Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

 
CON | 
Despite the low levelized cost of generation that creates the promise of a reasonable profit
margin, geothermal projects are not easy to finance. The high upfront risks, such as geological/ 
resource risk, the need for high upfront investment, and the long project development cycle, make
geothermal projects, especially in their exploration and test drilling phases, less attractive than
other types of power generation projects for the private sector. 
7 | PrO | 
Geothermal power generation has been around for more than a century and presents few
technological unknowns. To produce electricity, conventional steam cycle turbine generation
is usually employed. The operational risks and maintenance requirements are well known and
manageable. 
 CON 
| A geothermal steam field requires sophisticated maintenance. In many cases, additional
costs are incurred due to periodic drilling of make-up wells to replace older wells which
have lost some of their steam production potential. Challenging problems with scaling
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may
also arise in specific areas where the field contains high levels of minerals, requiring the design of
special features for the power plant, the use of chemicals, or the frequent cleaning of wells—all
of which increase operational costs.
8 | PrO |
Economies of scale can be achieved by sizing the geothermal plant to a utility scale (50 MW
to several hundred megawatts). Land and space resources are less of a constraint to achieving
the needed scale than with the case of most other power generation technologies.
 CON
| Extensive production well drilling is required for a large-scale geothermal plant, and can
test the limits of sustainability of a given field in several ways. While proper reinjection can
usually prevent reservoir depletion, the maximum capacity of the plant is limited ultimately by the
reservoir’s heat production capacity. Building one large power plant instead of several smaller
ones in different locations may unnecessarily concentrate the resource risk. Also, while the
area occupied by each production well will be modest, the area of the entire steam field may
increase considerably, creating potential land use or environmental issues. In addition, the efforts
to determine the optimal size of the plant in relation to the field may result in a longer lead time to
the start of plant operation.