Looking at the investment per effective MW, geothermal energy is a very attractive investment. In terms of investment per MW-peak, geothermal energy seems not to be especially attractive. However, utilization must also be considered. Taking utilization into account, geothermal energy is a very attractive investment. Finally, the period after economic life makes geothermal energy really attractive.

1. Geothermal power
- Financial comparison with wind, solar and coal -
2 December 2009
Mark Gankema
Version 3

2. HOW DOES GEOTHERMAL POWER WORK
By drilling deep wells (>3000 m) thermal energy from the earth is
converted into electrical power
1. After drilling wells (>3000 m) hot water
(>160 ºC) is pumped up from deep earth
levels
3.
2. With a heat exchanger, turbine and
2. generator, electricity is generated
3. The remaining energy can be used for
heating buildings, greenhouses or
community swimming pools
Proven technology:
Geothermal power stations are already running
1. for decades in for example Iceland, USA and
Germany (~ 20 plants)
Diagram source: www. geox-gmbh.de
3 December 2009 Geothermal power – financial comparison – version 3 2

3. ADVANTAGES
Geothermal power has superior advantages over wind turbines,
solar energy and coal/gas-fired power plants
Advantages of geothermal power -
compared to other methods
Wind turbines Solar panels Coal/gas power plants
Wind turbines Solar panels Coal/gas power plants
• Average capacity utilisation is • Average capacity utilisation is • Environmentally unacceptable
• Average capacity utilisation is • Average capacity utilisation is • Environmentally unacceptable
only 40% as the wind speed only 15% as there is no light levels of CO2 emissions
only 40% as the wind speed only 15% as there is no light levels of CO2 emissions
varies over time during the night and due to
varies over time during the night and due to • With the rapid growth of far
sub-optimal light conditions • With the rapid growth of far
• Full backup capacity in the sub-optimal light conditions East economies, significant
• Full backup capacity in the East economies, significant
system is needed in case there • Backup capacity in the system cost increase of coal/gas in the
system is needed in case there • Backup capacity in the system cost increase of coal/gas in the
is no wind is needed for night hours near future (5-10 years)
is no wind is needed for night hours near future (5-10 years)
• When wind speed and output is • Huge pieces of land are needed • Insufficient supply of coal/gas
• When wind speed and output is • Huge pieces of land are needed • Insufficient supply of coal/gas
high, market is flooded with (avg. 18 ha / / effective MW)
(avg. 18 ha effective MW) on the long term (30-50 years)
high, market is flooded with on the long term (30-50 years)
large supply, dropping market
large supply, dropping market • Investment per effective MW is • Fuel costs are additional costs
price per kWh • Investment per effective MW is • Fuel costs are additional costs
price per kWh high
high • Dependency on international
• Investment per effective MW is • Dependency on international
• Investment per effective MW is coal/gas markets
high coal/gas markets
high
3 December 2009 Geothermal power – financial comparison – version 3 3

4. FINANCIALS
In terms of investment per MW-peak, geothermal energy seems
not to be especially attractive …
Investment per MW Average utilisation
[mln euro / MW] [%]
80% 80%
4,8 4,7
2,9
2,7 40%
15%
Wind Solar Geothermic Geothermic Wind Solar Geothermic Geothermic
Landau Sauerlach Landau Sauerlach
… however, utilisation must also be considered
… however, utilisation must also be considered
3 December 2009 Geothermal power – financial comparison – version 3 4

5. FINANCIALS
Taking utilisation into account, geothermal energy is a very
attractive investment
Investment per effective MW
[mln euro / MW]
34,7
6,7 5,9
3,6
Wind Solar Geothermic Landau Geothermic Sauerlach
Investment per effective MW = Investment per MW-peak x Average utilisation
3 December 2009 Geothermal power – financial comparison – version 3 5

6. ADVANTAGES
Looking at the investment per effective MW, geothermal energy is
a very attractive investment
Investment per MW Average utilisation
[mln euro / MW] [%]
80% 80%
4,8 4,7
2,7 2,9
x/y 40%
15%
Wind Solar Geotherm ic Geotherm ic Wind Solar Geotherm ic Geotherm ic
Landau Sauerlach Landau Sauerlach
Investment per effective MW
[mln euro / MW]
34,7
= 6,7 5,9
3,6
Wind Solar Geothermic Geothermic
Landau Sauerlach
3 December 2009 Geothermal power – financial comparison – version 3 6

7. FINANCIALS
Nobody can predict future coal prices, though recent history shows
that prices can easily triple
Historical coal prices
Coal price NYMEX [$/ton] ‘Every month 3 coal-fired plants are
opened somewhere in China’
160 New York Times, 11 June 2006
140
actual
120
Coal price forecast based on
100
5 year linear trend
80 5 year linear trend
? Year
Year $$/ /ton
ton
60
2010
2010 84
84
40
2020
2020 139
139
20
2030
2030 193
193
0
2006 2007 2008 2009
For our analysis we will use three prices: $50, $100 and $150
For our analysis we will use three prices: $50, $100 and $150
3 December 2009 Geothermal power – financial comparison – version 3 7

8. FINANCIALS
Depending on future coal prices and geothermal parameters,
geothermal energy can compete with coal-fired power
Cost comparision [euro/kWh]
0,086
0,080
-
0,069
0,053 0,050 0,053
0,033 -
0,017 0,070
0,043
0,026 0,026 0,026
0,010 0,010 0,010 0,010 0,010
Coal 50 $/ton Coal 100 $/ton Coal 150 $/ton Geothermic Geothermic
Landau Sauerlach
Maintenance & operation Capital Fuel
3 December 2009 Geothermal power – financial comparison – version 3 8

9. FINANCIALS
The period after economic life makes geothermal energy really
attractive
Year 1 – 20 Year 21 – 30/50 (?)
Economic life: including capital cost After economic life: no capital cost,
(depreciation + interest) investment has been written-off
0,086
0,080
-
0,069
0,060
0,050
0,053 0,053
0,033 -
0,043
0,017 0,070
0,050
0,043 0,027
0,033
0,026 0,026 0,026
0,017
0,010 0,010
- - - - -
0,010 0,010 0,010 0,010 0,010 0,010 0,010 0,010 0,010 0,010
Coal 50 Coal 100 Coal 150 Geothermic Geothermic Coal 50 Coal 100 Coal 150 Geothermic Geothermic
$/ton $/ton $/ton Landau Sauerlach $/ton $/ton $/ton Landau Sauerlach
3 December 2009 Geothermal power – financial comparison – version 3 9

10. More information
General
• A sense of urgency
– http://www.slideshare.net/mgankema/sense-of-urgency-climate-and-energy-issues
• Comparing wind, solar, coal and geothermal power
– http://www.slideshare.net/mgankema/geothermal-power-financial-comparison
• Ultra deep geothermal power – cheaper than coal
– http://www.slideshare.net/mgankema/geothermal-power-cheaper-than-coal
Technical
• Ultra deep drilling *
• Reservoir Engineering *
• Seismic activity *
• Production flow rates *
• Determining very deep temperatures *
Financial
• Business case *
**For these presentations please contact us
For these presentations please contact us
3 December 2009 Geothermal power – financial comparison – version 3 10

11. For more information, feedback or questions, please contact us
Contact details
Mark Gankema
Genter Str. 8, 50672 Cologne, Germany
Telephone: +49 (0)221 46759735
mobile: +49 (0)178 1969963
E-mail: mgankema@gmail.com
Thank you very much for your attention!
Mark Gankema
December 2009
Cologne, Germany
3 December 2009 Geothermal power – financial comparison – version 3 11