Carl D. Stills

Geothermal Market Valuation
Carl D. Stills
Energy Manager, IID
March 13, 2014
www.iid.com
Salton Sea Restoration & Renewable Energy
Initiative: Project Success Requirements
Site Control
• Open Season - Lease Agreement
• Term (P/S), Milestones, Royalty, Surface/Subsurface/Unitization Rights
PPA
• $, Term, Delivery Point, Schedule
• Options – Prepay, Buyout
• “Renewable Auction Mechanism” (RAM)
Permitting
• Programmatic EIR - 12-14 months, depending on project size, location,
requirements
• Opposition mitigation
Experienced Workforce
• Professional, Construction, Technical, Millwright, Office, Laborer
• IV Unemployment Rate – 27.85%
Water
• Flash (19.08 AF/MW – Binary (117 AF/MW)
• 25,000 AF/Yr Available
Risk Mitigation
• Geothermal
Transmission
• Generator Interconnection through IID’s OATT
• Projects must file for transmission services to transmit energy to market
• STEP
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PPA:
Geothermal Cost – EES Report
Table 5
Comparison of 30-Year Levelized Costs
$2013
Energy Costs
EES Update to Geothermal Study
(2012)
• $80.74 - $108.06/MWh
Revenue Potential Study (2013)
• $89.11 - $118.13/MWh
Revenue Potential Study (w/o
Transmission and Interest During
Construction)
• $79.97 - $107.41/MWh
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Geothermal Project Success Probability Chart
100
80
60
Available Financing
Equity
Investment
Mezzanine, Bridge, Construction, LongTerm
IDENTIFICATION
EXPLORATION
$ 1.34 M
$11.07 M
DRILLING
Construction
Injection
Drilling
Production
Drilling
Feasibility
Delineation
Drilling
Drilling
Exploration
Geophysics
Reconnaissance
20
Financial Closure
Probability Becomes Higher &
Industry Shares Risk
Responsibility
Initial Production
Drilling
40
Exploration
Risk
Mitigated in
KGRA in IV
50 MW Plant
Opportunity to Support
Industry Pain Points
Desktop
PROJECT SUCCESS PROBABILITY
%
Risk Mitigation:
PRODUCTION
$14.73M
Source: Dept. of Energy – Geothermal Risk Mitigation Strategies Report, February 15, 2008 – Updated to 2011
dollars for a plant at the Salton Sea with two (2) confirmation wells – 1production, 1 injection
$312.86M
www.iid.com
R. Gordon Bloomquist, Ph.D.
Washington State University Extension Energy Program
Utility Resource Plans
• Utilities build resource portfolios that must balance several
cost and risk characteristics:
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Carbon regulatory risks/requirements
Fluctuation of natural gas prices
Transmission costs and availability
Grid stability issues
Energy demand scenarios
Ratepayer risk
Climate
www.iid.com
5
Thank you!
Carl D. Stills
Energy Manager, IID
[email protected]
www.iid.com
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