Discovering and Connecting to the Right Customer for Your Power

Abstract

Geothermal developers often focus primarily on the science and engineering aspects. Shortchanged in the process is understanding the market for a particular site’s power. Prospecting, drilling and construction dominate most projects. Nevertheless, by far the largest financial transaction is the long-term, power purchase agreement (PPA) with the power buyer. This paper advocates thoroughly assessing the electricity market for a particular site and doing so early in the process (Figure 1). This entails identifying and considering a larger number of prospective utility customers. In addition it is essential to assess the high-voltage, transmission networks since they define a site’s reach and marketplace. Furthermore, each prospective customer should be profiled. This is to learn each prospect’s renewable goals, power needs, pricing, current supply sources, regulatory constraints, and so forth. An additional part of this assessment is evaluating and comparing the utilities’ requests for offers (RFOs) and PPAs. Altogether, taking these steps can add tens of millions of dollars to the total contract value that the geothermal developer may enjoy (Figure 2). These are all steps that precede the PPA negotiation process itself.