Synopsis and Executive Summary

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Chapter 1 Synopsis and Executive Summary Figure 1.13 illustrates a predicted aggregate supply curve for the U.S. EGS resource, regardless of 1­30 86 rate of return (VRR) MIT EGS costing model. As expected for any new technology, costs at low levels 1042 e 10 100 1,000 10,000 100,000 10 region and not described by a particular depth or stored thermal energy content, using the variable of penetration are higher than existing markets for electric power, but rapidly decline. When EGS increases above 100 MWe of capacity, which amounts to only a few EGS projects, costs begin to become competitive. The segmented structure of the supply curve is a reflection of dividing the EGS resource into 1 km­thick segments (see Figure 1.6). The slight increase in break­even price that occurs at higher levels of penetration (above 5,000 MWe) is due to extraction of heat from somewhat lower­grade EGS resources (with lower average gradient and heat flow) that require deeper, more costly drilling. However, by the time these levels are reached, it is expected that competitive electricity prices will be equal to or greater than the EGS values, so that further deployment will not be constrained. EGS Capacity Scenario (MW ) Figure 1.13 Aggregate supply using MIT EGS, variable rate of return (VRR) model with quartet well configurations and a maximum flow per well of 80 kg/s. Break-even Price (¢/kWh) Next, we analyzed the effects of experience. Learning curves were developed to reflect cost reductions resulting from improvements in drilling, reservoir stimulation, and surface plant technologies. These stem from the combination of R&D investments that lower costs, and experience gained by repeating the deployment of EGS plants at different U.S. sites as part of a focused national initiative. Figures 1.14 to 1.16 illustrate these supply curves using both GETEM and MIT EGS models over a range of assumed conditions. When the EGS break­even prices are greater than competitive market prices for electricity, additional institutional investment is needed. For example, on Figure 1.14, this corresponds to the period from 0 to about 12 years. The total amount of investment required is proportional to the area between the EGS price curve and the market price curve. weighted by the amount of EGS capacity online.

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