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

Comparison with Other Technologies
As for any other power generation project, developing a geothermal project requires that the resources 
involved be economically justified. In general, this means that the project becomes part of a least cost 
development plan, taking into account the alternative resources that a given country can develop 
within the planning timeframe. These include thermal options based on fossil fuels, such as coal, 
fuel oils of different grades and prices, and natural gas, as well as renewable resources other than 
geothermal, such as hydropower, wind, and solar.
The economics of different resources can be compared by taking the different cost characteristics 
and computing the LCOE which will vary according to investment costs, fuel costs, fixed and variable 
operation and maintenance costs, useful life span, and the discount rate. Table 1.8 provides the basic 
parameters of a set of alternative development options that illustrate a range of different possibilities. 
They include:
• 
Medium Speed Diesel motors (MSD), which operate typically on Heavy Fuel Oil (HFO),
equivalent to FO #6 and provide a full range of capacity factors. Their fuel cost varies in
conjunction with the oil price for engine sizes that do not usually exceed 20 MW.
• 
Steam turbines using HFO or coal. Steam turbines exhibit economies of scale, which
normally have sizes in excess of 100 MW. In the case of coal, investment costs vary
widely depending on the environmental mitigation equipment required (which will depend on
the grade of the coal), as well as on fuel treatment requirements. 
• 
Combustion turbines operating with either gas oil (e.g., FO #4) or natural gas. They may
be either simple cycle or combined cycle, in which case there is a steam turbine powered
by heat extracted from the exhaust gases of the combustion turbine. Sizes usually do not
exceed 150 MW. Modern combustion turbines are designed to operate on heavier fuels.
• 
Small wind turbines, which are site specific and typically installed to serve as a complement
to larger systems. Their capacity factor is typically quite low (approximately 20 to 30 percent).
• 
Large wind turbines, also site-specific, which are normally installed in favorable sites to
provide capacity factors of up to 40 percent.
• 
Hydropower plants, with costs that may vary widely depending on physical location
characteristics and the hydrological regime. Hydropower capacity factors usually range
between 40 to 60 percent.
Table 1.9 shows the approximate values for fuel costs as of 2010, based on a reference oil cost of 
around US $75 per barrel. A comparison of the relative economics of the different alternatives can be 
performed through screening curves; one such set of curves illustrates the total cost associated with 
the dispatch of a kilowatt of each type of plant according to the capacity factor. In the case of thermal 
alternatives, as the capacity factor increases the associated cost increase proportionately to their use 
of fuel. Renewable energies have a flatter profile, as shown in Table 1.10.

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