We are pleased to announce the recent publication of a new Berkeley Lab analysis — “Mind the Gap: Comparing the Net Value of Geothermal, Wind, Solar, and Solar+Storage in the Western United States” — in the journal Renewable Energy.
Studies show that a diverse portfolio of zero-carbon resources will be needed to decarbonize the U.S. electricity sector, and that high-capacity-factor renewable resources like geothermal could become particularly important in later stages of decarbonization as the capacity contribution of variable, weather-dependent resources like wind and solar declines with increasing market share. Yet while wind, solar, and — more recently — storage have all seen significant U.S. deployment in recent years, deployment of new geothermal plants has barely budged over the same period. We explain this disparity in historical deployment by analyzing empirical price data from wholesale energy and capacity markets (Figure 1A-1C) and power purchase agreements (PPAs, Figure 1D), which reveal that geothermal has historically offered a lower “net value” — i.e., energy value plus capacity value minus PPA price — than these other resources in the western United States (Figure 2).
Looking ahead through 2026 — the initial target year for the California Public Utility Commission’s “mid-term reliability” procurement order — continued growth in the market share of wind, solar, and storage should improve geothermal’s relative market value, yet perhaps not enough to overcome the persistent cost gap between geothermal and these other, lower-cost resources. In the face of this challenging market outlook, continued policy intervention and R&D investments may be warranted to sustain and amplify the geothermal industry’s contributions towards a reliable, decarbonized power sector.
We thank the US Department of Energy’s Geothermal Technologies Office for funding this work, and hope you find it to be of use.
Article and Graphs Courtesy of the Lawrence Berkeley National Laboratory
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