental impacts). Lack of a solid
connection between the siting process and the federal commitment to renewable
energy and global warming initiatives is stark and hinders effective policy execution.
Literature addressing the environmental costs and benefits is scarce.
Local Populace Reactions (NIMBY): Geothermal development is affected by many
of the same issues surrounding the siting and operation of other industrialized
facilities that utilize natural resources, including
• Conflict with local beliefs or traditions, such as Hawaii and Glass Mountain
(Pumice Mine and Telephone Flat), may affect development. This is
particularly true for sites with Historic Preservation Act designation.
• Geothermal sites are often located in remote areas, necessitating
construction of new roads and transmission lines. Development on
environmentally sensitive or undisturbed lands is increasingly difficult and/or
expensive.
• Drilling noise may require sound abatement equipment or restrict hours of
operation.
• Gases released may require pretreatment.
Regulation: (a) Reform of the Public Utility Company Act (PUHCA) may afford
additional opportunities.
(b) National park areas contain unavailable resources, which limits development of
geothermal power.
(c) Regulatory movement toward least-cost planning, with inclusion of benefits
(externalities), could encourage development.
34
Economics
Three major cost components characterize geothermal development: (1) resource
exploration, (2) wellfield development including NEPA siting process, and (3) power
generation equipment. Existing facilities at the Geysers are among the least
expensive base load facilities. Future installations will utilize less favorable
resources and will be incur commensurately higher capital and operating costs
relative to the Geysers. Because the fuel costs are essentially zero, new installations
are particularly sensitive to finance rates.
Over the past several years, interest in smaller-scale geothermal installations has
increased. There are at least two commercial firms producing small-scale units,
Ormat and Exergy. NREL is cost-sharing the design and construction of several
small (up to 1 MW) installations.14 These facilities represent a variety of power
generation technologies including binary-cycle, Kalina-cycle, and flash installations.
Furthermore, many of the installations plan to use the by-product warm waters for
direct use applications. Projected installed costs range from $2,600 to $3,400/kW.
The projected cost of energy for the facilities ranges from $0.06 - $0.09/kWh.
Benefits of Geothermal Resources Development

In addition to cost benefits of strategically building geothermal power plants to serve
transmission hot spots, there are air quality and employment benefits that can be
quantified assuming the MW injection provided in the previous section.
Environmental
Cleaner Air and Reduced Greenhouse Gas Emissions: Unlike conventional
power plants, geothermal power plants emit benign levels of air pollutants.
Geothermal power plants exceed stringent clean air standards because no nitrogen
oxides are emitted and very low amounts of sulfur dioxide are released. In
comparison to fossil fuel plants, geothermal facilities emit minimal amounts of
carbon dioxide, 1/1000 to 1/2000 of what is produced by fossil-fuel plants. Other
gases released may include hydrogen sulfide, which are in such low concentrations
that it requires no special controls to comply with strict state and Federal limits.
Typical emissions of hydrogen sulfide from geothermal plants are less than 1 part
per billion.
Reduced Land Use: With respect to land use, geothermal facilities require less land
in comparison to coal and nuclear plants. This advantage is especially notable when
compared to mining operations. A typical geothermal plant requires several wells.
Directional or slant drilling can minimize land impacts. This allows for multiple wells
to be drilled from one drilling pad, minimizing the amount of land needed for access
35
roads, geothermal fluid piping, and construction. The technology is relatively
expensive compared to routine vertical drilling.
Air Quality: Geothermal power plants have less emission compared to fossil power
plants.
Table 19: Projected Avoided Emissions
Year 2003 2005 2007 2010 2017

