Electric Vehicles In An Electric-Centric World- Part 9- Economics & Risk

ECONOMICS AND RISK

Geothermal power is similar to nuclear plants or large hydro-electric projects in this sense; it requires a large up-front capital infusion to pay for the costs of exploration, drilling, and reservoir development. Although such substantial up-front costs increase risk beyond that attendant to the actual activity of exploratory drilling, there is little risk in the activity of drilling itself:

The risk associated with deep drilling is clearly offset against the risk created by our addictive reliance on petroleum-based fuels which creates source instability and, inevitably, price instability. Does dependence or reliance on Hugo Chavez, Mahmoud Ahmadinejad, Muammar Gaddafi, Vladimir Putin or the Shia militias of Iraq for our energy needs and economic viability make any sense? Anyone home? Talk about "risk".

The risk associated with deep drilling is also offset against the measurable risks created by coal power and nuclear power. In coal power's case, it is the wide-ranging adverse environmental impacts caused by mining activity and the production of carbon dioxide. In nuclear power's case, it is the environmental damage from mining activity, the unique danger from "yellow cake" proliferation, potential operational hazzards [aka "Chernobyl"/"Three Mile Island"] and long term storage containment. How much have we already wasted on "Yucca Mountain", whose viability is in question for having been constructed on a seismically active fault zone? The risk here is obvious: we do not know if this is a safe containment facility and will work effectively on a long-term basis. The risk of a catastrophic seismic event at this facility must also be factored in.

Business planning is also a problem when fossil fuels are used to generate electricity. This is particularly the case with natural gas, which historically has had great swings in price. Since the price of the earth's heat as a fuel is constant [i.e., "free"], the price of electricity generated from geothermal power will be more stable and this stability permits far better forecasting and profit modeling.

Although the cost to develop an active deep well geothermal reservoir is great and will require government assistance, that cost is not too far removed from the present-day cost to plan and build nuclear reactors. Accepting the need to drill deep wells in locations far removed from zones of near-surface thermal activity [geysers, faults, subduction zones near tectonic plates, such as those located in the western United States] where the estimated cost to construct a geothermal plant is approximately $2,800.00 per kWH, and we estimate that the cost to construct a deep well binary geothermal plant doubles to $5,600.00 per kWH. This cost is still competitive with the cost incurred to develop a new nuclear power facility. Recent studies suggest that a new nuclear power plant will cost approximately $6,000.00 per kWH. How many deep wells can be drilled - indeed, how many solar panels and wind turbines can be installed - at this price? In ten years, the cost to construct a new nuclear power plant will undoubtedly be significantly higher. In contrast, advances in drilling technology will most likely reduce the cost per linear foot to conduct deep well drilling operations.

Other considerations? Time is one. It should take less than two years to drill, develop and generate electricity from a deep well binary geothermal system. In comparison, a new nuclear facility will not go on line for at least fifteen years; much too long to wait. And who wants a nuclear power plant operating in their back yard? Presumably the same lost souls who would like nothing better than to have a toxic waste dump or spent-nuclear storage facility sited in their back yards. Coal power plants also take considerably longer to become active. And many people object to the mountains of coal stored on-site and to the "fly ash" that contaminates all it settles onto. No such problems with binary geothermal power.

Once drilling is complete, and the reservoir is developed and the plant is built, that is virtually the end of geothermal power's major expense. The "fuel" is free; there is no charge for the heat radiating from the earth's magma. No cartel can withhold production; no speculator can manipulate the price. Only maintenance and operational costs remain - but these are costs which are also incurred by all utilities regardless of the source of fuel that they use to generate electricity. And, geothermal power does not suffer the residual operational costs associated with security and pollution control/abatement [coal/nuclear predominantly], including the costs of sequestration and perhaps even the imposition of a tax on carbon.

Other costs that are associated with the operation of conventional power plants must also be factored: the cost to mine, mill and transport the fuel; pipeline construction/maintenance costs; environmental damage caused by mining activity [digging and pit creation]; pollution from mechanized extraction [tractors, cranes, trucks, trains, etc., all burn fossil fuel and contribute their share of greenhouse gases as long as the mining activity is pursued]; mine run-off; damage to the ecology of the mined sites [acid pollution of watersheds and destruction of woodlands and canopy which absorb greenhouse gases and naturally sequester carbon dioxide]; loss of revenue from recreational or agricultural activities; reclamation costs once the mine is depleted; security costs to keep tabs on the mined ore so the wrong people do not come into possession of uranium; higher operational cost of nuclear facilities due to the hazards involved with radioactive material, including higher plant security costs; substantially higher insurance costs; disposal and storage costs; thermal pollution from cooling towers. To arrive at a more lucid and accurate comparison of the economic viability of deep well binary geothermal power as opposed to electric power generated by using fossil fuel/radioactive ore, these extraneous costs cannot be ignored.

When the costs discussed above are properly factored in, deep well binary geothermal power is economically competitive with nuclear power and other allegedly less expensive methods of generating electricity. The total real cost to generate each kWH from nuclear and coal power is not significantly different from the cost that will be incurred to generate electricity from deep-well binary geothermal power systems. The exorbitant costs associated with pollution and security [military spending as well], etc., balances out the costs associated with drilling many deep wells. Geothermal power is economically competitive without considering its distinct advantage of being a much safer and more environmentally benign resource. When pollution and environmental damage costs are assessed to coal and nuclear power, they become much more expensive per kWH, and deep-well binary geothermal power achieves the economic competitiveness that makes it a much more attractive energy option.

