Session 4D: Economics

Solutions are needed to address resource adequacy in the electric power system for highly decarbonized systems. The storage duration, the length of time a storage device can provide continuous output at its rated capacity, must be sufficient to receive full credit toward resource adequacy. Longer peaks and high fractions of variable renewable generation have increased the required duration to potentially seasonal durations. Underground Thermal Energy Storage (UTES) can be adapted to a hybrid storage power plant or heating and cooling applications to satisfy the need for long-duration storage. In this study, we use the Renewable Energy Deployment System (ReEDS) capacity expansion model to evaluate the increase in value for an enhanced geothermal system (EGS) resources by adding UTES. In modeled scenarios, using geothermal without storage as a baseline we compare the increase in economic value for plants with a range of storage characteristics. The added value of a hybrid storage plant changes depending on assumptions including the length of storage duration, efficiency, and ability to charge storage from the grid during periods of low energy prices. Relating proposed characteristics for geothermal UTES hybrids to the modeled economic value provides insight into economically viable costs for developing UTES as well as what combination of technology characteristics and future energy and policy assumptions drive significant value increases.

The potential of geothermal power to fulfill the energy needs for all nations persists, despite not yet having been achieved. To promote its development, attention is generally given to solving those challenges that are tractable and compatible with conventional thinking, such as decreasing the cost of drilling. Meanwhile, two of the most crucial problems are often bypassed due to their complexity: these being the need for prevention of induced seismicity and the need for predicting performance uncertainty. Recently, we developed a stochastic design tool to meet the challenge of uncertainty assessment and to investigate the potential of fracture caging to control the risk of induced seismicity. Here, we use this tool to investigate the feasibility of full-scale development of hot dry rock resources for clean baseload power generation. We investigate various strategies for development that include advanced, enhanced, and caged geothermal systems. We investigate economics with consideration of drilling depth, thermal gradient, and number of wells. Our work predicts that it is possible to safely and profitably develop geothermal nearly anywhere using the currently available tools. However, achieving this will require a shift in thinking.

Geothermal cost and performance evaluation implemented via technoeconomic assessment (TEA) modeling is critical for the Department of Energy (DOE) and other geothermal industry stakeholders in assessing the current state of geothermal technologies and to identify existing hurdles to commercially viable geothermal development. The Geothermal Electricity Technology Evaluation Model (GETEM) is a major TEA tool used in estimating the economic feasibility and levelized cost of energy (LCOE) of conventional hydrothermal systems and enhanced geothermal systems (EGS). Since 2021, GETEM has been transitioning from an intricate spreadsheet model to a user-friendly tool within the System Advisor Model (SAM) developed by the National Renewable Energy Laboratory (NREL). Apart from enabling an expanded visibility of the geothermal model among other renewable resources, having GETEM in SAM has the advantage of simulation automation, better usability, updates tracking, active user inputs/feedback, and extended financial modeling. GETEM is used in developing supply curves for the Annual Technology Baseline (ATB). The ATB data are inputs to the Renewable Energy Potential (reV) and the Regional Energy Deployment System (ReEDS) models. The geothermal module in NREL’s reV model assesses the geothermal energy potential in the conterminous United States by defining the geospatial intersection of geothermal resources with existing grid infrastructure within the constraint of land use characteristics. The ReEDS model is a capacity expansion model used for simulating the long-term build-out and operation of the US generation and transmission system based on current energy costs and policies. To ensure enhanced representation of current industry trends in our model transitions and development, we organized a two-day virtual workshop to elicit geothermal industry stakeholder input and recommendations on our current approaches and assumptions on technoeconomic, resource assessment, and deployment scenarios modeling of geothermal technologies. Participants included developers, operators, investors, regulatory agencies, system modelers, national laboratory researchers, consultants, and other stakeholders. In this workshop, we gained stakeholder insights on current geothermal plant performance (i.e., capacity factors), updated drilling costs and learning curves, and next generation technologies such as closed loop and superhot rock geothermal. Other outcomes from this workshop and its impact on future geothermal development feasibility, resource availability, and capacity expansion studies are compiled and discussed.

The global geothermal industry is over 100 years old and is growing as suppliers seek to meet ever-increasing energy demands in an era of de-carbonization. Yet, unlike the petroleum industry, the geothermal industry has no universally accepted set of guidelines, standards, or protocols to guide what are called ‘reserves’ in financial statements and reports. Consistency in reserves and resources classifications (wherein reserves are a subset of resources), estimation methodologies, and the related disclosures is needed by investors, regulators, and corporate management teams to compare geothermal opportunities and clearly communicate the differences in terms that are well defined and understood. Another benefit of such standards is to show value added during the exploration and early development phase of a project as resources mature from one classification to another. In this study, a literature survey was conducted of existing classification standards in order to provide the backdrop for an evaluation of a geothermal resources classification framework based on the SPE Petroleum Resources Management System (SPE PRMS). A brief review of methodologies for estimating recoverable heat was also conducted. The SPE PRMS is a widely recognized international standard for petroleum resources, and its applicability to the formulation of a classification framework for geothermal resources was explored. Additional terminology is introduced to define geothermal reserves, resources, and associated concepts. An initial geothermal resources management system (GRMS) is presented.

Building upon successful test wells in the Utah FORGE geothermal project, a Service Company partnered with Fervo Energy to continue production wells in the application. A case study from Utah is presented on reducing drilling days on a granite geothermal well using innovative polycrystalline diamond compact (PDC) drill bit technology.

A critical deliverable in the drilling program was to increase distance drilled with PDC bits in the 12¼-in. vertical and 8¾-in curve sections. Drilling through hard and abrasive formations in the Utah application can increase cutter wear and shorten bit life. The lithology consists of igneous granite with pockets of metamorphic gneiss. Rock hardness unconfined compressive strengths (UCS) average 25 kpsi with spikes upwards of 40 kpsi. The continuous improvement process led to aggressive new product development resulting in improved dulling conditions and greater distances drilled.

Reduction in drilling days from well to well was achieved in both the vertical and curve sections. The custom PDC designs were comprised of longer profiles with extended shoulders for durability and parabolic cones for high weight on bit (WOB) operating parameters. Strategic placement of multi-dimensional shaped cutters across the cutting structure provided valuable advantages to enhancing efficiency and durability. A record run drilling 936 feet was achieved in the 12¼-in vertical section. This was a fifty percent increase in distance drilled compared to the next best offset. And a benchmark was set in the 8¾-in section with one bit completing the curve. This was an improvement over the first well which required four bits to complete the curve.

For decades, legacy roller cone drill bits have been used to drill geothermal wells at slow penetration rates. The learnings from this Utah application are chartering a new path of exceptional drilling performance utilizing PDC drill bits. The application of this technology is making the uptake of geothermal wells economic and successful.