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Stuart Burns

Stuart Burns

Stuart is a writer for MetalMiner who operate the largest metals-related media site in the US according to third party ranking sites. With a preemptive…

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Can Asia Live Without Nuclear Power

Every time there is a spike in the cost of energy such as the ’73 crisis and the ’79/80 oil price spike — and then again in ‘07/08 — alternative energy sources get a renewal of interest. This time, reaction to the high oil price has been further supported by widespread anxiety about the future of nuclear power, particularly in geologically active areas such as the Pacific ring of fire. Japan, for example, is battling to control, never mind save (they will never operate again), the six boiling water reactors at Fukushima 1 with a combined power of 4.7 GWe. In addition, Japan was planning to build 13 more reactors, plans that must now be in severe doubt as large parts of the country could, potentially, suffer similar geological activity to last month’s earthquake and tsunami. But that very geologic instability has a flip side: Japan is sitting on an estimated 23.5 GW of geothermal power potential. Electricity and heating potential that even in the event of an earthquake would present zero ecological or human health hazard, but which (like nuclear) has a high capital upfront cost and therefore struggles without some form of government guarantees.

Perversely, while many countries in Asia have invested heavily in nuclear power, the region is better placed than almost anywhere to make use of geothermal power for the reasons stated above. Asia runs about 112 nuclear power reactors in six countries and has more than 264 planned for construction, according to the World Nuclear Association. Although many of those will be in China, a number are in Indonesia, also home to 40 percent of the world’s total geothermal reserves – even though less than 4 percent is being developed.

Encouragingly, Indonesia has plans to develop these resources and triple production this decade, but the challenge is finance. Up-front costs are high, much like oil and gas exploration. In the US, a Reuters article estimates, one megawatt of geothermal energy requires an investment of about $3.5 million, versus $1.2 million for coal energy. The time from planning to production is 5-7 years because of drilling and environmental planning approval – geothermal sites are often in forests or national parks. By comparison, a wind or solar farm can be up and running from scratch in 12-18 months – except in Nevada.

Consequently, private funds have been thin on the ground, and investors like a quicker payback. Plagued by overly optimistic expectations last year, project delays and cost overruns, geothermal companies listed on the Toronto Stock Exchange, which is home to a large contingent of the world’s publicly listed geothermal businesses, have lost 20 – 30 percent of their market value in the last year. Some high profile investment vehicles in the space such as Magma have tended to invest in existing businesses rather than attempt Greenfield developments.

Maybe, like hydro-electricity, geothermal is a power source that deserves state assistance to get it up to critical mass. Certainly Asia is well placed to take a lead. In addition to the naturally occurring resources, industry in the area is technologically capable of the challenge. Mitsubishi Corp, Toshiba Corp and Fuji Electric are leaders in the geothermal equipment industry, supplying nearly 70 percent of all steam turbines and power gear at geothermal plants worldwide.

Even countries like Kenya that don’t even make it into the emerging market category are achieving geothermal power production by doing little more than guaranteeing a 20-year power contract for firms willing to put in the upfront investment. Kenya already produces over 200 MW of power from various Rift Valley sites and has plans to add another 300 MW by 2013. Kenya estimates it has the potential to produce 7 GW (7000 MW) from the area and is targeting production of 5 GW by 2030.

Headline statements like ‘the amount of heat within 10,000 meters (about 33,000 feet) below the earth’s surface contains 50,000 times more energy than all the oil and natural gas resources in the world’ are indicative of the vast amount of power the earth holds, but fatuous in any meaningful way.

Drilling costs and heat replenishment mean tapping into background heat seeping through the earth’s crust is not a viable source of power, however much there may be in total. But naturally occurring geothermal resources in geologically active regions are a viable renewable and low-emissions source of power that, like tidal, deserves greater state support if our “green taxes” are to be put to any useful purpose other than swelling the treasury coffers. Sometimes, even no money is required; merely a guaranteed tariff and contract period. We do it for wind and solar, both of which have environmental issues and dodgy economics, so why not for geothermal?

One study puts the world’s geothermal potential at 2,841 GW, more than half the world’s current power demand, according to Reuters. Surely, some of the billions we are spending on nuclear power in geologically unstable areas could be better spent on tapping power from those same geological resources?

By. Stuart Burns

(www.agmetalminer.com) MetalMiner is the largest metals-related media site in the US according to third party ranking sites. With a preemptive global perspective on the issues, trends, strategies, and trade policies that will impact how you source and/or trade metals and related metals services, MetalMiner provides unique insight, analysis, and tools for buyers, purchasing professionals, and everyone else for whom metals and their related markets matter.

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