D. Current Status

Geothermal development overall has declined in recent years. As the prices of fuels used in competing generating technologies--primarily natural gas--decreased, so too has the competitive viability of geothermal energy. Another major reason for the slowdown in geothermal development is slow growth in demand for electricity. The primary geothermal resources exist in the Western United States, a region where there has been a surplus of generating capacity for a number of years. Moreover, due to relatively high electricity prices, California is facing significant competitive market forces. The utility sector, as a whole, is facing a serious reevaluation of its market. Contractual arrangements that would have been considered routine 3 years ago are not acceptable under current conditions. Consequently, a main source of support for geothermal resource development has been undermined, posing a threat to continued growth in the geothermal arena for geothermal electricity generation.


Before the passage of PURPA, there was little if any incentive for public and private regional electricity monopolies to purchase power generated by independent producers. Under the provisions of PURPA, however, utilities were required to buy power from independent producers that are QFs at the utility's avoided cost (the amount the utility would otherwise have to spend to generate or procure power).

One of the PURPA contract options provided a period of fixed payments for both energy and capacity in order to allow projects to obtain financing. At the time of the issuance of these contracts, especially the Interim Standard Offer No. 4 (ISO4), oil prices were near a historic high and were expected to continue to increase. The geothermal power industry executed almost 30 of these contracts for over 600 megawatts of additional capacity in California. Under the provisions of the ISO4 contracts, a facility would receive energy payments for 10 full years, based on the long-run avoided costs to the utility anticipated at the time the contract was awarded.

The end of the 10-year period is now approaching for many projects. At that time, energy payments will be determined by short-run avoided costs for the remainder of the contracts. Mid-1990s avoided costs, which are largely tied to the price of natural gas, are considerably lower in current dollars than the avoided costs calculated in the mid-1980s. Therefore, many of the projects built under ISO4 contracts may no longer be economically viable.(12) The independent power industry in California, including geothermal stakeholders, has approached the utilities and the California Public Utility Commission to renegotiate the contracts.

Hydrothermal energy, which is used primarily to produce baseload electricity, competes with other baseload electricity power production, such as hydropower. Feasibility studies are being conducted to assess the potential for hydrothermal electricity to be used in other dispatching modes, but natural-gas-fired facilities--with generating costs of 3 to 4 cents per kilowatthour--would appear to be better suited.

Competition with other energy sources is an important factor for geothermal developers. Many States are experimenting with competitive bidding systems as a means of awarding power purchase contracts, with potentially adverse impacts on renewables. Currently, only five new geothermal electric power plants with 105 megawatts total generating capacity are planned for operation by 1999(13)--down from 517 megawatts being planned in 1994 for the same time period. The three primary drivers of growth during the 1980s have faded: demand for new capacity, ISO4 contracts, and additional capacity at The Geysers. In addition, as power sales agreements end, as utilities terminate their contracts with independent power producers, and as avoided cost rates in California reach equilibrium with current natural gas prices, other geothermal plants may shut down.

Technological Issues

Direct extraction of energy from magma has been the subject of research for many years.(14) While a single volcano contains a huge concentration of energy within a relatively small geographical area, formidable technical problems prevent the exploitation of magma resources. The very high temperatures encountered around magma bodies can cause drilling equipment to fail. The reaction of dissolved gases to a sudden release of pressure by the drillhole can be explosive. Even if some method of penetrating the rock immediately adjacent to the magma body is found, a heat extraction technology must be developed. The underlying assumption is that the great quantity of heat within magma bodies will yield sufficient quantities of energy to justify the anticipated high cost of extraction.(15) However, commercial development of magma resources remains in the distant future.