More so than with other forms of renewable energy systems, EGS can be local because it can obtain its source of energy [heat] anywhere at depth. And, it enjoys a small foot print in the process of doing so. Therefore, EGS will have a much better track record of generating local revenues, jobs, royalties and taxes, and will expand local economic activity more than solar power, micro-hydro power and wind power. Remember, the lack of local and domestic economic activity in the energy arena -- as much as our dependence on foreign energy supplies - helped push us into this energy/economic mess in the first instance. The anticipated increase in local economic activity is a powerful counter punch to the additional cost that deep drilling entails. Eventually, local economic growth will more than pay for this added cost. Correspondingly, unemployment payments will decline; this cost reduction will tip the economic scales further in favor of deep well binary geothermal power, thereby justifying more generous involvement by the government.

Being local, the need to construct transmission lines, hence the development costs to do so, can also be minimized. Not so with solar power and wind power which need large uninhabited areas in key solar and wind zones to produce their electricity, thus requiring transmission lines to and from these more remote areas. Another eyesore with environmental implications.

One way to reduce the cost of EGS further is to adopt co-generation processes. Stated succinctly, go-generation kills many birds with one stone. Thermal water that leaves the heat exchanger in a binary system can be further "processed" by passing it through hydro-pools in a quasi heat exchange process, the radiating heat warming a greenhouse. The greenhouse can then use treated waste water together with "sequestered" carbon dioxide as a "fertilizer", and use it to grow algae. The algae can be processed to make bio-diesel. In the alternative, agricultural crops can be grown hydroponically in the same manner or aquaculture ponds can be developed with the spent thermal water prior to re-injection. With locally grown produce, transportation from far away locations is eliminated thereby reducing fuel consumption. The increased productivity and additional revenue derived from these ancillary processes can be used to defray some of the expense of deep drilling and further dilute the overall cost per kWH. We get food, energy, eliminate excess carbon dioxide and treat waste water all in one shot. When these additional benefits attendant to biofuel production, waste disposal, carbon dioxide assimilation, food production and security are factored in, geothermal becomes even more cost competitive with solar power, wind power and "clean coal".

Moreover, used in conjunction with small-scale solar and wind generators on-site to power injection and production pumps and other machinery, parasitic consumption/loss of electricity can be minimized, thus allowing all of the electricity generated from binary geothermal power to be sent to the grid.

Lastly, electricity produced from geothermal power can be added to the market of renewable energy credits and assist utilities to meet their state's renewable energy portfolio standards. The sale of carbon off-sets and energy credits will also make the economics of EGS more favorable.

Another point. If we are going to drill deep into the earth's crust to sequester carbon underground, why not drill just a bit deeper to access the thermal energy that is freely available at depth so that we can avoid this sequestration cost in the first instance. This carbon cost can be avoided altogether by using truly "clean" geothermal energy. With regard to oil drilling, the easy stuff is gone. Oil companies will have to explore deeper and deeper into the earth's crust to locate and extract continually declining reserves of petroleum. Now we are talking about heat mining at depth.

Let alone the foregoing, the local and national economic benefits to be gained from developing geothermal resources are enormous. Each plant will generate tremendous local economic activity. That activity can not be outsourced overseas. To the contrary, what we learn from our own deep well drilling programs and resource development can be exported to the world, earning U.S. businesses many billions of dollars in profit, the earnings of which solve two major problems in their own right: the balance of trade [a deficit reaching more than 2.5 billion dollars per day, mostly going to unfriendly nations to finance their unfriendly agendas] and balance of payments [budget deficit/national debt; one hesitates to make that colossal and depressing calculation].

Other obvious advantages are not overstated: a future secure from economic and military disaster - a cleaner environment that just might be necessary to save the globe itself. Eliminate the dangerous dependence on foreign sources of energy. Broaden the options to conduct foreign policy. The nation's balance of payments are reorganized and more equilibrium returns to the marketplace [note the export of 1.2 billion dollars per day just to procure our petroleum needs, an amount surely to rise]. No longer addicted to "Black Crack". No longer beholden to sand castle despots. No longer constrained by foreign "bankers". No more scenarios which depict our leaders with hat-in-hand and on bended knee, groveling for help [recall Mr. Bush's pathetic begging before King Abdullah, meekly seeking more oil production from Saudi Arabia to quell the speculative rise in price to +$147.00 per barrel and perhaps higher in the near future]. More freedom and flexibility. Eminently greater security, both economically and politically and in a real, physical sense. That is a future powered by deep well binary geothermal energy.

Compared to the economics of continuing the space program or the economics associated with being the world's policeman, including that military misadventure in Iraq for the purpose of securing and stabilizing fossil fuel resources, deep drilling EGS is a bargain. What can possibly be more important than assuring national security through energy independence. Nothing. Consequently, this program cannot be analyzed on the usual cost-benefit basis or in terms of pure market-driven forces. We do not do things to secure our national security based on a cost-benefit economic model. We do it, period. Geothermal provides us with energy self-sufficiency, reliability, dependability, sustainability and security, and it creates domestic jobs that can not be outsourced. Geothermal is renewable, clean and environmentally benign.

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