The Increasing Value of Geothermal

Abstract

In 2017, for the first time, the combined energy and capacity values of geothermal energy significantly exceeded the value of solar photovoltaic (PV) resources in California. Geothermal’s wholesale energy value in southern California is currently $9/MWh greater than solar PV. At the same time, The California Public Utilities Commission (CPUC, 2018) has advised that for planning purposes, new solar PV should obtain only an 18% capacity rating (MW) in 2018, dropping to 2% in 2022-2030; at the same time, geothermal capacity ratings remain in the range of 80%-90% (or greater) of maximum seasonal production. As solar PV capacity ratings in California continue to trend toward zero, this creates a difference between geothermal and solar PV capacity value of approximately $18.50/MWh if the geothermal plant displaces a new combustion turbine. Over the next 5-10 years with current trends, geothermal will have a combined energy and capacity value of $22-37/MWh higher than solar PV using conservative assumptions. Additionally, geothermal provides other economic benefits, not monetized in this paper, that improve its comparative value, such as avoided renewable integration costs, operational flexibility and resource diversity. Thru analysis of the comparative economic value of geothermal in California from 2012 through 2018, we demonstrate that geothermal not only competes with solar PV but steadily becomes a more valuable resource to the California ISO (CAISO) wholesale energy market and in meeting resource adequacy (RA) requirements.