4. Discussion
4.1. Legislative issues
It is possible, indeed essential in order for this paper to have a
practical application, for respective national legislative systems to
embed strong sustainability parameters into permitting stipulations.
Ketilsson et al. provides a general discussion of the means by which standard reservoir engineering tools can be forged into the permitting
and legislative process for geothermal projects [56]. The
authors envision two permitting categories, one for new projects
and another for the expansion of existing plants. Although it is
uncommon for new projects to calculate their generating capacity
over a 100 year timespan, existing methods could be used to create
a best practice estimate. Simple methods based on surface and subsurface
exploration can glean valuable data concerning the system
structure, chemistry of fumaroles, deep reservoir temperatures and
fluid quality. Based on this data, a volumetric generating capacity
estimate can be established, and this analysis can be refined via
reference to the productive capacity of similar reservoirs elsewhere
[57]. However, any estimate of E0 at the pre-production stage will
incorporate an error margin as pressure drawdown data will be
missing and further resource discoveries may be made in the future
[56]. There is thus the risk that the model to generate E0 is an
underestimate of the true sustainable production level, however,
even so, it should be considered the maximum allowable production
level permissible by national energy authorities. This situation
could be resolved via independent re-evaluations of the sustainable
level of production, perhaps occurring on an annual basis. Regular
periods of review also provide power plant owners with the
opportunity to optimise production over time and take advantage
of emerging technological enhancement opportunities.
Where geothermal power plants are aspiring to expand production,
it is much easier to establish the sustainable level of
production. Established production fields will have detailed well
by well numerical models considering prediction times for much
longer than a 30 year period of economic maximisation [56].
Furthermore, the data is more accurate as pressure drawdown and
recharge information is available. Sufficient information is available
to make sure that the geothermal field adheres to the 100
year criterion for sustainable utilisation.
As it is relatively straight-forward to at least estimate a value for
E0, it is important to consider why this is not already a requirement
for new and expanding geothermal power plants. There are a
variety of reasons, including the great demand for seemingly
abundant energy resources; disparity between science and policymaking;
lack of long-term national sustainability strategies; gaps in
the understanding of the attributes of geothermal energy resources;
and uncertainty in the early phases of production concerning the
sustainable output. Furthermore, in general, the process of lawmaking
is inherently a political one, and thus it typically encourages
the fulfilment of economic rather than sustainability objectives.
There is evidently a clear need for scientists to play a greater role in
ensuring that sustainability principles are embedded into legislation.
The development of the Geothermal Sustainability Assessment
Protocol (GSAP) is a promising instrument in order to guide policymaking
towards the more sustainable use of geothermal resources.
Currently being tested and implemented for projects in Iceland and
Kenya [58,59], the GSAP applies BellagioSTAMP principles and
consists of a set of indicators for measuring the overall sustainability
of geothermal production, including its resource utilisation, environmental
impacts and financial viability. Assuming widespread
adoption over time, the GSAP should at the very least help to
popularise the importance of maintaining sustainable yields from
the geothermal resource.
4.2. The use of LEC methodology as a basis for the GPI
This paper proposed the use of LEC methodology to calculate
the costs of the unsustainable utilisation of geothermal resources
in a current time period and in terms of the costs of the alternative
energy asset providing the same or very similar function as the
geothermal resource. The use of LEC methodology is particularly
useful for a current measure of economic welfare such as the GPI,
since it gives a present value of the costs of energy production.
This paper has used global LEC averages to illustrate the
potential GPI cost deduction associated with unsustainable
geothermal utilisation. While this is a reasonable approach to
illustrate a theory, in practice the method is much more robust if
site specific data is applied. Even so, great care needs to be taken
when comparing different LCE studies as the cost outcomes are
highly dependent on the choice of discount rate, cost assumptions
and capacity factors. For instance, although geothermal power
generally has a typical capacity factor of upwards of 90%, for hydro
power this amount can vary from 35% to 90% depending on the
power plant’s specific location [55]. In terms of costs, different LEC
assessments will include some values (for example, connection of
the generating source to the transmission grid) and not others.
When applying a LEC-based deduction to the GPI and using many
different studies, care has to be taken to ensure that the same
assumptions are applied throughout.
It should be noted that this study has used LEC estimates which
are purely based on market costs. Maintaining consistency with the
strong sustainability ethos underpinning the GPI’s cost deduction
methodology should necessitate the use of full LEC estimates for
renewable energy alternatives. Therefore, ideally, LEC estimates
should incorporate costs for socio-environmental damages, such
as carbon dioxide emissions or air pollution. If this was the case
then subtracting a GPI cost for unsustainable geothermal utilisation
would fully account for the full set of anticipated socioenvironmental
impacts stemming from the substitute energy
resource. Plant specific publications of LEC estimates incorporating
the costs of socio-environmental impacts are extremely rare,
although the ‘External Costs of Energy’ (known as ExternE) Project
by the European Commission has calculated environmental external
costs from various forms of renewable energy production. As yet,
studies have been hampered by data shortages and focused on
predominantly the economic costs of air pollutants, and no estimates
have been carried out on either hydro or geothermal power
plants. However, there is the future potential for the ExternE
methodology to be expanded to include other externalities and be
of use when calculating the most appropriate GPI cost deduction for
the unsustainable utilisation of geothermal resources.
It is also important to note that LEC estimates are typically based
on 20 to 40 year timescales. Thus, the LEC appraisal takes place over
a period where the economic feasibility of a power plant is
considered, not a 100 year sustainability perspective. However,
although this is apparently a methodological flaw, this is not
necessarily the case. GPI needs to deduct the replacement market
costs of the unsustainable component of geothermal utilisation,
expressed in current time terms. The current market costs,
expressed in terms of the average cost over the lifetime of a
replacement geothermal (or alternative) plant, can only be considered
in the light of the likely useful economic lifespan of the
replacement plant. Even though LEC estimates for geothermal
projects ignore sustainable utilisation issues, they remain the most
accurate means of determining the current market costs of renewable
energy production. Until the market perspective shifts to
viewing geothermal production over a 100 year timescale, the LEC
estimates will remain somewhat higher.