Thursday, April 13, 2017

Finance: Increasing the Value of Geothermal in the Energy Mix

Is Geothermal Competitive in an Era of Low Cost Renewables? (New Energy Events)

by Kevin Wallace, POWER Engineers (GRC Board of Directors)

News on power purchase rates of 40-50 $/MWh for new solar-PV plants begs the question – can geothermal be competitive, with prices challenging for any but the largest of geothermal projects? We feel geothermal still has a valuable role in the energy portfolio, if the wider benefits are considered.

The value to the grid of stable, baseload power with some ramping capability is generally not considered in auctions that are judged merely on costs per MWh. As system operators experience higher penetrations of intermittent resources such as solar (resulting in the infamous ‘duck curve’), simplistic pricing methods cause distortions in the true cost of grid operations. When pricing shifts to accurately reflect system integration costs, the value of having geothermal in the energy mix will be increased.