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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. 50030 95946 ROISSY CDG CEDEX, FRANCE e-mail: [email protected] [email protected] OUTLINE 1. MILESTONES 2. STATUS 3. TECHNICAL SHORTCOMINGS 4. NON TECHNICAL OBSTACLES 5. CONCLUSIONS MILESTONES (1) 1960’s Pre-oil shock first attempt – abandoned second attempt successful doublet completion 1973-1978 Post first oil shock four completed doublets enforcement of legal framework 1979-1986 Post second oil shock 51 completed doublets >90% success ratio first well damage symptoms late 1980’s Early exploitation stages thermochemical (corrosion/scaling) damage equipment failure MILESTONES (2) 1990’s Technological/managerial maturation technological improvements (R&D stimuli) debt renegotiation abandonment of 21 non economic/severely damaged doublets 2000’s Follow-up. Where to go next? Privatisation Co-generation Future prospects (development vs. sustainability issues) PARIS BASIN DISTRICT HEATING SCHEME operating abandoned Location of the geothermal district heating sites in the Paris Basin PARIS BASIN DISTRICT HEATING DOUBLET COMPLETION/ABANDONMENT STATUS Completed doublets 20 15 10 5 90 0 75 -5 Abandonned doublets 80 85 95 00 05 Year PARIS BASIN GEOTHERMAL HEATING STATUS 31/12/2006 Target Achieved 1985 1990 2000 2006 Operating doublets 55 43 34 34 Installed capacity (MWt) 360 260 227 200 2,000 1,455 1,240 1,000 Unit Capacity (MWt) 6.5 6.0 6.7 5.9 Unit Yield (GWht/yr) 36,000 33,800 36,200 29,400 Artificial lift wells 49 36 27 20 Self flowing wells 6 7 7 14 Co-generation doublets - - 1 19 Heat Production (GWht/yr) TECHNICAL SHORTCOMINGS Corrosion/scaling damage thermochemically sensitive geothermal brine causing well damage (corroded casing, reservoir plugging) and equipment failure Equipment failure Downhole production pumps Injection pumps Heat exchanger plugging Regulation malfunctioning Consequences Productivity losses Frequent/prolonged doublet shutdown NON TECHNICAL BARRIERS FINANCIAL Massive debt charges Investment 10 M€ OM costs 0.6 M€ Equity 5-10 % Debt 90-95 % Low fossil fuel costs MWht natural gas < 30 € Consequences Debt repayment charge >50-60% of revenues Near to bankruptcy state NON TECHNICAL BARRIERS SELECTED FINANCIAL FIGURES Item/doublet A1 A2 D1 D2 (1) (1) (2) -1 (1) (2) Total heat supply (MWht/yr) 58,000 43,500 48,888 51,000 40,000 31,000 - geothermal 39,500 32,500 42,000 41,000 26,000 15,000 - back-up boilers 18,500 11,000 6,000 10,000 14,000 16,000 - geothermal coverage % 68 75 87.5 80 65 48 Heat selling price (€/MWht) 38 37 38 39 41 41 2131 1598 1808 2006 1646 1285 Expenditure (10 €/yr) 2061 1607 1764 1886 1492 1349 - debt charge 1082 1037 1052 1159 656 488 - power 133 108 157 90 85 79 - back-up fuels 508 302 165 274 384 439 - maintenance 247 224 281 268 276 252 - heavy duty workover provision 55 37 61 50 38 38 - overhead 37 37 49 44 53 53 70 -9 44 120 154 -64 3 Revenues (10 €/yr) 3 3 Balance (10 €/yr) B C NON TECHNICAL BARRIERS OPERATOR’S EXPERTISE Geothermal operators lacking 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 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 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 445 528 building heating, gas fired boilers 445 518 individual gas heating 449 506 individual electric heating 445 520 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) domestic uses (families): transports corporates, transports tertiary sector industry agriculture residential Fuels (Mtoe's/yr) 34 24 25 10 26 18 Electricity (TWh/yr) 119 58 8 91 131 30 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 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.