Reykjavík Energy

Geothermal Utilization in Iceland

LOCAL and GLOBAL perspective

IGC Conference, March 6 - 2013

Bjarni Bjarnason

CEO

EBD-114-01

2

World Primary Energy Consumption Fossil Fuels Remain Dominent but Renewables are on the Rise

World Consumption in Million Tonnes Oil Equivalent

Source: BP Statistical Review of World Energy 2012

3

30 °C/km

The Geothermal Resource

The total amount of

heat stored in the crust

is of the order of 5

billion EJ.

Mankind uses 400 EJ

annually for all energy

needs.

0.1% of the stored heat

would satisfy the global

energy consumption for

10,000 years.

Source: Flóvenz, 2008

4

Direct Use

• Space heating

• Greenhouses

• Fish farming

• Industry

• Snow melting

• Swimming pools

Electricity

• Baseload

• Over 90% availability

Where does Geothermal fit in?

5

Source: Data from BP Statistical Review of World Energy 2012

Geothermal Growth is Very Slow

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• Exploration risk

• Cost

• Lack of hydrothermal resources

• Lack of education and training

Why?

Solutions

• Research and Development

• Eduacation and sharing of experience

• Clearer risk profiles

• Enhanced systems

• Deep Drilling

• EGS

H

L

Greenland

L

L

L

Iceland Located on the Mid Atlantic Ridge

9

Primary Energy Use in Iceland 1940-2010 Geothermal was a critical game changer

Hydro

Geothermal

Oil

Coal

Geothermal

Oil

Hydro Peat

Coal

Sou

rce:

Ork

ust

ofn

un

10

Space Heating in Iceland 90% Geothermal

Source: Orkustofnun

11

Geothermal Useage in Iceland

Source: Orkustofnun and Lund 2010

Installed electric capacity • 663 Mwe

Direct use capacity

• About 1,800 MWth

12

• In 2010 Iceland’s total economic benefit from geothermal was calculated to be about $480-830 million.

• That equals 4-6% of GDP

• Includes:

• Space heating benefits

• Related industry benefits

• Resource leasing

• Social impacts

Benefits to the Icelanders

Source: Kristofersson - Þjóðhagslegur ávinningur af jarðhitanýtingu

Reykjavík in 1933

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Reykjavík today

14

15

0

50.000

100.000

150.000

200.000

250.000

19

61

19

66

19

71

19

76

19

81

19

86

19

91

19

96

20

01

20

06

20

11

Ton

ne

s C

O2/y

ear

Reduction in CO2 emissions in Reykjavík due to space heating

16

Emissions What if Oil was used for Space Heating in Reykjavík instead of

Geothermal?

17

• Policy

• Low long term cost

• Forward thinking

• Oil crises

What made this possible?

18

Comparison of Energy Prices 3 person home – 100 m2

Number of Big Macs

10

75 51

39

30

This is Reykjavík Energy

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Water 1909 Electricity 1921 Hot water 1930

Fiber optics 1999 Sewage 2006

20 Source: Bertani, 2010 and OR

~

Major Geothermal Companies

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• Cost • Risk • Surface footprint • Reservoir management • Induced seismicity • H2S emissions

Challenges

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• SulFix

• CarbFix

• Deep Drilling

With Challenges Come Opportunities

19. des 2011 CarbFix – Almenn kynning, staða og fjárhagur

CarbFix and SulFix - Gases dissolved and reinjected

Gas separation station separates CO2 and H2S from less soluble gases.

Hellisheidi Power Plant: Annual emissions 40,000 tons CO2 and 16,000 tons H2S.

CO2 and H2S dissolved in water and pumped back into the reservoir at 500 m depth.

Figure: HAA (2009)

Geotermal fluids in the reservoir react with dissolved CO2 and H2S resulting in mineral precipitation.

The basic processes

Photo: J. Alean

Basalt CO2 dissolved in water Carbonates Photo: H. Sigurdardottir

Photo: J. Alean

Basalt H2S dissolved in water Sulfur and Sulfides

September 17-19 TOUGH symposium 2012

Deep Geothermal Drilling

10 km 20 km

Magma chamber

Borehole

Krafla caldera

Krafla geothermal power station

Dike

0

10

0 Lake

Mývatn

Krafla Geothermal Area

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• Drill 4-5 km deep holes 450-600°C

• Supercritical fluid with higher energy density

• Power magnified 10x

Iceland Deep Drilling Project

Conventional dry-steam well

IDDP well

Downhole temperature 235°C 430-550°C

Downhole pressure 30 bar 230-260 bar

Volumetric rate of inflow 0.67 m3/s 0.67 m3/s

Electric power output ~ 5 MWe ~ 50 MWe

Source: IDDP

Drilling

29

Challenges

Drilling technology

Keep BHA <150°C ° in rock of 500°C

Steal casings

Thermal stresses ΔT~500°C (930 °F)

Cementing

3500 m and 400°C

Long pumping time, high temperature difference from top to bottom

Well logging

Currently, no logging tools >300°C (570°F)

Source: IDDP

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31

33

34

35

36

37

38

39

40

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• One of the cleanest energy sources

• About 100,000,000 tonnes of CO2 have been saved in Reykjavík by using geothermal water for heating houses

• Sustainable energy source

• Tremendous economic benefit for Iceland

• Exciting research and development ongoing

Conclusion

42

Source: Data from BP Statistical Review of World Energy 2012

Geothermal Growth is Very Slow

Women in the workforce of RE

27,3% 28,2%

29,3% 30,2% 29,7% 29,0%

30,6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2006 2007 2008 2009 2010 2011 2012 nóv

Allir starfsmenn

Women in the Management of RE

19,0% 19,7% 20,3%

27,4% 28,1%

32,3%

41,9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2006 2007 2008 2009 2010 2011 2012 nóv

Stjórnendur

Combined

19,0% 19,7% 20,3%

27,4% 28,1%

32,3%

41,9%

27,3% 28,2%

29,3% 30,2% 29,7% 29,0%

30,6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2006 2007 2008 2009 2010 2011 2012 nóv

Stjórnendur Allir starfsmenn

19,0% 19,7% 20,3%

27,4% 28,1%

32,3%

41,9%

5

10

15

20

25

30

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2006 2007 2008 2009 2010 2011 2012 des

Stjórnendur EBITDA

Female Managers and EBITDA

47

Thank you

Foresight – Efficiency – Integrity