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Special Report | September 2016

A long way to go for Geothermal

Government has put out a draft policy paper in November 2015, calling for comments from all stake holders, but a policy frame work for tapping Geothermal energy in India seems to be far from reality.

Renewable energy (RE) has taken centre stage in last two decades. When wind, solar, bio-mass and other hybrid technologies found prominence, countries like Germany sharpened their expertise and were successful in exporting 100 per cent RE to neighbouring countries. This is indeed a very notable achievement. However, the quest for cleaner energy continued and geothermal is one segment that many have explored and begun tapping.

Definition
According to the International Energy Agency (IEA), ´Geothermal energy can provide low-carbon base-load power, heat (and cooling) from high-temperature hydrothermal resources, deep aquifer systems with low and medium temperatures, and hot rock resources. Geothermal power comprises mature renewable technology options that can provide base-load power from energy stored in trapped vapour and liquids. Enhanced geothermal technologies are under development that would allow to greatly expand the use of this technology family beyond countries that have resources suitable for established technologies.´

Geothermal energy was in use from the beginning of the 19th century. However, electricity from geothermal was established only in the beginning of the current century. As per the 2016 Annual US Geothermal Thermal Production Data, the global geothermal power capacity is 13.3 GW as on January 2016. This is spread across 24 countries. It is expected that global capacity will touch 18.4 GW by 2021 and 32 GW by 2030. Iceland was the first country to tap geothermal energy for heating purposes in a major way. Interestingly, 25 per cent of the country´s power requirement is met by electricity produced from geothermal energy. As per the data available, it is believed that all countries put together tap only six-seven per cent of the total potential.

Global Geothermal energy players
As on March 2016, the US leads the chart with an installed capacity of 3,567 MW, followed by Philippines with 1,930 MW. Indonesia is in the third position with a capacity of 1,375 MW, Mexico with 1,069 MW followed by New Zealand with 973 MW, and Italy with 944 MW. However, in the planned capacity addition chart, it is Indonesia which leads with 4,013 MW, followed by the US with 1,272 MW. African countries have started to tap this rich and natural energy source. An addition of 1,091 MW is under way in Kenya, followed by 987 MW in Ethiopia. The MENA region is also exploring its possibilities, and Turkey has planned an addition of 1,153 MW.

Where does India stand?
While there is desired momentum and expansion happening in the global geothermal arena, Indian expansion in the segment is yet to gain speed. RE is considered the best way to curtail carbon emissions and technology to tap power from wind and solar have been developed and implemented. Issues such as unpredictability of availability and low plant load factor (PLF) has made stakeholders look beyond these resources.

The past decade has seen considerable amount of concentrated efforts from both government and private parties to identify and tap geothermal thermal energy in India. If we go by projects under implementation by different countries as per the 2016 Annual US Geothermal Production Data, India is looking at harnessing 98 MW from geothermal. However, the report does not specify any timeline for the same. The Ministry of New and Renewable Energy (MNRE), under which geothermal energy falls, has put out the draft policy in November 2015 inviting comments from all stakeholders. The policy has highlighted the country vision as: ´To establish India as a global leader in geothermal power by deployment of geothermal energy capacity of 1,000 MW in the initial phase till 2022. The scheme is to focus on assessing potential of resources and promoting RDD&D projects of power production and geo-exchange pumps. Resource assessment is being planned in 2016-2017 for public domain.´ According to the draft policy, the Geological Survey of India has identified 340 hot spring localities in the country, of which 1,000 MW capacity can be produced from 113 spots. The major potential hot springs from are - geothermal reservoirs at Puga (Jammu & Kashmir) in the north-west of the Himalayas and Tatapani (Chhattisgarh) fields on the Narmada in central India. Other potential places are Godavari basin Manikaran (Himachal Pradesh), Bakreshwar (West Bengal), Tuwa (Gujarat), Unai (Maharashtra), Jalgaon (Maharashtra), Rajgir and Munger (Bihar) and Jharkhand. Beyond this, the draft policy also extends support to the following categories (as defined below) in terms of funding.

