Capital Expenditures (CAPEX)
Definition: For the ATB—and based on EIA (2016) and GETEM component cost calculations—the geothermal plant envelope is defined to include:
- Geothermal generation plant
- Exploration, confirmation drilling, well field development, reservoir stimulation (EGS), plant equipment, and plant construction
- Power plant equipment, well-field equipment, and components for wells (including dry/non-commercial wells)
- Balance of system (BOS)
- Installation and electrical infrastructure, such as transformers, switchgear, and electrical system connecting turbines to each other and to the control center
- Project indirect costs, including costs related to engineering, distributable labor and materials, construction management start up and commissioning, and contractor overhead costs, fees, and profit
- Financial costs
- Owners' costs, such as development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, and property taxes during construction
- Electrical interconnection and onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (<1 mile), and necessary upgrades at a transmission substation; distance-based spur line cost (GCC) not included in the ATB
- Interest during construction estimated based on four-year and five-year duration for hydrothermal and EGS respectively (for the Advanced Scenario), seven-year and nine-year duration for hydrothermal and EGS respectively (for the Moderate Scenario) and an eight-year duration and ten-year duration for hydrothermal and EGS respectively (for the Conservative Scenario) accumulated at different intervals for hydro and EGS based on schedules as outlined by the GeoVision Study (ConFinFactor).
Regional cost variations and geographically specific grid connection costs are not included in the ATB (CapRegMult = 1; GCC = 0).
In the ATB, CAPEX is shown for six representative plants. CAPEX estimates for all hydrothermal NF-EGS potential result in a CAPEX range that is much broader than that shown in the ATB. It is unlikely that all the resource potential will be developed due to the high costs for some sites. Regional cost effects and distance-based spur line costs are not estimated.
CAPEX in the ATB does not represent regional variants (CapRegMult) associated with labor rates, material costs, etc.
CAPEX in the ATB does not include geographically determined spur line (GCC) from plant to transmission grid.
Base Year: GETEM inputs are derived from the Business-as-Usual (BAU) scenario from GeoVision ((DOE, 2019), (Augustine et al., 2019)). Costs are for new or greenfield hydrothermal projects, not for re-drilling or additional development/capacity additions at an existing site. The following chart shows historical CAPEX and LCOE for geothermal.
Future Years: Projection of future geothermal plant CAPEX for three scenarios are derived from modeled costs in the GeoVision Report.
- Conservative Scenario: Continuation of current industry trends in drilling (e.g., minor efficiency improvements with little to no increase in rate of penetration) and EGS (e.g., subeconomic flow rates and limited stimulation reproducibility) resulting in a minimum learning rate and minor CAPEX improvements as implemented in the Annual Energy Outlook 2015 (EIA, 2015): 10% CAPEX reduction by 2035. This corresponds to a 0.5% annual improvement in CAPEX, which is assumed to continue through 2050.
- Moderate Scenario: Drilling advancements, specifically the Intermediate 1 Drilling Curve (e.g., doubled rate of penetration and bit life and reduced number of casing intervals, associated drilling materials, and timelines) detailed as part of the GeoVision report, result in cost improvements that are achieved by 2030. Costs decrease linearly from present values to the 2030 projected values followed by a 0.5% annual reduction in CAPEX, due to a minimum learning rate, through 2050.
- Advanced Scenario: Significant drilling and EGS advancements as modeled in the Technology Improvement scenario of the GeoVision report result in cost improvements that are achieved by 2030. Costs decrease linearly from present values to the 2030 projected values followed by a 0.5% annual reduction in CAPEX, due to a minimum learning rate, through 2050. Drilling improvements, as part of the GeoVision Ideal Drilling Curve, include significantly increased rate of penetration, bit life, and EGS stimulation success, limited casing intervals, and significantly reduced consumption of drilling materials.
Use the following table to view the components of CAPEX.
The following references are specific to this page; for all references in this ATB, see References.
Augustine, Chad, Ho, Jonathan, & Blair, Nate. (2019). GeoVision Analysis Supporting Task Force Report: Electric Sector Potential to Penetration. (No. NREL/ TP-6A20-71833). National Renewable Energy Laboratory. https://doi.org/10.2172/1524768
DOE (2019). GeoVision: Harnessing the Heat Beneath Our Feet. (No. DOE/EE–1306). U.S. Department of Energy. https://www.energy.gov/sites/prod/files/2019/06/f63/GeoVision-full-report-opt.pdf
EIA (2015). Annual Energy Outlook 2015 with Projections to 2040. (No. AEO2015). U.S. Energy Information Administration. https://www.eia.gov/outlooks/archive/aeo15/
EIA (2016). Capital Cost Estimates for Utility Scale Electricity Generating Plants. U.S. Energy Information Administration. https://www.eia.gov/analysis/studies/powerplants/capitalcost/pdf/capcost_assumption.pdf