Geothermal Power generation is a really difficult industry to get into. There are many barriers for companies trying to start geothermal power plants. First of all you have to be located in the correct areas in the country. For some reason, most of the geologically viable regions are located in the west coast of the U.S. and a majority of the hottest resources are located in California and Nevada. So geological restrictions alone eliminate about 40 of the US states from ever having a producing geothermal power plant.
Once you narrow down your search to the correct geological region, you can identify localized regions that you believe have geothermal activity. In order to have a functioning power plant you need to find a sight with two qualities. It has to have high temperatures close to the surface, by close I am talking in geologic terms so less than 10,000 ft. It also has to have a reservoir of naturally occurring water in the same area. After you have picked the area you want to set your plant at, you need to acquire the land or at least the rights to use the land.
After acquiring your land access you need to begin the permitting process. You need to secure drilling permits to drill on the land. Many times there is a lot of environmental impact studies that are involved in the permitting process. Once you have your permits, start drilling test wells so that you can get a better picture of what is going on underground. By drilling test wells, you can send instrumentation down into the earth to start getting some temperature profiles, mapping the fractures, and measuring the amount of water flow that will come out of the specific hole.
After collecting all of this downhole data you can create a model of how you understand the resource to be behaving underground. This model is very important for figuring out where you are going to drill your production and injection wells. After you get an understanding of the resource you have to start drilling your wells. Geothermal wells can cost between $1 million and $10 million each. The drilling requires you to hit the fault in the exact right location. If you don’t hit it just right, your $5 million well can be a complete dud that you have to plug.
As soon as you have your tested production and injection wells, now you can spend the $50 to $150 million to get your power plant built. At the same time you have to work on securing a long term power purchase agreement with someone who promises to buy your electricity. This entire process can take around six or seven years before you are actually generating any electricity and bringing in any revenue. Geothermal is definitely not for the faint of heart!
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