TODAY’S STUDY: A CASE STUDY OF GEOTHERMAL POTENTIAL

Energizing Southern California’s Economy: The Economic Benefits and Potential for Geothermal Energy in Southern California
Dan Jennejohn, Karl Gawell, John McCaull, Bill Glassley, Elise Brown, October 2011 (Geothermal Energy Association)

Introduction

Geothermal energy continues to be a major provider of renewable energy to California. As the state looks forward to a future of expanded renewable energy production, geothermal energy will remain a critical part of California’s energy mix. Geothermal resources provide a uniquely reliable and continuous source of clean energy, which helps to balance the state’s renewable energy portfolio.

Geothermal energy provides a significant share of California’s power supply. In 2010 geothermal energy provided approximately 42% of California’s commercial in-state renewable electricity generation.i In addition to its current contribution to California’s energy mix, the future potential of geothermal energy in the state is also substantial. An aggregation of various estimates provides a range of 3186 – 24750 megawatts (MW) of geothermal energy resources could be developed in California using conventional and incrementally improved technologies.ii This is equivalent to 10% to 90% of the estimated increases in demand for new power generation for the state.

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In addition to its large potential capacity, geothermal energy also offers advantages over other forms of energy: it is ideally suited to provide baseload (24/7) power that intermittent renewable resources cannot provide. As highlighted by Figure 2, the value of baseload geothermal energy to California’s renewable energy portfolio cannot be overstated. Additionally, when compared to other forms of baseload thermal generation, geothermal offers major advantages in fuel price stability, since it does not require a fuel supply, significantly reduced air emissions, and a smaller footprint/installed MW.

California’s geothermal power production comes largely from four areas in the state. In Northern California, The Geysers, in Sonoma and Lake Counties, represents the single largest geothermal power source in the state, and the world. Today, The Geysers represents almost one-half of the state’s geothermal output, with installed capacity of over 1100 MW.

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Southern California enjoys geothermal production from power plants located around Coso and the Imperial Valley. Today, Southern California provides substantial geothermal power from these regions, with enough installed capacity to meet the needs of an estimated 1 million California households. The region also has substantial undeveloped geothermal resources, which could potentially double, at least, current production using existing technology.

Developing these resources would bring significant amounts of clean, renewable, reliable power to meet the state’s energy, climate, emissions and renewable goals. It would also mean thousands of new jobs, and billions of dollars of economic development in some of the most economically challenged areas of the state.

In the future, emerging technologies will expand the benefits of geothermal even further. Not only are firms in California involved in developing the geothermal technologies of the future, but the renewable power they could harness is simply enormous. This could provide direct benefits to the power needs of the California economy, and make California a world leader in a fast-growing new technology market.

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Current Production and Near Term Development

The majority of Southern California’s geothermal capacity is concentrated in the vicinity of the Salton Sea in Imperial County, and on Department of Defense land in Inyo County. Geothermal power plants have been operating in Southern California since the early 1980’s. Currently, 25 geothermal power plants provide approximately 937 MW of clean geothermal energy to demand centers throughout Southern California, enough electricity to power approximately 1 million households. Additionally, operating geothermal plants bring a variety of job opportunities to the region. For example, geothermal power plants in the Imperial Valley directly employ 391 professionals to support geothermal power plant operations.

Geothermal companies are developing additional geothermal resources for electricity production in Imperial County. Currently, five geothermal projects–with a combined estimated installed capacity of 239 MW–are being developed by CalEnergy, Energy Source, and Ormat Technologies in the area around the Salton Sea. These projects are in advanced stages of development and are expected to begin coming online in 2012. In addition to providing clean energy to Southern California’s power markets, the development and operation of these geothermal power plants will also provide an economic boost to the region. According to CalEnergy, the development of its Black Rock geothermal projects will employ up to 642 workers during the peak of construction. Once online, these power plants will permanently employ approximately 57 operations, maintenance, engineering, and administrative professionals.

The construction of EnergySource’s Hudson Ranch I geothermal plant supports up to 230 full time construction jobs, and will permanently employ approximately 34 plant operations and maintenance professionals when complete. Additional development of the Hudson Ranch resource is expected to support the permanent employment of 19 geothermal professionals. For the construction of its Hudson Ranch I geothermal power plant, EnergySource awarded a contract with an approximate value of $85M to Performance Mechanical Contractors, a local contractor.iii This is just one example of how the development of geothermal resources brings added value to the local economies of Southern California in the form of clean and renewable electricity, improved infrastructure, and added jobs.

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Future Geothermal Development: What’s Possible

While the geothermal industry has been producing clean energy in Southern California for decades, and also has advanced stage projects slated to come online in the near future, geothermal resources in the region are large enough to drive long-term development for decades to come. In fact, it has been estimated that 65% of the state’s incremental geothermal capacity exists in Southern California.iv Seven known geothermal resource areas (KGRA) have been identified in Imperial County by the USGS. Various sources estimate these KGRA’s have approximately 1800 – 2900 MW of geothermal energy potential.v In addition to the KGRA’s around the Salton Sea other areas in Southern California with geothermal potential have been identified, specifically the Truckhaven/Superstition Mountain Leasing Projectvi

Geothermal developers are keen to capitalize on Southern California’s abundant geothermal resources for the foreseeable future. In addition to advanced stage projects that are expected to bring approximately 239 MW of geothermal energy online in the next few years, geothermal companies are developing six early stage geothermal projects, and are exploring another six prospective geothermal sites for possible future development.

