Risk and Uncertainty in Geothermal Projects: Characteristics, Challenges and Application of the Novel Reverse Enthalpy Methodology
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A reliable geothermal risk assessment methodology is key to any business decision. To be effective, it must be based on widely accepted principles, be easy to apply, be auditable and produce consistent results. In this paper we review the key characteristics of a geothermal project and propose a novel approach derived from risk and uncertainty definitions used in the hydrocarbon industry. Ac-cording to the proposed methodology, the probability of success is assessed by estimating three different components. The first, the geological Probability of Success (PoS), is the likelihood that the key fundamental geological elements are present. The absence of one or more of these will lead to the inevitable failure of the project. The second, the temperature threshold PoS, is defined as the probability that the fluid is above a certain reference value. Such a reference value is the one used to design the development. Such a component therefore depends on the end use of the geothermal resource. The third component is the commercial PoS and estimates the chance of a project being commercially viable using the Reverse Enthalpy Methodology (REM). Geothermal projects do not have a single parameter that represents their value. Therefore, in order to estimate it, it is necessary to make an initial assumption that can be revisited later in an iterative manner. REM works with either the capital expenditure (CAPEX) of the geothermal facility (power plant or direct thermal use) or the drilling CAPEX as the initial assumption. Varying the other parameter, it estimates the probability of having a Net Present Value (NPV) higher than zero.