Capacity (MW) 1,953 1,953 1,953 1,953 1,953
Capacity Factor 86% 86% 86% 86% 86%
Percent of Peak Load 3.8% 3.8% 3.7% 3.5% 3.5%
Generation (GWh) 14,723 14,723 14,723 14,723 14,723
Percent of Generation 5.1% 5.0% 4.9% 4.6% 4.6%
Employment (#) 3,821 3,261 3,261 3,261 3,261
Avoided Emissions
CO2 (Tonne/day) 27,269 27,269 27,269 27,269 27,269
NOx (Tonne/day) 8.70 8.70 8.70 8.70 8.70
SOx (Tonne/day) 0.58 0.58 0.58 0.58 0.58
CO (Tonne/day) 7.73 7.73 7.73 7.73 7.73
TOG (Tonne/day) 5.71 5.71 5.71 5.71 5.71
ROG (Tonne/day) 0.92 0.92 0.92 0.92 0.92
PM (Tonne/day) 1.02 1.02 1.02 1.02 1.02
PM10 (Tonne/day) 0.92 0.92 0.92 0.92 0.92
Source: California Energy Commission report “California Renewable Technology Market and Benefits Assessment,” November
2001, G. Simons.
Economy
Job Creation: California’s geothermal industry has provided economic and
employment benefits. Over the last forty years over $5 billion has been invested in
constructing geothermal electrical facilities in California. This expenditure has
supported over $15 billion in Gross State Product, $4.5 billion in payroll, $1 billion in
state taxes, and well over 100,000 jobs. Geothermal energy provides valuable
supplies of electricity to the electrical system grid in capacity-strained areas, and has
deferred the need for the construction of new and expensive transmission and
distribution upgrades. For many communities geothermal power facilities create
jobs, generate income and support economic development.
Stable Energy Prices: By investing in geothermal energy development, California

can economically benefit from a homegrown industry that can both provide clean
electricity to California as well as exporting power and technology to other regions.
Geothermal power plants consume no fossil fuels; therefore most of the cost of
geothermal generation is known when the systems are installed. Geothermal power
36
plants maintain predictable annual operating costs, since they are not subject to the
risks of fuel price fluctuations as are plants fired by fossil fuels.
Table 20: Finance Costs
Category Units Value
EXPENSES
Royalty Rate % of annual revenue 3%
Avg. wholesale electricity price $/kWh $ 0.0429
TAXES
Federal Tax Rate % 34.00
State Tax Rate % 6.50
Combined Tax Rate % 38.29
Investment Tax Credit % 10%
Production Tax Credit (five years) $/kWh $ 0.0180
Property Tax Rate % 2%
ESCALATION/INFLATION
General Inflation % 2.80
Escalation--Fuel % 5.00
Escalation--Other % 2.80
FINANCE
Debt ratio % 66.67
Equity ratio % 33.33
Interest Rate on Debt % 9.00
Life of Loan Years 20
Cost of equity % 18.00
Cost of Money % 12.00
Debt Reserve $ one year
ACRS DEPRECIATION Years 6
Projected Economic Impacts: Forecasts for additional geothermal capacity

installations in 2010 and 2017 have associated economic impacts. As presented in
Table 11, increases in employment and taxes are projected to be on the order of
5,000 new jobs and almost $60 million in tax revenues.
Table 11: Projected Economic Impacts Associated with Geothermal

Development
Category 2010 2017 Total
Employment (#) 944 4,084 5,029
Taxes ($Million) $ 11.0 $ 47.4 $ 58.4
Emis. Ben. ($Million) $ 27.2 $ 123.1 $ 150.3
Total Benefits ($Million) $ 38.2 $ 170.5 $ 208.7
Source: California Energy
Commission Consultant Report
written by Davis Power Consultant
under contract 500-00-031.
37
Summary
Geothermal energy provides significant benefits in terms of improved air quality,
increased diversity in electric energy sources, local and state revenues, and
employment. California has the largest geothermal installed capacity in the country
with approximately 1,900 MW. In addition, California has the potential to double the
installed capacity by 2017 from resource areas such as Imperial Valley, The
Geysers and Glass Mountain. Imperial County has 11 KGRAs including Brawley,
Salton Sea, and East Mesa. Using the strategic value analysis methodology, an
additional 1485 MW to 2638 MW can economically be developed by 2017
depending on what price forecast the calculated LCOEs for geothermal is compared
with. With the RPS and the PTC in place, geothermal development is poised to
increase dramatically within the next decade.
38
Endnotes
1
California Energy Commission, April 2005, 2004 Net System Power Calculation,
Sacramento, CA CEC-300-2005-004SF
2
California Energy Commission, May 8, 2003, Energy Action Plan,
www.energy.ca.gov/energy_action_plan
3
California Energy Commission, May 8, 2003, Energy Action Plan,
www.energy.ca.gov/energy_action_plan
4
Material from this section was adapted from the CEC Consultant Report written by
GeothermEx, “New Geothermal Site Identification and Quantification"
5
Material from this section was adapted from the CEC Consultant Report written by
GeothermEx, “New Geothermal Site Identification and Quantification"
6
The section 45 tax credits (PTC) were extended when HR 4520 (American Jobs
Creation Act) was enacted on 22 October 2004. Geothermal, solar, wind, and closed
loop biomass are eligible for the 1.5 cents/kWh credit indexed for inflation (now at
1.8 cents/kWh).
7
1.8 cents/kWh).
8
1.8 cents/kWh).
9
The analysis for the E3-CPUC and Combined Cycle LCOE was completed by
Energy and Environmental Economics, Inc. (E3) and is consistent with the
methodology and inputs adopted for the California Public Utilities Commission
Avoided Cost proceeding in Rulemaking 04-04-025, April 7, 2005. Details of the
methodology and input assumptions can be found on the E3 website at
http://www.ethree.com/cpuc_avoidedcosts.html.
10
Electricity Infrastructure Assessment Report, May 2003 pp 15-19.
11
http://www.cpuc.ca.gov/published/rulings/43824.htm
12
California Energy Commission, Renewable Resources Development Report,
September 30, 2003, page 61. Energy values, GWh, were converted to capacity,
MW, by assuming a 95% capacity factor.
39
13
The National Historic Preservation Act of 1966, amended in 1992, establishes a
Federal policy of encouraging preservation of cultural resources for present and
future generation. The Federal lead agency of r proposed action is responsible for
initiating the “Section 106” review process and for consulting with the State Historic
Preservation Officer (SHPO) and the Advisory Council on Historic Preservation.
14
C. Kutscher, “Small-Scale Geothermal Power Plant Field Verification Projects,”
NREL/CP-550-30275, National Renewable Energy Laboratory, June 2001.
40

