Understanding Permitting Impacts on the Levelized Cost of Energy for Geothermal

Abstract

In 2011, a panel of geothermal experts assembled by the U.S. Department of Energy concluded that, aside from resource discovery risk, permitting and financing costs are two other critical barriers to future geothermal development. In response to this assessment, the following analysis aims to illustrate how permitting delays and associated cost overruns can significantly impact the cost of geothermal project development. By conducting a simple financial analysis using a publicly available model, it demonstrates that these delays and cost overruns could increase a project?s levelized cost of energy (LCOE) by up to 13.3% over a base-case scenario. This represents a significant increase, and could jeopardize the financial attractiveness of a given project. Finding ways to improve the efficiency of the geothermal permitting process? without sacrificing environmental protection?can reduce such unforeseen delays and LCOE increases, potentially improving the technology?s competitiveness and expanding its use in the marketplace.