LOOKING FORWARD: Barriers, Risks and Rewards of the Australian Geothermal Sector to 2020 & 2030 Presented by Professor R. Quentin Grafton at World Geothermal Congress 2015 Melbourne, 24 April 2015 Full and Summary Report and Supplementary Material available at: http://arena.gov.au/about-renewable-energy/geothermal-energy/expert-group/

International Geothermal Expert Group Commissioned by Australian Renewable Energy Agency (ARENA) Quentin Grafton, Chair (The Australian National University) Roland Horne (Stanford University) Michal Moore (University of Calgary) Susan Petty (AltaRock Energy Inc.) Bill Livesay (in memoriam) Consultant: Cameron Huddlestone-Holmes (CSIRO)

Terms of Reference Report finalised 10 June 2014 Determine whether, over the period to 2020 and 2030, there are: plausible commercialisation pathways for either EGS or HSA geothermal energy to deliver cost competitive utility scale energy to Australia without long-term subsidy and to describe those pathways Report finalised 10 June 2014

Australian Geothermal: Boom & Bust Innamincka Pilot Plant Trial Complete Habanero 2 Side Tracks Complete Habanero 3 Complete With Own Rig Salamander 1 Completed Habanero 2 Complete Paralana 2 Completed Jolokia 1 Completed Savina 1 Completed Celsius 1 Completed Habanero 4 Complete Habanero 3 Failure Activity Peaked in 2010

Australian Total Funding (nominal dollars in 2000s) Category Government Funding (million) Private/In- kind Total Industry $107 $720 $827 Research $25 $50 Pre- competitive $30 - Totals $162 $745 ≈$900 About 80% funding from private sector

Achievements: Australian Geothermal Baseline understanding of Australia’s geothermal resources Emerging direct use sector Proof of concept for EGS demonstrated at Innamincka, Cooper Basin, South Australia Core of experienced and skilled professionals in government agencies, industry, service companies and research organisations

Technology Barriers: Australian Geothermal Shallow Direct Use Commercially ready Deep Natural Reservoir Key technology challenge is finding permeability consistently (yet to be demonstrated) Enhanced Geothermal Systems Components of the system yet to be developed beyond demonstration/pilot

Cost-Price Performance Gap

Australian Electricity Price (wsale $/MWh)

LCOE Comparisons - 2020 Blue – no carbon price Red – carbon price

LCOE Comparisons- 2030 ‘Favourable’ geothermal cost scenarios Blue – no carbon price Red – carbon price

Key Findings (1) Australia has a large geothermal resource that could be used to generate direct heat or electricity. Geothermal sector attracted funding of around $900 million since the 1990s of which about 20% was provided by the public sector. Exploration efforts in the geothermal sector peaked in 2010 with 414 application for exploration licences (only 5 applications in 2002).

Key Findings (2) Major technical barriers are finding and flowing it. Major commercial barriers are: (1) small size of the companies holding leases and undertaking demonstration projects; (2) the inability to attract additional private sector funding to finance the commercial development of projects; and (3) the high costs of development.

Key Findings (3) Utility scale power generation from geothermal projects MAY become cost competitive with fossil fuel dispatchable power generation by 2030, but only with: a high carbon price and ‘least cost’ geothermal scenario. Most prospective geothermal markets out to 2030 are in remote locations that are off the grid and where commercial scale applications exist (especially direct heat uses such as in Cooper Basin).

Recommended Options to ARENA A Resume Option that represents a continuation of the existing ARENA programs. This approach has, to date, not put the sector on a path to delivering cost competitive utility energy generation. A Reconsider Option that readjusts the current funding allocated to the sector in ways that will improve reporting standards, allow for a rebalancing in terms of how funds are spent and ensure more stringent standards, but with lower funding levels. Includes option of stopping all funding to the sector. This option may reduce loss of critical data and key personnel. A Reboot Option restarts in ways that move the geothermal sector towards a more cost competitive path with focus on R&D in both finding (other than drilling) and flowing the resource. This option keeps in play the potential for geothermal to be cost competitive by 2030.

Thank you Full and Summary Reports and Supplementary Materials available at: http://arena.gov.au/about-renewable-energy/geothermal-energy/expert-group/