Geothermal Strategic Value Analysis: in Support of The

Uploaded by

Copyright:

Available Formats

Geothermal Strategic Value Analysis: in Support of The

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Geothermal Strategic Value Analysis: in Support of The

Uploaded by

Copyright:

Available Formats

GEOTHERMAL

STRATEGIC VALUE ANALYSIS

DRAFT STAFF PAPER

Davis Power Consultants

Additional Staff Contributors

California has a tremendous supply of renewable resources that can be harnessed to

Geothermal Strategic Value Analysis

Resource Identification and Qualification4

Coso Hot Springs Inyo 355 300 55

Sulfur Bank Field, Clear Lake Area Lake 43 0 43

Honey Lake (Wendel-Amedee) Lassen 8.3 6.4 1.9

Total: 4825 1870 2955

California has the potential to produce an additional capacity from liquid-dominated

Table 2: California Geothermal Potential5

Electricity Generation-Performance Characteristic and Cost

Geothermal resource characteristics define power generation technology. A dry steam

Source: California Energy Commission

Technology Dual Flash

Technology Dual Flash

Technology Dry Stream

Year 2005 2010 2017

Capacity Factors (%) 95 95 95

Total Transmission Cost - FINANCE

Capacity Factor (%) 90 90 90 90 90 90 90 90 90 90 90 90 90

Capacity Factor (%) 91 91 91 91 91 91 91 91 91 91 91 91 91

Capacity Factor (%) 93 93 93 93 93 93 93 93 93 93 93 93 93

Capacity Factor (%) 93 93 93 93 93 93 93 93 93

Capacity Factor (%) 95 95 95 95 95 95 95 95 95

Capacity Factor (%) 96 96 96 96 96 96 96 96 96

Adding New Geothermal Generation to the Grid

In running contingency analysis on more than 5,000 transmission lines, transformers

An AMWCO is an indication of the reliability of the transmission grid. It should not to

Table 10: Projected Cost Components for Transmission Lines

Line Voltage (kV) Single Circuit Double Circuit

Substation (kV) Substation Costs

Economic and Location Analysis of Geothermal Sites

Table 12: Geothermal Resource’s Transmission Impact Ratios

Geothermal SVA Results

Table 13: Summary Tables

Constant Dollars ($/kWh)

2005 $0.0316 $0.0605

2004 Constant Dollars

In summary, the analysis conducted by Energy Commission staff, in conjunction with

Current, PTC,w/trs Const, PTC, w/trs

Calistoga Napa 25.0 25.0 7.60 25.0 6.15

Lake City/ Surprise

Total: 2857.0 1801.5 2638.3 1801.5 2638.3

Calistoga Napa 25.0

Lake City/ Surprise Valley Modoc 37.0 37.0 6.70

Total: 3068.0 1485.0 1782.5

Calistoga Napa 25.0

Lake City/ Surprise Valley Modoc 37.0

Total: 2432.0 0.0 1485.0

Coso Hot Springs Inyo 55.0 . .

Calistoga Napa 25.0 .

Honey Lake (Wendel-

Total: 2857.0 1485.0 1513.5

Table 18 Technical Geothermal Potential, WECC States12