Research on the extraction of energy from geopressured geothermal resources culminated in the construction of one small demonstration plant (1 megawatt capacity) near Pleasant Bayou, Texas, in 1989. The plant was operated for 1 year using methane from the brine to drive a gas turbine, and heat from the brine to power a binary cycle generator. To support a commercially viable enterprise, the pressurized fluid must be sufficiently hot and must contain a sufficient quantity of dissolved methane, and the reservoir must be sufficiently large and permeable to allow adequate production of fluids over an extended period of time. In addition, the deep wells required to extract the highly pressurized brines are very expensive. These issues have led to reasoned speculation that only a limited portion of U.S. geopressured resources may be economically exploitable in the foreseeable future.

Hot dry rock technology has progressed beyond the feasibility stage. Research has shown that the resource can be reached at moderate depths, that hydraulic fracturing can be effectively used to create man-made reservoirs in hard rock, and that heat can be extracted from such reservoirs, using water as a working fluid. However, the geology of hot dry rock resource areas varies, and the technology to develop manmade reservoirs in different geologic conditions is unproven and potentially expensive. Although hot dry rock resources have the potential to yield enormous quantities of energy, the path to exploitation still requires significant technological developments.

The term "heat mining" was coined to describe the process of extracting heat energy from hot dry rock.(16) Three requirements must be satisfied before "heat mining" will be commercially viable: (1) the development of inexpensive high-temperature hard-rock drilling techniques, (2) improvements in three-dimensional rock fracturing, and (3) mastery of methods for maintaining low-impedance fluid circulation through the fracture system. The DOE geothermal programs is reviewing the status of hot dry rock research in the context of industry interest in the resource.

A major technical obstacle to heat mining is the development of a method for extracting heat from deeply buried rock. The hot dry rock resource base typically occurs in igneous and metamorphic terrains containing rocks that lack sufficient matrix or fracture permeability for the migration of fluids. Under those circumstances, it is necessary to create an extensive interconnected fracture system that will allow sufficient fluid circulation, removal, and reinjection. Recent tests have shown that hydraulically created fracture systems can produce adequate circulation. However, after a permeable zone has been created, water must be injected into the formation, and the quantity of water needed is not certain, nor is it known to what extent circulating fluids will precipitate scale in fracture systems.

Since operating experience for most geothermal technologies is limited, reservoir life expectancies are an important unknown.(17) Hydrothermal resources can be depleted on a local scale, and several fields--including Wairakei (New Zealand), Larderello (Italy), The Geysers (California), and Heber (California)--have had slow declines in temperature and pressure over time. The decline in generating capacity and electricity production at The Geysers is shown in Figure 21. While factors affecting the depletion rates are known, their effect at each field is not--nor is it clear whether the fields will ever recover. Thus, reservoir management techniques are a key area for technology development.

Finally, current drilling technology for the development of hydrothermal resources is both expensive and risky for the driller. Reducing the cost and the risk is likewise critical.

Environmental Issues

Environmental considerations provide a significant impetus for the development of geothermal resources. Hydrothermal geothermal technology is relatively "clean," with minimal adverse impact on the environment.(18) Since geothermal development entails no combustion, its atmospheric emissions are limited to the dissolved gases that are released during depressurization in open-cycle systems. Carbon dioxide is released in direct steam and flash systems at a typical rate of 55.5 metric tons per gigawatthour, or at approximately 11 percent of the rate for gas-fired steam electric plants. Moreover, some recent plants, particularly those at Coso Hot Springs, California, reinject noncondensible gases into the reservoir, limiting emissions of greenhouse gases to well testing and unplanned outages. For projects that use lower temperature, binary-cycle technology, emissions from the closed-cycle systems are negligible. Similarly, the technologies being developed to exploit hot dry rock and magma resources will not entail any significant emissions of carbon dioxide.

Environmental issues that could adversely affect the future development of geothermal resources include water requirements, air quality, waste disposal, subsidence, noise pollution, and location.

