Modeling the Risks of Geothermal Development

Abstract

Geothermal energy has emerged as a promising energy source in recent years and has received serious attention from developers and potential users. Despite the advantages of this resource, such as potential cost competitiveness, reliability, public acceptance, etc., the commercial development and use of geothermal energy has been slow. Impediments to the development of this resource include technical, financial, environmental and regulatory uncertainties. in that the generation facility is tied to a single fuel at a single site, these uncertainties are of particular concern to utility companies. Since geothermal power is unique in that the generation facility is tied to a single fuel at a single site, these uncertainties are of particular concern to utility companies.

The areas of uncertainty and potential risks are well known (see for example EPRI 1978, and Woodward-Clyde Consultants 1980). This paper presents a method for quantifying the relevant uncertainties and a framework for aggregating the risks through the use of submodels. submodels can be combined with subjective probabilities (when sufficient data is not available) to yield a probability distribution over a single criterion (levelized busbar cost) that can be used to compare the desirability of geothermal power development with respect to other alternatives.