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Energy­ Sector Fundamentals

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Energy­ Sector Fundamentals ( energy­-sector-fundamentals )

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Energy­Sector Fundamentals: Economic Analysis, Projections, and Supply Curves 5000 Installation Rate 100000 4000 Cumulative Capacity 80000 3000 60000 2000 40000 1000 20000 00 10 20 Year 30 40 500 Figure 9.16 Diffusion of technology scenario – 100,000 MWe after 50 years. Chapter 9 9.12.1 Theroleoftechnology EGS Installation Rate (MW /yr) e Cumulative Installed EGS Capacity (MWe) 9­36 research and they are reflected in the graphs shown later in this chapter. Because technology improvements will improve the ability to access new and deeper areas with predictably higher heat content (Armstead and Tester, 1987), we can develop a proxy for new supply curve(s), represented by access to the deeper resources. We expect technology improvements in surface plants to decrease the delivered cost of energy (COE), by allowing higher efficiency energy conversion from heat to electricity, effectively utilizing lower­grade heat content areas that are accessible at shallower depths. Using both the GETEM and the MIT EGS models, we have forecast the relationship of new energy supplies to the COE delivered to the expected base­load power market. The price of energy falls predictably with higher volumes of installed capacity, finally approaching a break­even price at approximately 11 years from inception; this is shown in section 9.12.2. The effect of technology and subsequent price levels is sensitive to assumptions in the models regarding fixed rates of return vs. variable rates in ultimately achieving performance goals. We have illustrated both approaches in this The key to decreasing installed costs is an investment in key areas identified above, including drilling techniques, subsurface analysis, rock fracture, flow control, well­field monitoring, and injection mechanics. This implies an ongoing investment in research and development, including a proof­of­ concept design to access deeper resources and higher heat regimes. The R&D equivalent commitment can be measured as “absorbed cost,” which is a proxy for the subsidy that would represent industry investment in capital, land, and support facilities needed to produce the first 240 MWe of delivered power.

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