Water Requirements

Some geothermal power plants use large quantities of cooling water.(19) For example, a 50-megawatt water-cooled binary- cycle plant requires more than 5 million gallons of cooling water per day (100,000 gallons per megawatt per day). Since many geothermal resources are located in arid regions where water is a scarce and regulated commodity, long-term access to water could be an important constraint on their development. At The Geysers in California, for example, it is believed that production declines could be substantially reversed by injection of water from external sources; however, competition for limited local water supplies has prevented recharging of the aquifer. Currently, a pipeline to bring treated sewage effluent from 26 miles away, and from Clear Lake, is under construction. The fluids will be injected into one corner of the geothermal reservoir.

Air Quality

There are no air emissions where closed-loop binary technology is used, because the system does not allow exposure of the hydrothermal fluid to the atmosphere. However, naturally occurring chemical compounds may be released into the atmosphere as a byproduct of the extraction of geothermal energy at sites using flash steam technology for energy conversion,(20) including varying concentrations of hydrogen sulfide, hydrogen chloride, carbon dioxide, methane, ammonia, arsenic, boron, mercury, and radon. Emissions of hydrogen sulfide are often a concern at steam and flash plants, because the gas has a characteristic "rotten egg" odor at low concentrations, and at high concentrations it is toxic. Air quality standards can be met inexpensively by installing hydrogen sulfide abatement systems, which range in cost from 0.1 to 0.2 cents per kilowatthour of electricity generated. Noncondensible gas emissions such as carbon dioxide and hydrogen sulfide can be reduced by reinjection into the reservoir, but the long-term effects of this practice on the geothermal reservoir are not known.

Waste Disposal

To date, all waste streams from geothermal facilities in California have satisfied State standards through either treatment or emission control. Research on methods to alleviate disposal problems is continuing. At some sites, such as the Salton Sea field in California, geothermal fluids can contain large quantities of dissolved solids. The energy extraction process produces a heat-depleted liquid stream that must be disposed of in accordance with the appropriate regulations. Most often, the liquid is reinjected as part of the total reservoir management strategy. In the Imperial Valley, California, high-salinity brines are processed by flash crystallizers, which produce sludge containing potentially toxic heavy metals such as arsenic, boron, lead, mercury, and vanadium.(21) For example, a 34-megawatt double-flash geothermal power plant tapping the high-temperature resource in the Imperial Valley could produce up to 50 tons of sludge every 24 hours.(22) Valuable metals might be extracted from such sludge before its disposal, and this option has been explored at some Imperial Valley projects. DOE research and development efforts are investigating the use of bacteria to remove heavy metals from the sludge materials. Some hydrogen sulfide abatement systems produce elemental sulfur that is sold or hauled away by sulfur producers.

Disposal problems become much more difficult when the waste is toxic. Federal statutes establish land disposal (including reinjection) as the least desirable method of disposal. The Hazardous and Solid Waste Amendments (Public Law 98-616) to the Resource Conservation and Recovery Act (Public Law 94-580) mandate pretreatment of toxic waste to minimize hazards to human health and the environment.

Subsidence and Noise Pollution

Subsidence (sinking land surface) and noise pollution have been avoided or controlled at existing U.S. geothermal energy facilities. Noise from power generation equipment is routinely reduced by blanketing and insulating. Development of resources near population centers may require the type of noise abatement measures used by the oil drilling industry for town-site drilling.

Location Issues

Many of the most promising geothermal resources are located in or near protected areas such as national parks, national monuments, and wilderness, recreation, and scenic areas. The average amount of surface area disturbed for the development of geothermal resources is slight in comparison with other forms of energy extraction. The disturbance usually takes the form of clearcutting of vegetation, grading, and road paving for well pads, pipelines, transmission lines, and generation facilities. Erosion and landsliding may be a problem, depending on the local terrain.

Geothermal resource development in Hawaii, although technologically promising, has been intensely opposed by some environmental and public interest groups, claiming that such development would do irreparable damage to the tropical rain forest while violating local religious beliefs and cultural mores. The controversy has slowed the pace of development in Hawaii.

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