Economic Risk Analysis of Geothermal Development

Abstract

An economic risk analysis of a geothermal development venture has been performed using a Monte Carlo simulation model. The model is formulated much along the lines of that of conventional oil and gas development. However, since necessary data to carry out the risk analysis have not so much in the field of geothermal energy in Japan as in oil and gas, simplified formulation of input data has been obliged. Our study has picked up a particular geothermal field in Japan where commercial operation of 50 power generation has started and therefore physical and economical characteristics of geothermal resources in the area are fairly understood. We the accompanying economic risk when another 50 power plant is to be operated in an adjacent area. Input data are formulated deducing from the past experiences. Expected present worths as well as distributions of present worths are computed for several cases. Some important parameters are changed during the model study and their influences on the economics are studied.