Economics

Economics

Geothermal power requires no fuel (except for pumps), and is therefore immune to fuel cost fluctuations, but capital costs are significant. Drilling accounts for over half the costs, and exploration of deep resources entails significant risks. A typical well doublet (extraction and injection wells) in Nevada can support 4.5 megawatts (MW) and costs about $10 million to drill, with a 20% failure rate.^[18]
In total, electrical plant construction and well drilling cost about 2-5 million € per MW of electrical capacity, while the break–even price is 0.04-0.10 € per kW·h.^[19] Enhanced geothermal systems tend to be on the high side of these ranges, with capital costs above $4 million per MW and break–even above $0.054 per kW·h in 2007.^[20] Direct heating applications can use much shallower wells with lower temperatures, so smaller systems with lower costs and risks are feasible. Residential geothermal heat pumps with a capacity of 10 kilowatt (kW) are routinely installed for around $1–3,000 per kilowatt. District heating systems may benefit from economies of scale if demand is geographically dense, as in cities, but otherwise piping installation dominates capital costs. The capital cost of one such district heating system in Bavaria was estimated at somewhat over 1 million € per MW.^[21] Direct systems of any size are much simpler than electric generators and have lower maintenance costs per kW·h, but they must consume electricity to run pumps and compressors. Some governments subsidize geothermal projects.
Geothermal power is highly scalable: from a rural village to an entire city.^[22]
Chevron Corporation is the world's largest private geothermal electricity producer.^[23] The most developed geothermal field is the Geysers in California.