Geothermal Energy in Developing Countries and the MDGs

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  • 2013•10•04

    Ingvar Birgir Fridleifsson and Málfrídur Ómarsdóttir

    Hellisheidi Geothermal Power Plant

    Hellisheidi Geothermal Power Plant (Iceland). UN Photo/Eskinder Debebe

    The United Nations designation of 2012 as the Year of Sustainable Energy for All, coupled with the UN Secretary-General’s launch of his Sustainable Energy for All initiative, arguably set high expectations for energy achievements last year. According to the International Energy Agency (IEA), the year indeed saw a “new focus, new commitments and new actions towards a goal of achieving universal energy access by 2030”.

    But despite advancements and this new focus, 1.3 billion people today still do not have access to modern energy sources; double that number rely on wood, coal, charcoal or animal waste for cooking, thus exposing themselves to harmful smoke. A key factor in improving standards of living to achieve the Millennium Development Goals (MDGs), while at the same time ensuring environmental sustainability, is making clean energy widely available and, more importantly, affordable.

    This is echoed by the World Energy Council’s (WEC) development of a framework to help address the challenges of energy sustainability, the WEC’s definition of which “is based on three core dimensions — energy security, social equity, and environmental impact mitigation”.

    Geothermal is a clean and renewable energy source. Almost 70 percent of the countries where geothermal utilization has been recorded are developing or transitional countries. The potential for geothermal energy use to improve living standards in those countries is thus very high.

    However, geothermal has high upfront investment costs. Therefore, in order to attain the MDGs and improve poverty conditions globally, much effort is needed to increase capacity building in renewable energy technologies like geothermal in developing countries. For though the technologies for exploiting the main renewable energy sources — hydro, biomass, wind, geothermal, solar and wind — have been developed, the experience is mainly confined to industrialized countries.

    World energy sources

    Over the coming years, rapid population growth is expected in the global south, while populations in developed countries will diminish as a share of the world’s total. Consequently, recent forecasts project that by 2040 energy demand in the developing world will rise by 65 percent (compared to 2010), which is twice the increase foreseen for developed countries.

    When assessing future global energy needs, it therefore is essential to establish which energy services are best suited to supporting the MDGs, and to look at the roles different forms of energy can play in providing these services to reinforce human development and to combat climate change in the most practical and affordable way.

    It is also important to consider that economic development over the next century will seemingly be constrained less by geological resources than by environmental concerns, and financing and technological constraints. Oil and gas will continue to be important energy sources, but renewable energy is on the rise. In its World Energy Outlook 2012, the IEA notes that “a steady increase in hydropower and the rapid expansion of wind and solar power has cemented the position of renewables as an indispensable part of the global energy mix”. By 2035, the IEA predicts, renewable energy will account for almost one-third of total electricity output.

    With annual consumption of primary energy in the world currently at about 510 exajoules, there is no question that the technical potential (how much energy can be produced, independent of cost) of renewable energy is sufficiently large to meet future world energy requirements, as shown in Table 1.

    Table 1: Ranges of technical potential (yearly availability) of renewable energy sources

    Source EJ per year
    Hydropower 50–52
    Biomass 50–500
    Solar energy 1,575–49,837
    Wind energy 85–580
    Geothermal energy 128–1421
    Total 1,888–52,390

    Source: IPCC (2011).
    Note: EJ = exajoules.

    However, the question is: How large a part of the technical potential can be harnessed in an economically, environmentally and socially acceptable way? That will probably vary between the energy sources.

    In favour of geothermal

    The number of hours a power plant can produce per 24-hour period (i.e., the capacity factor) varies quite widely depending on the renewable source. The capacity factors are: geothermal energy, 72 percent; bioenergy, 55 percent; hydropower, 44 percent; wind energy, 23 percent; and solar energy, 13 percent.

    Not only is the capacity factor of geothermal by far the highest, and not dependent on weather conditions, but geothermal has an inherent storage capability and can be run continuously to meet demand during “normal” use periods and at “peak demand” when there is additional need (e.g., on hot days when air conditioners are used more intensively).

    The need for drilling wells, and constructing power plants, transmission lines and/or insulated pipelines, typically generates high upfront investment costs for geothermal projects. However, they have relatively low operating costs.

    Geothermal resources have been identified in around 90 countries, and 79 of those have quantified records of geothermal utilization. Electricity is produced from geothermal sources in 24 countries, of which nine obtain 5–26 percent of their national electricity from geothermal.

    To date, geothermal potential has been developed to a very small extent, and there is ample space for accelerated use of geothermal energy both for direct applications (such as ground-source heat pumps for space and water heating) and for electricity generation. Table 2 lists the top 16 countries in the world in geothermal electricity production and in direct use.

    Table 2: Top 16 countries producing and using geothermal energy

    Geothermal electricity production, 2010 Geothermal direct use, 2009
    GWh/year GWh/year
    United States 16,603 China 20,932
    Philippines 10,311 United States 15,710
    Indonesia 9,600 Sweden 12,585
    Mexico 7,047 Turkey 10,247
    Italy 5,520 Japan 7,139
    Iceland 4,597 Norway 7,001
    Japan 3,064 France 3,592
    Kenya 1,430 Germany 3,546
    El Salvador 1,422 Netherlands 2,972
    Costa Rica 1,131 Italy 2,762
    Turkey 490 Hungary 2,713
    Papua New Guinea 450 New Zealand 2,654
    Russia 441 Canada 2,465
    Nicaragua 310 Finland 2,325
    Guatemala 289 Switzerland 2,143

    Sources: Data on electricity from Bertani (2010) and on direct use from Lund et al. (2010).
    Notes: GWh/year = gigawatt hours per year.

