Economic assessment of Balçova-Narlıdere Geothermal District Heating Systems

Abstract

Development of a geothermal district heating system covers full range of activities from the determination of geothermal reservoir to the delivery of geothermal energy successfully. Economic assessments are come true in the early stages of geothermal developments. The goal of this thesis is to realize a detailed economic assessment for Balçova-Narlıdere Geothermal District Heating System (GDHS) which is one of the largest district heating systems in Turkey with its current heating capacity of 50 MWth. Tasks in geothermal district heating investments are looked over at the beginning to make a correct economic evaluation and make future development in this geothermal field easy under the discipline of project management. Internal rate of return method which is commonly used financial tool to find the profitability of investments is applied to this investment. The economic analysis begin with the calculation of end of 2002 values of capital investment costs, revenues and operating costs since the existence of past cash flows. Future operating costs are determined according to the yearly expenditures realized in 2002. Future revenues are determined in accordance with the capacity of current heating system and energy utilization prices valid in 2002-2003 heating season. If the sustainability of a resource is considered in the design, the prospective geothermal district heating system could be operated in a long period. However, long-term period projects contain economic uncertainties for the future cash flows. The overall life of Balçova-Narlıdere GDHS is considered as 20 years after year 2001 and uncertainties are considered in this study. Calculations are realized according to various scenarios in which operating costs are constant throughout 20 years. To determine these scenarios, operating costs in 2002 which reflects the current expenditures are either decreased or increased by some percentages. In addition, 60 different pricing plans have been taken into consideration in these scenarios to demonstrate the effects of energy utilization prices on the profitability of investment. The continuity of current price policy for Balçova-Narlıdere GDHS is discussed and energy utilization prices per 100 m2 are suggested for these scenarios. On the other hand, taxes paid to government in Balçova-Narlıdere GDHS investment are investigated to show the benefits of geothermal investments from the viewpoint of government. Because of the development in production of some equipment like heat exchangers, pipes and changing in marketing strategy, the costs of these equipment are reduced. At the end, internal rate of return method is repeated for the current cost of the investment. The energy utilization prices for 13 different scenarios are found for this situation and results are compared with the prices determined to meet the real cost of the investment.