INNOVATION POLICY AND INNOVATION MANAGEMENT
Factors affecting the cost of electricity from geothermal power plants
- 1 University of Rijeka, Faculty of Engineering, Croatia
- 2 University of Rijeka, Faculty of Economics and Business, Croatia
This article analyses the factors affecting the cost of electricity from geothermal power plants. Geothermal power is a capital – intensive technology and the installation costs are highly site sensitive. The costs of geothermal electricity are influenced by the thermal properties of the reservoir, the costs of site exploration and wells drilling, the number and depth of the wells, the power plant type. The choice of the power plant type depends on the properties of the geothermal resource, its temperature, quantity and quality. Being site- and technology-dependent, the installation costs for geothermal power may be as low as 2000 US$/kW and as high as 7000 US$/kW, with the global weighted average at 4000 US$/kW. This wide range of installation costs translates into levelized cost of electricity (LCOE) between 40 US$/MWh for upgrade and expansion projects and 170 US$/MWh for greenfield projects. The global weighted average LCOE is estimated at 70 US$/MWh. Further costs reductions may be accomplished through the research and development of more innovative and low-cost techniques for site exploration and drilling as well as with advanced exploitation methods for geothermal reservoirs.
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