TODAY’S STUDY: GEOTHERMAL, THE CLEANEST NEW ENERGY

Promoting Geothermal Energy: Air Emissions Comparison and Externality Analysis

Benjamin Matek, April 2013 (Geothermal Energy Association)

Brief Summary

This analysis updates a 2005 paper published by Alyssa Kagel and Karl Gawell of Geothermal Energy Association (GEA) in the Electricity Journal. That report explored the beneficial externalities associated with using geothermal power instead of fossil fuels by comparing emissions levels of different fuel sources. The 2005 paper found roughly 1.6 cents/kWh of unrecognized value in the market price of geothermal power. Since that time new information has become available. This analysis expands upon the methodology of the 2005 paper by taking advantage of information not available over a decade ago and by incorporating more atmospheric pollutants into the calculation. As a result, this report finds the externality benefits of producing electricity using geothermal resources, as opposed to fossil fuels to be $0.01 for natural gas, and $0.035 for coal per kWh. Additionally, GEA estimates that geothermal provides approximately $117 million in externality benefits per year to the states of Nevada and California by avoiding fossil fuel emissions.

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Introduction

When compared to other energy sources such as coal, natural gas, and even some renewables, geothermal energy emerges as one of the cleanest and most environmentally benign forms of energy. In general, geothermal plants have small land footprints and low air emissions. Of the three types of geothermal power plants currently in operation, dry-steam and flash plants produce only trace amounts of gaseous emissions, while closed-cycle Organic Rankine Cycle (ORC or binary) plants produce near-zero greenhouse gas (GHG) emissions during generation. However, the cooling towers used for some binary plants may produce miniscule amounts of atmospheric pollutants depending on the type of cooling tower and the amount of cooling needed. Additionally, Argonne National Laboratories found in their 2010 life-cycle analysis of geothermal systems that hydrothermal binary plants have some of the lowest lifecycle emissions of any generating technology, including other renewables. Argonne calculated the life-cycle GHG emissions from binary power plants to be 5.7 gCO2eq/kWh. This value is lower than that of both wind and solar, which have life-cycle GHG emissions of 8.0 and 62.3 gCO2eq/kWh, respectively.

This report updates a 2005 analysis published by Alyssa Kagel and Karl Gawell of GEA in the Electricity Journal. That study explored the externalities associated with using geothermal power instead of fossil fuels by comparing emissions levels of different fuel sources. The 2005 paper found roughly 1.6 cents/kWh of unrecognized value in the market price of geothermal power. Since that time new information has become available. This analysis expands upon the methodology of the 2005 paper by taking advantage of information not available over a decade ago, and it incorporates more atmospheric pollutants into the calculation.

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An externality is defined as a cost or benefit that is not transmitted through market prices of a good or service. For our purposes, an externality is interpreted as the benefit of generating electricity from geothermal power instead of fossil fuels by estimating those “costs” not included in current fossil fuel market prices. As a result, this report finds that the external benefit from geothermal generation equivalent to 1.0 cent per kWh for natural gas and 3.5 cents per kWh for coal.

Additionally, the benefits of geothermal energy include other positive externalities not included in this analysis. For example, geothermal power requires a smaller footprint (measured as kWh/acre) than other energy sources, reduces the impacts on transportation infrastructure due to the absence of a fuel cycle, and geothermal power plants can utilize recycled waste water to reduce environmental impacts on water resources and treatment costs…

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Capacity Factor

The capacity factor of a power plant is the ratio of its actual output over a period of time to its potential output if it were possible for it to operate continuously at full capacity. Figure 2 provides national capacity factor information for assorted energy sources. As Figure 2 demonstrates, geothermal plants have higher capacity factors than most other renewables and even higher than coal and natural gas.

Geothermal Air Emissions

One of the significant benefits of geothermal energy, besides its incredibly high capacity factor, is its extremely low air emission rate. Flash and dry-steam plants emit about 5% of the carbon dioxide, 1% of the sulfur dioxide, and less than 1% of the nitrous oxide emitted by a coal-fired plant of equal energy capacity, and binary geothermal plants produce near-zero emissions.

Geothermal power does not involve direct combustion of the primary energy resource. Flash and dry- steam geothermal plants release some gases into the atmosphere during the power conversion process due to the presence of naturally-occurring dissolved gases contained in geothermal fluids. However, it is difficult to distinguish between natural and anthropogenic emissions associated with geothermal resource development. There is a lack of baseline data for naturally-occurring GHG emissions released from undeveloped geothermal sites.11 These questions are explored further in GEA’s November 2012 paper, “Geothermal Energy and Greenhouse Gas Emissions.”

Of the three types of geothermal power plants online today – dry-steam, flash-steam, and binary – only the first two are likely to emit any measurable amounts of GHGs. When comparing the CO2 emissions data obtained from the Environmental Protection Agency (EPA) and Energy Information Administration (EIA) for coal and natural gas power plants, the average rate of carbon dioxide emissions for coal-fired power plants and natural gas power plants are 2200 lbs CO2/MWh and 861 lbs CO2/MWh, respectively. Geothermal systems, on the other hand, produce significantly less emissions, approximately ≈197 lbs CO2/MWh.

