Economic Cost Comparison of Geothermal and Other Technologies

Abstract

The World Bank’s Energy Sector Management Assistance Program (ESMAP) has published a guidebook on power generation from geothermal resources. The book aims to provide World Bank clients and staff with practical advice on geothermal energy scaleup strategies. In particular, the guidebook covers aspects of policy analysis and project development necessary for the deployment of geothermal power on a larger scale, thereby targeting policymakers, energy sector specialists and utility managers responsible for the planning, development, and financing of geothermal projects in developing countries. Based on a generic example from the guidebook, this paper compares geothermal power generation with several other options like hydropower, solar, and wind, as well as with fossil fuel technologies, such as coal, gas, and fuel oil. Screening curves for all technologies, projected onto a load duration curve (LDC), show which technologies would be most cost-effective to provide the system load over a certain demand period (i.e., from peak demand on the top to base load power at the bottom of the LDC). Under the given conditions geothermal power can economically compete with most fossil fuel technologies in spite of its high initial investment. At high capacity factors of around or over 80%, geothermal seems to be an economical way to generate cleaner and reliable base load power. Developing a geothermal project requires that the resources involved be economically justified. In general, this means that the project becomes part of a least cost development plan taking into account the alternative resources that a given country can put in place within the planning timeframe. These include thermal options based on fossil fuels, such as coal, fuel oils of different grades and prices, natural gas, and other renewable resources, such as hydropower, wind, and solar.