With fossil fuel prices skyrocketing, the economics of renewable energy sources have become significantly more attractive. Beyond that, though, some EU countries have established incentive schemes for renewable power. These are being supported by the EU with the aim of achieving renewable power production costing in the range of 8 - 15 eurocents/kWh, and ultimately as low as 5 eurocents/kWh by 2020.
A renewable energy source arousing interest is Enhanced Geothermal Systems (EGS). However, since it is a new technology with a steep technological learning curve, the exploration risks can be high, so public acceptance must be won and legislation developed to promote the technology. A major step can be taken by promoting quantitative understanding of the economic impact of key technical and economic parameters for EGS at different phases in the workflow, from exploration to production. As part of the EU project ENGINE, TNO developed a simple techno-economic performance tool in Excel (engine.xls) for this.
The models have also been implemented in a dedicated decision support system (EGS DSS), using best practices for asset evaluation from the oil and gas industry. This approach allows the modeller to take natural uncertainties into account and use decision trees to evaluate sensitivities and different scenarios. The tool evaluates the performance of geothermal systems by investigating sensitivity to both natural uncertainties beyond anyone's control (e.g., flow characteristics, subsurface temperatures), engineering options (well design and surface facilities options) and economic uncertainties (e.g., price of electricity, tax regimes). It can also forecast the effects of improved exploration tactics and technological performance, as well as government incentives, on the viability of prospects. The Excel performance assessment tool (ENGINE.xls) and the Engine DSS are public deliverables of the Engine Project.
Performance assessment is an important initial step in forecasting the economic performance of a prospect, in terms of key performance indicators such as Net Present Value (NPV) or Unit Technical Cost (UTC). The Excel calculation spreadsheet provides basic insight into the way the calculations are performed and allows the user instant access to the sensitivity of his model outcomes to changes in the input parameters. The spreadsheet can be easily modified and extended for project-specific calculation models. The EGS-DSS enables probabilistic calculations to be quickly performed and users can evaluate their decision trees and perform advanced sensitivity analysis. EGS-DSS allows planners to build decision trees in which complete probabilistic calculations can be performed for each branch.