Table 1 shows more information on emissions levels for Carbon Dioxide, Methane, Particulate Matter, Sulfur Dioxide, and Nitrous Oxide and how emissions from geothermal compare to natural gas and coal.

Carbon Dioxide (CO2)…Methane (CH4)…Particulate Matter (2.5 and 10 micrometers)…Nitrous Oxide (N2O) and Nitrogen Oxides (NOX)…Sulfur Dioxide (SO2) and Hydrogen Sulfide (H2S)…

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Benefits of Geothermal Power

Decisions about electricity choices are often based upon the lowest consumer cost. This does not take into account a variety of other factors including: value of the reliability of the power system, cost to integrate the resource into the power system, future prices and price volatility, land use, conflict with competing social values, the cost of subsidies paid by governments or taxpayers, security implications, and more. Properly accounting for them greatly improves the prospects for geothermal power by comparison.

Geothermal energy provides both base-load and flexible power. Since geothermal plants generate power at high capacity factors they require much less transmission capacity to deliver the same amount of energy as other types of renewable resources. While using geothermal as a base-load operation is typical, geothermal plants can also operate in a flexible mode. Once the plant is operational it can be expected to provide electricity for many decades if maintained properly.

Geothermal energy’s ability to provide both base-load and flexible power means it can support unpredictable changes in electricity. On the other hand, natural gas is not configured to support unpredictable changes because of its expensive transmission and distribution infrastructure unlike geothermal.18 Moreover, if natural gas exports increase, US prices will increased toward world market levels which are significantly higher.

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Geothermal projects involve considerable on-site capital investment, typically pay substantial property taxes, and involve significant long-term local employment. Additionally, geothermal project developers sign long-term fixed price or price formula contracts, so they don't present the risk of price shocks and help counter-balance the volatility of some other resources. In geothermal financing, the project developer pays the “fuel costs” upfront when developing a power plant. Therefore, geothermal power plants operate at a low levelized cost if the plant is operated at a high capacity factor. When operating at nearly full capacity, the costs can go as low as 4-5 cents/kWh (USD) on average.

Unfortunately, government subsidies provided to fossil fuels move the cost of emissions onto the consumer instead of the emissions producers themselves, a trend that distorts the market. Environmental costs brought on by emissions from fossil fuel sources can be difficult to quantify, but are rarely borne by the fossil fuel companies themselves. These costs include land degradation as a result of mining or the natural gas well fields, emissions of toxic chemicals, the unfortunate extinction of wildlife due to climate change, and negative health consequences including rising healthcare costs.

While recent regulatory changes and a renewed interest in a national climate policy rehabilitated investment in geothermal power, production continues at only a fraction of its potential. If public policy begins to account for geothermal energy’s positive externalities, the resulting expansion of geothermal energy could bring about fewer environmental impacts, better air quality, greater fuel diversity, and improved national security through the use of a domestic energy source…

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Results

Using the methodology described above, GEA found the benefit of producing power using geothermal sources, as opposed to fossil fuels is $0.01 for natural gas, and $0.035 for coal per kWh.

These three values can be interpreted in two ways. First, they can be viewed as benefits associated with using geothermal energy in place of fossil fuels. For example, society gains 3.5 cents in value for every kWh of geothermal energy generated opposed to that same energy coming from coal. Alternatively, these values can be viewed as a cost incurred from using fossil fuels. If the same amount of electricity was generated in the U.S. from coal instead of geothermal energy, the result would cost society 3.5 cents per kWh.

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It is important to note that because the lowest cost available for each atmospheric pollutant is used in GEA’s estimation, the true benefit from geothermal power could actually be much greater than the values estimated above.

GEA estimates that geothermal provides an estimated about $117 million in externality benefits per year to the states of Nevada and California by avoiding fossil fuel emissions. Using the externality values 3.5¢/kWh and 1.0¢/kWh for coal and natural gas and the system power distributions from the EIA and CEC22 for California in 2011 and Nevada in 2010, we estimate the externality benefit per year is about $87.5 million per year for California and $29.1 million per year for Nevada. This assumes California obtains ≈ 44% (8% coal and 36% NG) and Nevada ≈ 87% (20% coal and 67% NG) of its electricity from fossil fuels.

Regardless of how these results are considered (i.e., as benefit derived from using geothermal as a power source, or as costs that must be absorbed in addressing the consequences of non-geothermal power production), it is clear that indirect economic consequences result from specific energy choices regarding how power is generated. This analysis provides a partial measure of the positive attributes that geothermal power production can provide relative to other power generation sources.

Furthermore, the economic benefits of geothermal power outlined in this report can be interpreted as minimum values, since they do not consider other positive externalities of geothermal energy utilization. The main conclusion from this analysis is that geothermal energy is a high-value energy source that can provide substantial economic and societal benefits if deployed at sufficient scale to penetrate U.S. power markets…

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