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Economic Benefit of Geothermal Development to the Region

In addition to providing jobs, geothermal power sales provide a significant source of tax revenues for local jurisdictions. Imperial County received more than $12 million in 2008 from geothermal power producers, accounting for 25% of its revenue base. Through the Geothermal Steam Act Amendments (2005), geothermal leases on federal lands also result in revenue that is passed back to the states in which geothermal power is produced. In 2008, California received $9.9 million in returned revenues. Of that revenue, 40% is provided to the counties (including Imperial and Mono Counties) in which geothermal power is produced.vii Another portion of those funds is made available by the California Energy Commission through its Geothermal Resources Development Account (GRDA). The GRDA program supports projects intended to increase the availability and use of geothermal energy through research, planning and project development. In 2011, the California Energy Commission awarded 2 GRDA grants for projects in the Imperial Valley that totaled more than $3.7 million.viii

Although often viewed exclusively as a source for generating electrical power, geothermal resources can also be employed in a variety of applications in which the heat from geothermal waters is directly used. One example of such an application is aquaculture, in which phytoplankton, zooplankton, aquatic plants and fish are grown in warm, nutrient-rich waters that can be heated by geothermal fluids. Imperial County has a long history of employing geothermal heat to support its $10.9 million aquatic products industryix.

Geothermal fluids are complex solutions that may have significant economic value themselves. For example, the Imperial Valley/Salton Sea region has geothermal fluids rich in many economically valuable metals, including lithium, manganese and zinc. Simbol Mining, Inc. has recently been conducting research into methods for extracting these elements from geothermal brines in the region. If successful, it is likely that many millions of dollars will be generated in revenues and a new source of jobs will be created…

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Longer Term Geothermal Potential/Advanced Technologies

While the benefits of expanded geothermal production in the near-term are significant, the long-term potential holds even greater promise. As shown in Figure 4, a variety of sources estimates the state’s untapped geothermal energy potential to be in the range of 3186 – 24750 MW, with an average of ~10,917 MW. These potential generation estimates assume geothermal resource development with relatively conventional technology or incremental improvements.

In the long-term, geothermal resources have the potential to expand by means of various technological innovations. For example, geothermal technologies could be implemented in distributed generation applications in addition to utility-scale production. Small power units that can utilize medium and low-temperature resources are being applied in several areas of the nation, and have potentially widespread application in the state. One expert estimated that as much as 7,000MW of distributed generation could be produced by geothermal resources in the state.xiv

In addition to distributed generation, utilizing geothermal resources for innovative commercial purposes is expected to become more common in the future. This includes both direct-uses of geothermal resources, and geothermal heat-pump applications to provide high-efficiency heating and cooling in residential and commercial buildings. As mentioned previously, efforts to produce valuable minerals from geothermal reservoirs as a by-product of electricity production could potentially drive further industry development and innovation in Southern California in the future.

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Further geothermal technology developments will allow production of geothermal energy from the expansive heat available in the rock systems underlying the state. The advancement of EGS technologies has the potential to stimulate electricity production from an even greater geothermal resource base. EGS technologies "enhance" and/or create geothermal resources in hot dry rock through hydraulic stimulation. Both federal and state initiatives are working to develop EGS technologies that will help California’s geothermal industry realize its ultimate potential.

According to Google.org, the potential amount of power that could be produced using advanced EGS technology could dwarf the total power production today from all power sources. At a 2% recovery rate, EGS potential in California is over 140,000 MW. Today, total power generation capacity in the state is just over 63,000MW.xv Additionally, some of the most promising areas for EGS potential are located in Southern California, as shown in Figure 5.

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Conclusion

If California were a separate country, it would be the world leader in geothermal power production with over 2500 MW of installed geothermal capacity. Southern California alone would rank fifth in installed geothermal capacity behind Mexico (958 MW), and ahead of Italy (843 MW).xvi

California’s role as a leader in the development of geothermal resources is very likely to continue. Among the US states, California leads the nation in geothermal power production and has the potential to significantly expand its production in the future. Southern California’s abundant geothermal resource is the key to that expansion.

Millions more California homes and businesses could have their energy needs met through geothermal power waiting to be tapped in Southern California. Developing these resources would be a major step towards achieving the state’s goals to reduce greenhouse gas emissions by reducing the need for electricity generation from fossil fuels. Geothermal energy is a consumer and environmentally friendly product, which also enhances the reliability of the power system. Further development would provide an increase in geothermal royalty revenues to both the state of California and local counties. Additionally, the development of geothermal resources will generate a large number of construction jobs and support an increased number of permanent operations and maintenance jobs in the region. The continued development of Southern California’s geothermal resources will strengthen the region’s robust network of industry and higher education institutions working to develop the geothermal technologies of tomorrow. Geothermal innovations in geothermal heat pumps and distributed generation technologies can help meet the energy needs of Southern California’s homes and business. As the development of improved geothermal technology advances, the possibilities for further development in the region will continue to grow.

To achieve a renewable, clean energy future California needs to look no further than its own back yard. The state’s geothermal resources are available and plentiful. With investment in transmission development and expedited but careful planning, geothermal energy in Southern California will continue to provide clean energy to future generations.