Monday, 29 March

IEA Report concludes that Geothermal Energy is the cheapest zero-emission option for Australia and USA

A very interesting study was released last week by the International Energy Agency: "Projected Costs of Generating Electricity: 2010". The study covers the costs of producing electricity from different sources in arange of countries. Coal is economically competitive in the absence of a sufficiently high carbon price. This is not a surprise but things start getting interested when the effect of possible carbon pricing is taken into account. In many Western nations, nuclear power turns out ot be the cheapest zero-emission option, i.e. most Western countries except Australia. For Australia and the United States, geothermal energy offers the cheapest source of future electricity, at least at the power station gate(not including the costs of transmission). An interesting conclusion is that even with a carbon charge of $US30 ($A33) a tonne, the study reckons it will be cheaper for Australian generators to burn black coal, send the emissions into the atmosphere and pay the charge rather than to turn to gas or other low-emission alternatives.

Vikas Srivastav reports on Financial Chronicle web site that Tata Power is planning to substantially increase its geothermal energy through its investments in Indonesia, Australia and at home in India. Indonesia announced a geothermal target of 9500 MWe by 2025 and Tata Power wants to be part of this expansion. The estimated costs for the Indonesian projects are reported to be $2m-$3m per MWe, with the levelised electricity costs at "Rs 4-4.5 per unit, which is lower than Rs 17 for solar power, but higher than wind" (Mr Srivastav reported these cost projections in Indonesian money units I cannot convert these to Australian dollars because Indonesian money references are too complicated for me). It had been announced earlier (in an e-mailed statement by Origin Energy)that the Tata would collaborate with Origin Energy in trying to enter the Indonesian geothermal power sector. Readers of this blog would know that Tata is already partnering with Origin in Geodynamics and the Innamincka Deeps venture.

Kenya is buying two drilling rigs for US$36 million and wants to acquire five more to speed up exploration for steam fields that will be used to generate geothermal energy, Energy Minister Kiraitu Murungi said. "It costs $6.3 million to sink a single well", he said "and 26 steam wells have been drilled in the East African nation since geothermal work began in 1996". Kenya is planning to expand geothermal power plants in Olkaria, 60 kilometers (37 miles) northwest of Nairobi, over the next two years, at cost of about $1.4 billion, with the capacity to generate 280 megawatts of electricity. The country currently exploits about 167 megawatts of its geothermal potential of 7,000 megawatts but has plans to boost its geothermal generation capacity by 4,000 megawatts over the next 20 years.

Greenpower Energy is starting its preliminary exploration on the GEP37 and GEP38 exploration poermits near Esperance in Western Australia. The permits have a combined area of 10732 sq km, they are for a period of 6 years, are renewable and enable the holder to proceed to commercial development. The company is expecting to find a geothermal resource heated by radiogenic granites. The Esperance Express estimates the cost of exploration as $42.9 million. As far as I can understand, the company is analysing past drilling data at the moment. Some shallow holes may be drilled this year and next year. Deeper drilling down to 5000 m is planned for 2012. Greenpower Energy is primarily a coal and coal-seam-gas company listed on ASX in 2008.

The Kuth Managing Director, David McDonald, was on Radio Australia News encouraging the PNG government to consider using geothermal energy to provide for the increasing electricity demand from the country's mining sector. "I think the real benefit that exists for PNG longer term is that much of your mining is driven by diesel generation and that's an extremely expensive cost for that industry to develop," David McDonald said. "So it's going to need a much lower cost base load supply, and frankly geothermal is one of the answers to that."

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