    The World Bank divides the world’s economies into the following groups: low-income countries (LIC), lower-middle-income countries (LMC), upper-middle-income countries (UMC), and high-income countries (OECD and non-OECD countries). Table 3 shows the number of geothermal countries in each of these groups and also compares that number to the number of the top 16 countries using geothermal for electricity production and direct use (heating and cooling), respectively.

    When tables 2 and 3 are compared, it is clear that electricity production with geothermal is relatively evenly spread between countries in the different economic categories. This is in contrast to the top 16 countries making direct use of geothermal, where there are 14 high-income OECD countries, 1 UMC (Turkey) and 1 LIC (China) — the latter actually figuring at the top of the list of direct use.

    Table 3: Number of countries in different economic categories using geothermal for electricity production and direct use, in 2010 (from Fridleifsson, 2012).

    Top 16 countries utilizing geothermal
    Economic category* Number of countries Electricity production Direct use
    High-income OECD 29 5 14
    High-income non-OECD 3
    UMC 22 4 1
    LMC 21 6
    LIC 4 1 1

    *As defined by the World Bank.

    This kind of categorization can signal in which areas lie the most scope for capacity development initiatives in developing countries.

    Direct utilization

    During the past decade, the main growth in the direct use sector has been in ground-source heat pumps (GHPs). The reason is, in part, because GHPs can utilize groundwater or ground-coupled temperatures anywhere in the world for space heating and/or cooling.

    For developing countries, it is this sector in which there is the most potential for development as space and water heating form significant parts of the energy budget in many parts of the world. (In industrialized countries, 35–40 percent of total primary energy consumption is used in buildings.) However, potential in this sector has remained largely untapped. Apart from China, developing countries have, as yet, shown very limited interest in the installation of GHPs.

    The direct use of geothermal is very important in many developing and transitional countries, as activities such as washing and bathing, and greenhouse cultivation and fish farming significantly improve people’s quality of life. In addition, tourism is often a substantial source of income at geothermal locations. The direct use of geothermal can even replace fossil fuels in densely populated areas where space heating and/or cooling is needed. The potential is very large because space heating and water heating are significant parts of the energy budget in large parts of the world.

    Industrialized countries can assist developing countries to achieve their energy goals in this area in the form of both technology transfer and financial support for energy projects. One flexible, market-based mechanism is the Clean Development Mechanism (CDM). The CDM provides the opportunity for developing countries to earn certified emission reduction credits (through sustainable energy projects), which can be sold to industrialized countries to contribute to their emission reduction targets under the Kyoto Protocol.

    The CDM can potentially deliver renewable energy to developing countries, with geothermal energy being one of the contributors to the carbon credit market. The potential of carbon finance has attracted several geothermal projects to be registered under the CDM. As of January 2012, two direct use projects are presently under evaluation for eligibility to receive carbon credit revenues. Both are geothermal district heating projects, one in China and one in the Republic of Korea (UNFCCC, 2012).

    Electricity generation

    The countries with geothermal fields suitable for electricity production are mainly confined to the active plate boundaries or regions with active volcanoes (see table 2). Many developing countries that have suitable geothermal fields are not able to harness the potential, mainly due to the high investment costs and lack of funds. Even the ones that are able are harnessing only a very small portion of their potential for the same reasons.

    Figure 1 shows the top 14 countries with the highest percentage share of geothermal in their national electricity production. Geothermal power stations provide about 12 percent of the total electricity generation of Costa Rica, El Salvador, Guatemala and Nicaragua, with potential for harnessing much more.

    With the large untapped geothermal resources and the significant experience in geothermal as well as hydro development in the region, Central America may become an international example of how to reduce overall emissions of greenhouse gases in a large region and address the MDGs. Similar developments can be foreseen in the East African Rift Valley and other countries and regions rich in high-temperature geothermal resources.

    There are examples from many developing countries of how the development of geothermal resources has enabled rural electrification, safe drinking water, schools and medical centres. Such projects are in line with the MDGs.

    Figure 1: The 14 countries with the highest percentage share of geothermal energy in their national electricity production.

    Notes: Numbers in parentheses give annual geothermal electricity production in GWh in 2010. The numbers on the x axis (bottom) of the graph show the percentage of the national electricity production that geothermal provides in the respective countries. The number of UNU-GTP graduates from each country is shown to the right of the graph bars.

    Cooperating for climate and living standards

    Global warming due to greenhouse gas emissions is one of the major concerns faced by humanity today. It is an unsettling fact that the poorest people in the world — those who have done the least to bring about changes to the climate — will be most impacted due to a lack of infrastructure, preparedness and resources for adaptation measures. Reducing fossil fuel use, therefore, is essential, and a key solution is to increase the sustainable use of renewable energy sources such as geothermal.

    More and more countries are now seriously considering how they can use their indigenous renewable energy resources. For instance, most of the EU countries, as well as the United States and Canada, already have some geothermal installations.

    However, with limited economic resources, mitigation of climate impacts through a reduction of CO2 emissions has not been among the top priorities of developing nations. This is why it is imperative for industrialized countries to make significant contributions by assisting developing countries in this field.

    Capacity building and the transfer of technology are key issues in the sustainable development of renewable energy resources. Many industrialized and developing countries have significant experience in the development and operation of renewable energy installations for direct use and/or electricity production. It is important that they share that knowledge with newcomers in the field.

    An example of how capacity building in renewable energy technologies in developing countries can be done effectively is the innovative training programme for geothermal energy professionals developed in Iceland under the United Nations University.

    With strong international cooperation and support from industrialized countries, geothermal energy can play a great part in helping developing nations to achieve the MDGs by simultaneously battling climate change and improving living standards. Geothermal provides energy services from a clean source, is secure, and is free from fuel price fluctuations, thus increasing the amount of financial resources available for economic development and the attainment of the MDGs.