Non Technical Barriers in Developing Geothermal District Heating in the Paris Basin Pierre UNGEMACH and Miklos ANTICS GPC IP Paris Nord 2, 14, rue de la Perdrix, Lot 109, B.P ROISSY CDG CEDEX, FRANCE

OUTLINE 1. MILESTONES 2. STATUS 3. TECHNICAL SHORTCOMINGS 4. NON TECHNICAL OBSTACLES 5. CONCLUSIONS

MILESTONES (1)  1960’s Pre-oil shock first attempt – abandoned first attempt – abandoned second attempt successful doublet completion second attempt successful doublet completion  Post first oil shock four completed doublets four completed doublets enforcement of legal framework enforcement of legal framework  Post second oil shock 51 completed doublets 51 completed doublets >90% success ratio >90% success ratio first well damage symptoms first well damage symptoms  late 1980’s Early exploitation stages thermochemical (corrosion/scaling) damage thermochemical (corrosion/scaling) damage equipment failure equipment failure

MILESTONES (2)  1990’s Technological/managerial maturation technological improvements (R&D stimuli) technological improvements (R&D stimuli) debt renegotiation debt renegotiation abandonment of 21 non economic/severely damaged doublets abandonment of 21 non economic/severely damaged doublets  2000’s Follow-up. Where to go next? Privatisation Privatisation Co-generation Co-generation Future prospects (development vs. sustainability issues) Future prospects (development vs. sustainability issues)

PARIS BASIN DISTRICT HEATING SCHEME

PARIS BASIN DISTRICT HEATING DOUBLET COMPLETION/ABANDONMENT STATUS Year Abandonned doublets Completed doublets

PARIS BASIN GEOTHERMAL HEATING 191--Co-generation doublets 14776Self flowing wells Artificial lift wells 29,40036,20033,80036,000Unit Yield (GWht/yr) Unit Capacity (MWt) 1,0001,2401,4552,000Heat Production (GWht/yr) Installed capacity (MWt) Operating doublets AchievedTarget STATUS31/12/2006

TECHNICAL SHORTCOMINGS  Corrosion/scaling damage thermochemically sensitive geothermal brine causing well damage (corroded casing, reservoir plugging) and equipment failure thermochemically sensitive geothermal brine causing well damage (corroded casing, reservoir plugging) and equipment failure  Equipment failure Downhole production pumps Downhole production pumps Injection pumps Injection pumps Heat exchanger plugging Heat exchanger plugging Regulation malfunctioning Regulation malfunctioning  Consequences Productivity losses Productivity losses Frequent/prolonged doublet shutdown Frequent/prolonged doublet shutdown

NON TECHNICAL BARRIERS FINANCIAL  Massive debt charges Investment10 M€ Investment10 M€ OM costs0.6 M€ OM costs0.6 M€ Equity5-10 % Equity5-10 % Debt90-95 % Debt90-95 %  Low fossil fuel costs MWht natural gas < 30 € MWht natural gas < 30 €  Consequences Debt repayment charge >50-60% of revenues Debt repayment charge >50-60% of revenues Near to bankruptcy state Near to bankruptcy state

NON TECHNICAL BARRIERS SELECTED FINANCIAL FIGURES Item/doubletA1A2BCD1D2 (1)(1) (2)(1) (2) Total heat supply (MWht/yr)58,00043,50048,88851,00040,00031,000 - geothermal39,50032,50042,00041,00026,00015,000 - back-up boilers18,50011,0006,00010,00014,00016,000 - geothermal coverage % Heat selling price (€/MWht) Revenues (10 3 €/yr) Expenditure (10 3 €/yr) debt charge power back-up fuels maintenance heavy duty workover provision overhead Balance (10 3 €/yr)

NON TECHNICAL BARRIERS OPERATOR’S EXPERTISE  Geothermal operators lacking Mining experience (well maintenance/workover, downhole production pumps, corrosive/scaling fluids handling) Mining experience (well maintenance/workover, downhole production pumps, corrosive/scaling fluids handling) Heating experience in operating GDH grids, under retrofitted schemes, combining several base load, backup/relief energy sources and fuels Heating experience in operating GDH grids, under retrofitted schemes, combining several base load, backup/relief energy sources and fuels Managerial/entrepreneurial skills Managerial/entrepreneurial skills No integrated management structure. Unclear definition of intervening parties duties and commitments. Inefficient marketing/negotiation of heat sales and users’ subscription contracts No integrated management structure. Unclear definition of intervening parties duties and commitments. Inefficient marketing/negotiation of heat sales and users’ subscription contracts

NON TECHNICAL BARRIERS FISCAL (1)  VAT 19.6 % applicable to GDH operators whereas gas and electricity producers benefit from a 5.5 % rate. This is clearly unfair.  IMPACT: Sector € (VAT free)€ (VAT included)  building heating, geothermal grid  building heating, gas fired boilers  individual gas heating  individual electric heating

NON TECHNICAL BARRIERS FISCAL (2)  Local, so called, professional tax penalises GDH grids serviced under lease/concession contracts (non deductible infrastructure neutral costs). Prejudice: GDH grid serving 5,000 equivalent dwellings #70,000 €/yr.  Ecotax exemption for individual users (families) arguing that ecologic taxation do not apply to them whereas they represent ca 25% of total energy consumption (heat+power)

NON TECHNICAL BARRIERS IMAGE  GDH difficult to apprehend & comprehend  GDH remains esoteric and somewhat exotic compared to other RE and fossil fuel sources  GDH regarded, in the early days, as a poorly reliable, costly and, occasionally, hazardous technology  More efforts required to attract a wider social acceptance and public awareness.

NON TECHNICAL BARRIERS CONCLUSIONS/RECOMMENDATIONS  Most NT obstacles, if not yet totally removed, are being progressively overcome  WHAT IS NEEDED MOST Operators side. More integration, less dissemination, by grouping several GDH grids into single management structures with a well defined mining/heating synergy Operators side. More integration, less dissemination, by grouping several GDH grids into single management structures with a well defined mining/heating synergy State side. A clearly stated (and applied) environmental policy explicitly by favouring RES via relevant regulation, fiscal incentives and ecologic taxation. State side. A clearly stated (and applied) environmental policy explicitly by favouring RES via relevant regulation, fiscal incentives and ecologic taxation. Overall. Gain wider social acceptance via selectively targeted actions. Overall. Gain wider social acceptance via selectively targeted actions.