Parameters Affecting Price Valuation of Geothermal Resources

Abstract

Recent changes in Icelandic laws regarding energy resources such as hydro and geothermal require that the controlling right of the resources to be at all times at the communities or the state. Companies producing electricity in a competitive market from those resources need to rent or pay royalties for the access to utilize them. This has called for a method to determine a fair rent or royalty payment for any given geothermal resource.
A method is proposed and described for determining the yearly payment for a given geothermal resource. A quality factor is introduced so the proposed method could include the different situations found in various geothermal fields. Few of the main cost bearing factors that the resources impose on the utilization are taken into this quality factor. In addition, a minimum reinjection is required depending on steam used, before reinjection starts to discount the payment as a procedure to preserve the resource. With the proposed method the price factors could be set the same for broad types of geothermal resources and utilization. The method is presented as a formula where the yearly payment or rent is divided in to three main charging categories, which are charge for installed power, charge for heat energy and charge for land and other benefits.