Cogeneration of Hydro and Geothermal Power

Abstract

This paper describes the formulation of an optimization problem for the cogeneration of hydro and geothermal resources. The principal elements of the problem are described and formulations for shadow prices (steam values) are derived. A discussion follows with insights into the interplay between the two resource types and the details of what affects the steam values. A vision for an altered role of geothermal energy in future energy systems is presented and linked to the need for better understanding of the variable cost of geothermal energy. This analysis shows that some flexibility in geothermal power production leads to lower operational cost (less need for make-up wells or pumping) and better use of hydro resources. This is particularly relevant in power systems where hydro spillage is common (e.g. the Icelandic power system). In power systems where wind and solar power generate a large share of the supply, geothermal energy can become of major importance as a load-following resource to balance supply and demand.