Konstantin Povarov, Geothermal Energy Society

Release Date: 2009-05-29

The Geothermal Energy Society has a lot of different roles; to lobby interests of the companies, advise on policy implementation, to look for foreign investors, international cooperation, R&D… In the present context, which of these functions is more relevant for you and for the sector?
The initial purpose is to collaborate with different government and non-government organizations together with scientists in geothermal energy and bring them together to organize a non-profit organization that can provide support from a political point of view, to put the main geothermal resources of Russia on our website and distribute news of the International Geothermal Association (IGA). As a member of IGA, I try to bridge the gap between Russian and international companies to boost geothermal energy in Russia.
I would like to say a few words about geothermal power plants (GeoPPs). The first GeoPP in the USSR was constructed in 1966 in Kamchatka - Pauzhetskaya GeoPP with 11 MW of installed capacity. After that, the sector was almost completely forgotten in Russia.
It was born again in 1992 when my father, Professor Oleg Povarov, who was also Director of SC Intergeotherm S.A. decided to develop geothermal project in Nicaragua – San Jacinto Tizate. In cooperation with SC Podzemburgaz and SC Kaluga Turbine Works during 1993-1995 seven geothermal wells were drilled at this geothermal field and power generating equipment for four geothermal units (2x2,5 MW and 2x23 MW) were produced.
In 1992 SC Nauka, a consulting and servicing stock company was found by Prof. Povarov to develop local geothermal projects: Verkhne-Mutnovskaya and Mutnovskaya geothermal power plants in Kamchatka. Kamchatka is one of the main regions in Russia where it is possible to produce geothermal energy from the Earth heat source: there are many volcanoes and heat from the Earth core is close to the surface. So, in 1995 SC Nauka developed the design of Verkhne-Mutnovskaya GeoPP. In 1999 it was commissioned with 12 MW installed capacity and it continues to work quite well producing almost the cheapest electricity in Kamchatka, only electricity from Pauzhetskaya GeoPP is cheaper because its depreciation cost is zero. The third geothermal power plant was commissioned in 2002, it was constructed with 2 turbogenerators of 25 MW each, SC Nauka developed the conceptual design for it, organized the financial scheme and was the scientific adviser for the whole project. Geothermal turbines and bi-metallic condensers were manufactured at Kaluga Turbine Works, separators at Machine Building Plant ZiO-Podolsk and General Contractor for this project was Technopromexport. There are two more modular GeoPPs in the Kuril Islands: Mendeleevskaya GeoPP with 3,6 MW on Kunashir Island, and Okeanskaya GeoPP on Iturup Island, with 3.6 MW installed capacity.
In 2003, after all these projects were implemented, the Association Geothermal Energy Society was found. It includes more than 20 members, corporate or otherwise, among which Institutes of Russian Academy of Science: Institute of Volcanology, Institute of Geothermal Problems, Geoelectromagnetic Research Institute; Institutes of the Ministry of Education of Russia: Moscow State Geological Research Institute, Saint-Petersburg Mining Institute, Moscow Power Engineering Institute; leading factories manufacturing geothermal energy equipment, and drilling companies: Kaluga Turbine Works, Podzemburgas, Federal State Enterprise Nedra, Kamchatskburgeotermiya; Geortherm; leading Russian engineering and consulting companies in the field of geothermal and renewable enegy: Nauka, InterArm, Intersolarcentr etc. Since then it has organized two international geothermal workshops – in Sochi in 2003, with over 50 countries participating, and in Kamchatka in 2004, with about 20 countries participating.
What is the real potential of geothermal energy across Russia? Is there enough political will to push the sector forward? Money usually follows political agendas…
There are many places in Russia where it is possible to construct binary GeoPPs, where heat is taken from the hot geothermal water from geothermal wells to a heat exchanger and transferred to low-boiling fluid which is circulating in the close cycle: heat exchanger-separator-turbine-condenser-heat exchanger, producing electricity from hot water. This GeoPP can be built in many regions of Russia - Kaliningrad, Krasnodar, Stavropol, Chechnya, Dagestan – there are some geothermal district heating projects but currently there are only two geothermal power projects for the construction of power plants in Kamchatka in Mutnovsky and Pauzhetsky geothermal fields.
In the last 15 years RAO UES was responsible for the conventional power plants construction, and development of geothermal energy sector in the late 90s began as a privately owned business, but since 2001 it also focused on renewable energy sources. At that time the responsibility for power generation relied solely on RAO UES of Russia, with Anatoly Chubais playing the leading role. Thus till 2007 RAO UES of Russia was the main shareholder of existing geothermal power plants in Kamchatka.
After the restructuring of RAO UES the main role of geothermal went to RusHydro. This is a new topic for them. During my meeting with Mr. Chubais in 2007 it was mentioned that RusHydro was the only power generation company that produced green energy. It has a special department for renewables which includes geothermal, solar, wind and tidal power plants divisions. Now RusHydro is developing the documentation for the construction of binary GeoPP 2,5 MW in Pauzhetsky geothermal field and the idea is to construct this first Russian binary geothermal power plant to prove the possibility of producing electricity from hot water and then implement it in other regions of Russia. This power plant will be put into operation in 2011. There are several new projects in Krasnodar region – construction of a special demonstration project, in a town called Rozovy, where energy company, Yuzhgeoteplo, has almost finished the first stage of construction of a geothermal project producing 5 MW of heat. The next stage is to show how it is possible to produce electricity from renewables (wind and solar installations).
