Dissertation/Thesis Abstract

Uncertainty analysis of geothermal energy economics
by Sener, Adil Caner, Ph.D., The George Washington University, 2009, 293; 3378671
Abstract (Summary)

This dissertation research endeavors to explore geothermal energy economics by assessing and quantifying the uncertainties associated with the nature of geothermal energy and energy investments overall. The study introduces a stochastic geothermal cost model and a valuation approach for different geothermal power plant development scenarios. The Monte Carlo simulation technique is employed to obtain probability distributions of geothermal energy development costs and project net present values.

In the study a stochastic cost model with incorporated dependence structure is defined and compared with the model where random variables are modeled as independent inputs. One of the goals of the study is to attempt to shed light on the long-standing modeling problem of dependence modeling between random input variables. The dependence between random input variables will be modeled by employing the method of copulas. The study focuses on four main types of geothermal power generation technologies and introduces a stochastic levelized cost model for each technology. Moreover, we also compare the levelized costs of natural gas combined cycle and coal-fired power plants with geothermal power plants. The input data used in the model relies on the cost data recently reported by government agencies and non-profit organizations, such as the Department of Energy, National Laboratories, California Energy Commission and Geothermal Energy Association.

The second part of the study introduces the stochastic discounted cash flow valuation model for the geothermal technologies analyzed in the first phase. In this phase of the study, the Integrated Planning Model (IPM) software was used to forecast the revenue streams of geothermal assets under different price and regulation scenarios. These results are then combined to create a stochastic revenue forecast of the power plants. The uncertainties in gas prices and environmental regulations will be modeled and their potential impacts will be captured in the valuation model. Finally, the study will compare the probability distributions of development cost and project value and discusses the market penetration potential of the geothermal power generation.

There is a recent world wide interest in geothermal utilization projects. There are several reasons for the recent popularity of geothermal energy, including the increasing volatility of fossil fuel prices, need for domestic energy sources, approaching carbon emission limitations and state renewable energy standards, increasing need for baseload units, and new technology to make geothermal energy more attractive for power generation. It is our hope that this study will contribute to the recent progress of geothermal energy by shedding light on the uncertainty of geothermal energy project costs.

Indexing (document details)
Advisor: Dorp, Johan Rene van, Mazzuchi, Thomas A.
Commitee: Deason, Jonathan P., Duffy, Michael R., Jayaraman, Kamala
School: The George Washington University
Department: Engineering Mgt and Systems Engineering
School Location: United States -- District of Columbia
Source: DAI-B 70/11, Dissertation Abstracts International
Subjects: Alternative Energy, Systems science, Energy, Operations research
Keywords: Dependence modeling, Energy economics, Geothermal energy, Levelized cost, Power markets, Renewable energy
Publication Number: 3378671
ISBN: 9781109421491
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