RD&D Projects (Power)
The Research, Design, Development and Demonstration (RDD&D) of new technology for the deployment of the geothermal energy including its hybridisation with other RE technology will be considered to initiate geothermal-based power generation scheme stresses to carry out survey/studies for resource assessment/development of geothermal fields of the country. The power produced in terms of electrical units defined by CERC will be incentivised as per the scheme. Under the above programmes of the Ministry, R&D, technology development, demonstration projects and projects on other related activities are submitted to MNRE for the financial support. Such projects are scrutinised in the Ministry for support and approval of the competent authority.

Industrial Projects (Power)
Only projects comprising power production and distribution to state utilities with revenue generation will be considered. Power produced in terms of electrical units defined by CERC will be incentivised as per scheme.

Public Good (Direct Heat)
Project comprises of thermal applications, for instance the geothermal fluid can be used for space heating, greenhouse cultivation, cooking etc., in these projects MNRE would facilitate NGOs, entrepreneurs, central or state PSUs and other private players.

Ground Source Heat Pump
The basic principle on which GSHP works is ´refrigeration cycle´. The refrigerant carries the heat from one ´space´ to another. The heat pump´s process can be reversed. The earth is the main source and sinks of heat and utilises constant temperature at 10-300 meters below the earth surface. In winters it provides heat and summers it takes the heat. The heat pumps can be adopted to any kind of building at any place as India has a high potential for direct heat use/GSHP. Though the draft policy was put up on the MNRE site, the country is yet to have a policy in place. Kameshwar Rao, Partner, PricewaterhouseCooper, says ´India has very limited geothermal resources such as in Chhattisgarh or Ladakh, and is unlikely to contribute meaningfully to energy mix even at a the state level.´

However, Prof. D Chandrasekhram, who was associated with the Department of Earth Sciences in IIT Mumbai is all for it. He has been studying geothermal energy for last 30 years and pointed out that Andhra Pradesh (now Telangana) has signed a PPA for geothermal power from the Godavari basin project of 25 MW capacity. The PPA was signed at Rs.6.95. This is the first pilot project in the country.

While these projects are capital intense, Prof. Chandrasekharam added that the land required to set up a plant is much lesser than a conventional or solar plant - only 1.5 acre/MW, and the estimated cost per MW for setting up a geothermal project would be Rs.11-12 crore. While the cost per MW in case of coal/wind/solar is `6 crore. Escalation in cost is mainly due to mining and heavy engineering processes involved in setting up the project.

Rao further elaborated, ´As it is capital intensive, large projects are necessary for it to be commercially viable. A smaller project may serve as technology demonstration rather than mainstream supplier. The capital costs will vary considerably depending on the geothermal setting, and could range Rs.18-20 crore per MW. We do not have any tariff regulations currently.´

Prof Chandrasekharam, who is also the non-executive Chairman of Geo Syndicate, a Mumbai-based company which specialises in geothermal energy pointed out, ´Do not compare the cost of other RE based power and geothermal. The cost of solar power was Rs.18/unit which has come down to below Rs.6 now. But what happened to the companies? Many of them collapsed because their PLFs are very low. In case of geothermal, the PLF would be 90 per cent, and it is the cleanest source available with higher output.´

The benefit of geothermal is that output would be constant like conventional power plants. This gives it an edge over others.

Rao on the other hand feels, ´Geothermal has the benefit of clean energy, but suffers from high resource risk. The costs of exploratory drilling to establish the resource can be considerable, but can be funded by the governments. However, project costs can escalate and PLFs achieved can be often lower than estimates, causing project to become unviable. For this reason, their cost of capital tends to be higher. For these reasons it´s a risky bet.´

While the country has mapped the probable hot spring sites, there is no clear data of the potential capacity. When asked the Prof. Chandrasekharam said, ´let us concentrate on implementing the power plants first and then give out the potential data. I personally have taken many public sector companies to different countries to demonstrate the intricacies of geothermal plants. But nothing has concretised till date.´

The Way Forward
The country has a set a very ambitious goal as part the action plan for climate change for 2030. This includes three major steps:
a)To reduce emissions intensity, or emissions per unit of GDP,
b)To increase forest cover, and
c)To increase the RE component in the energy basket.
To achieve India´s commitment on climate change, it is imperative to look at adding more and more cleaner energy to our renewable and total energy mix.

-Renjini Liza Varghese

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