Geothermal Energy Portfolio from a Utility Perspective

1
Geothermal Energy Portfoliofrom a Utility
Perspective
How do you know what you need and is Geothermal
it?

• Marilynn Semro
• Seattle City Light
• May 11, 2005

2
Agenda

• The long-term strategic integrated resource plan
• What is a good resource
• What is good about geothermal
• What is not so good about geothermal
• Geothermal in the NWPCC 5th Plan
• Utility conclusions
• Where do we go from here?

Seattle City Light
3
Integrated Resource Plan

• What are IRP Strategic Long-Term Objectives?
• Reliability.
• Cost.
• Risk.
• Environmental and Societal Mitigation.
• How much is the gap?
• How much? - load growth? resource adequacy?
• What? - capacity, energy
• When? - timing

Seattle City Light
4
IRP continued

• What are the options? Conservation, Gas, Coal
  Wind are in, market is out.
• but what about geothermal?
• Characteristics base-load, highly reliable.
• Cost
• Production tax credit - Is it available and can
  you use it?
• Societal and environmental impacts site
  specific
• Risk
• Will there be environmental regulations?
• Is there a resource?
• Will it be there when you need it?

Seattle City Light
5
IRP continued

• Identify or select portfolios.
• Determine your best fit options.
• tradeoff between minimizing risk and cost?
• Chose a resource portfolio that balances costs
  and risks.

Seattle City Light
6
What is a Good Resource?

• Varies from utility to utility.
• Increase reliability by adding diversity.
• Reduce fuel availability risk (may look at coal,
  geothermal, landfill gas, and biomass if have
  hydro, natural gas, and wind).
• Reduce reliance on one or few resource (in event
  of plant or transmission outages).
• May provide a particular need (e.g. peaking or
  load following).
• Minimize cost.
• Low capital/high operating cost (must manage
  operating cost).
• High capital/low operating cost (must manage
  investment and out of money potential - low
  fuel price risk).
• Manage risk - capabilities to manage risk.
• Environmental and societal values.

Seattle City Light
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What is a Good Resource?

• Other
• I can get the resource when I need it.
• I can get the amount that I want.
• I can get the transmission in a timely manner.
• The resource cost is competitive with
  alternatives.
• The transmission costs are not exorbitant.
• The resource developer is willing to meet my
  desire for a power purchase agreement or an
  ownership interest.
• If there is going to be a long-term relationship
  with the developer/operator, the relationship
  must be compatible.
• I can get value of PTC if it is a renewable
  resource.
• The counter-parties are credit worthy.

Seattle City Light
8
What is Good About Geothermal?

• Reliability
• Very low outage rate.
• Cost
• Overall cost can be competitive.
• Risk
• Low fuel volume risk.
• Low fuel price risk.
• Environmental Societal
• Renewable and Green.
• Green tags and tradable offsets.
• Public generally accepting of idea.

Seattle City Light
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What is Not So Good About Geothermal?

• Hard to get in NW relative to other resource
  types.
• Very limited candidate resource pool.
• Difficulty in expanding candidate resource pool.
• A lot of work to make happen relative to
  competitors.
• Hard to put in Integrated Resource Plans with so
  little information.

Seattle City Light
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Geothermal in NWPCC 5th Plan

• Geothermal power generation is not considered in
  the 5th Power Plan.
• Largely excluded due to potential for land use
  conflicts in the limited areas with potential
  geothermal.
• Plan calls on utilities to acquire renewable
  energy (including geothermal) projects if
  cost-effective opportunities rise.

Seattle City Light
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Utility Conclusions

• Utilities are not going to put all their new
  resource eggs in the geothermal basket due to
  risk.
• No resource
• Doesnt come on-line on time (or at all)
• But if opportunities arise, and they are prepared
  to take advantage of those opportunities then
  yes.
• Utilities continue to be concerned about lack of
  good renewable resources (e.g. wind and
  geothermal).

Seattle City Light
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Where Do We Go From Here?

• Very worthwhile resource and we should continue
  to pursue resolving issues.
• availability and location of resource
• land-use - leasing, permits, etc
• transmission issues (applicable to all new
  resources but wind appears to try to be
  partnering with gas and coal)
• cost - production tax credit, other financial
  incentives
• Other

Seattle City Light
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Questions

• ?

Seattle City Light