‘The economic potential of deep, direct use geothermal systems in the Netherlands’

Abstract

For this thesis, a probabilistic techno-economic model is developed for deep, direct use geothermal projects in the Netherlands. As a case study, data from the future DAP doublet (TU Delft) is inserted wherein multiple scenarios are researched that model variations in well capacity, energy prices, project design, government policies, brine gas content and heat demand available. For the case study, the model considers technical and economic uncertainties over a period of 50 years. These uncertainties are incorporated in the form of probability distributions and 15000 Monte Carlo iterations. By modeling these scenarios, an overview is developed of the economic performance of a deep district heating project based on the Net Present Value (NPV), Levelized Cost of Heat (LCOH), Internal Rate of Return (IRR), Profitability Index (PI) and payback time. Additionally, an evaluation of the effectiveness of the Dutch subsidy scheme is researched combined with the main financial obstacles associated with geothermal exploitation. The reference scenario of the case study resulted in a 90% probability of a positive NPV with a median PI of 1.5. Higher returns are delivered from scenarios where the subsidy policies were altered in a way that they are more suitable for district heating purposes. A scenario where high constant demand was simulated combined with an extra initial investment for the purpose of heat storage, resulted in the best performing scenario overall. Considering the demand available for this case study, the fixed operational cost, SDE base sum and gas/water ratio are the most important parameters in terms of NPV sensitivity. In order to achieve the desired growth of the Dutch geothermal sector, focus should be aimed at the realization of sufficient heat network deployment, heat storage options and more project specific subsidies.