The main problem is the price of the electricity produced by renewables – in Kamchatka it is less than 0.04 eurocents per kW/hour and in other countries it was 0.21 eurocent in 2007 and this year, as I have saw during my recent visit to Madrid to IGA Directors Board Meeting, it is 0.26 eurocents per kW/hour in Germany and in Bulgaria and Slovakia even lower. If we compare it with the price of electricity from conventional power plants powered with fossil fuel, we see that the tariff that is imposed by the special regional tariff service is much higher, especially in Kamchatka.
The main problem with Kamchatka is that fossil fuel is imported from abroad. The cost of electricity production on thermal power plants (TPPs) is very high and the local population can’t afford it. To reduce this tariff in the region, geothermal prices were lowered as much as possible. Sometimes the tariff is lower than the cost of production. In this case a power plant can go bankrupt, so it is not profitable to develop it. So this is why we don’t have the fast development of geothermal energy sector like that we see in other countries.
Is the regulatory framework likely to change in the foreseeable future?
In June 2008, the Government signed a special law №426 to support renewable energy: it was calculated by RusHydro that they raise the geothermal tariff to some 1.76 rubles per kW/hour. If this law works, it will be more than 5 rubles per kW/hour produced by geothermal power plants. If this is the case, it will more profitable, and it will boost up geothermal energy development in Russia.
Can a change in the regulatory environment alone make geothermal competitive in an oil and gas country like Russia?
It’s very hard to make fossil and geothermal compete as sources of energy. Geothermal costs money. For example, as the last report of international energy agency shows, the cost of 1 MW installed capacity of geothermal energy varies from 2 to 4.5 mln US dollars. The cost of Mutnovskaya power plant in Kamchatka with 50 MW installed capacity was more than 150 mln US dollars. Relative cost of 1 MW of installed capacity was higher than in other countries then because it is the hardest region for power plant construction in the world – only 3-4 months of construction period per year, heavy snow loads, seismic activity, mountains etc. Over 1,000 people were involved at the construction site at the time…
If it is expensive and there is no incentive for companies, what is the argument of an Association like yours to convince society and stakeholders to invest in geothermal energy? I can think of one: geothermal can help to free other resources from export, mainly gas.
I look towards the future. I’m still young to keep it going for another 5-10 years. We have no other choice than to develop renewables: we’re short in coal, oil and gas, and at the same time, by the Kyoto protocol, we’re obliged to reduce CO2 emissions. Russia can afford to make up to 45% of regional heating system utilizing geothermal energy. We are not developing enough ground heating. China has the first place in the direct use of geothermal energy, followed by Sweden, USA etc.... At the same time, we have a widely distributed district heating system throughout all the country, and all the heat is produced from fossil fuel. If we want to reduce CO2 emissions, it is better to replace oil and coal with renewables, with main heat supply from geothermal energy. I believe it will happen in 5-10 years’ time.
We export gas to foreign countries whereas it is much better to use this gas to produce electricity in Russia with highly efficient combined cycle power plants with an efficiency of over 60% in Russia. But the energy efficiency of existing Russian power plants is less than 35% due to the fact that many are outdated and burn oil very inefficiently. Gas can be burned here and sold for the same or more money than exporting raw oil and gas.
Is it also question of mentality in Russia?
Yes, it is.
We have seen a lot of new investors coming into the electricity sector with experience of renewables at home - E.ON, Fortune, Gaz de France... Are there any steps to transfer the business mentality here?
I don’t think there’s a problem with the experience; the most experienced specialists are engineers from Iceland, New Zealand, USA and Russia. Actually, the first binary cycle power plant was constructed in Russia in 1967 in Kamchatka, it was only 250 kW, but the experience and two patents obtained by Soviet specialists to produce electricity from hot water were worth it.
Now we have almost everything to develop geothermal energy in Russia but the main region is Kamchatka and Kuril Islands with a local grids. We have to solve the problem with the government support, I mean tariff regulation authorities, to afford this type of electricity.
If you manage to connect local and national grids, you can export and develop the sector…
Yes, but because of Russia’s large distances you have to invest a lot to construct a common grid.
Are there other, cheaper ways to develop geothermal power here or not?
We may produce geothermal electricity from hot water utilizing binary cycle technology in different parts of Russia - in Kaliningrad and South Russia.
What happens in all the other territories?
It should be covered with ground heat pumps.
Have you calculated the investments?
Not for the whole of Russia.
Looking ahead, where do you see geothermal energy in Russia in 10 years time?
There’s a business plan for the second stage of Mutnovsky power plant (100 MW of electricity). So, we have to find investments. At the same time, if we put another 100 MW of GeoPPs in Kamchatka, it will cover more than 65% of the region and in this case the price of electricity will be much lower than now, but we have to find these investments which should be also returned.
How do you return the investment when electricity tariffs are so low in Russia?
The only way is to subsidize geothermal power in Kamchatka to make it as attractive as in Europe. Now we have subsidies only for oil-based thermal power plants in Kamchatka. Oil fossil fuel power plants are subsidized from the budget.
What would be your final words about the potential of geothermal power generation in Russia?
I have to say that almost all countries with any geothermal resources – even China – develop geothermal energy, and Russia is lucky to develop it not only for electricity but also for heat supply. I believe that more than 45% of the total demand of heat for regional heating systems can be covered with geothermal heat pumps and many regions can utilize geothermal energy and binary technology for electricity production. At the same time, many European countries use heat pumps for heat and air condition to produce also cold air for conditioning in summer and heat in winter so we have to implement this technology as well.
Initially the idea for developing geothermal energy in Russia came from my father who died in 2006. I hope that I will live to see it.
Thank you. Mr. Povarov for talking to us!
Company: Geothermal Energy Society
Position: General Director
Country: Russian Federation
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