What Is Geothermal?

When properly developed and managed, geothermal systems are a clean, abundant, and reliable source of renewable energy, and by using geothermal for electricity generation or direct use we conserve the use of non-renewable and more polluting resources.

The capacity of installed geothermal electricity generation worldwide is equivalent to the combustion of nearly 30 million tonnes of coal or the output of about 10 nuclear plants.

Geothermal energy is effectively a renewable resource, which does not consume any fuel or produce significant emissions. Although some geothermal fields have been degraded, none have been exhausted and sustainable development is possible. Geothermal energy also has the advantage, over other renewables, that it is independent of climatic variation.

Geothermal energy is a relatively low-cost and indigenous generation option that can contribute to New Zealand’s growing demand for electricity. It is uniquely reliable, with geothermal power stations typically achieving load factors of 95%, compared to typical load factors of 30 – 50% for hydro and wind power stations. Wairakei Power Station has operated at a load factor of more than 90% for over 40 years with low operating costs. This inherent reliability makes geothermal generation a valuable component in a diverse electricity supply system such as New Zealand’s.

There are geothermal generation opportunities on either side of Auckland (i.e. Northland and the Taupo Volcanic Zone), the principal demand centre for electricity in the North Island. The proximity of geothermal resources to Auckland, assuming sufficient transmission capacity, provides an efficient, low-cost electricity supply option. Geothermal fields are also commonly found near major forests and their energy-intensive processing industries, allowing symbiotic development of each resource.

An important aspect of recent investment in geothermal projects is the development of partnerships between power generators and Māori trusts. Māori commonly have the land access rights to geothermal fields and geothermal projects are increasingly delivering economic benefits to local Iwi.

The word geothermal comes from the Greek words geo (earth) and therme (heat), – ‘the heat of the earth’.

Geothermal energy is derived from the heat in the earth’s core and from radioactive decay within its mantle. At high temperatures and pressures within the mantle, mantle rocks melt forming magma, which rises towards the surface carrying the heat from below.

In some regions where the earth’s crust is thin or fractured, or where magma bodies are close to the surface, there are high temperature gradients. Deep faults, rock fractures and pores allow groundwater to percolate towards the heat source and become heated to high temperatures. Some of this hot geothermal water travels back to the surface through buoyancy effects to appear as hot springs, mud pools, geysers, or fumaroles.

If the rising hot water meets an extensively fractured or permeable rock zone, the heated water will fill pores and fractures and form a geothermal reservoir. These reservoirs are much hotter than surface hot springs, reaching more than 350°C, and are potentially an accessible source of energy.

High temperatures can be achieved in liquid-dominated reservoirs because increasing hydrostatic pressure with depth allows elevated temperatures without boiling. Many undisturbed geothermal reservoirs in New Zealand have temperature and pressure profiles where fluid is close to boiling point to depths of more than 1 km.

Geothermal areas are commonly close to the edges of continental plates. New Zealand’s location on an active plate boundary (between the Indo-Australian and Pacific Plates) has resulted in numerous geothermal systems and a world-class geothermal energy resource.

The characteristics of geothermal systems vary widely.

Aotearoa New Zealand has over 62 years of geothermal operations including electricity generation. Steam and power production has grown periodically with current development focused on reducing carbon emissions as part of Aotearoa New Zealand’s energy transition.

During the 2022 calendar year, geothermal operators in Aotearoa New Zealand generated 8.06 TWh from 20 power plants located over eight high-temperature fields. For this same year, geothermal resources contributed 18.5% of Aotearoa New Zealand’s total electricity supply while all renewables generated 87% (Figure 1.1).

As temperature and conditions vary, the types of geothermal generation technologies employed to produce electricity span the spectrum from brine, heat-recovery binary plants, to 2-phase binary, to condensing steam turbines (single, double, and triple flash), and backpressure turbines. Individual generation unit sizes range from 3.5 MWe up to 140 MWe (Ngā Awa Purua, Rotokawa – at one time the largest single-shaft geothermal turbine in the world).

Among the original equipment manufacturers for remaining operating plant, Ormat is the New Zealand market leader (384 MWe), followed by Fuji (300 MWe), Toshiba (160 MWe), British Thomson-Houston (139 MWe), Mitsubishi (42 MWe), and Others (8 MWe).

In 2022, geothermal electricity generation comes from five operators: Mercury NZ Ltd. (481 MWe), Contact Energy Ltd. (431 MWe), Ngāwhā Generation Ltd. (Top Energy) (56 MWe), Eastland Generation Ltd. (57 MWe), and Others (8 MWe). Three fields (Mōkai, Rotokawa, and Kawerau) have operations that are co-owned by local iwi (the Tuaropaki Trust, Tauhara North No 2 Trust, and Kawerau A8D Trust respectively). In addition, Ngāti Tūwharetoa Geothermal Assets (NTGA) own and operate part of the Kawerau steamfield and supply steam/heat to direct users, including the TOPP1 and GDL power stations (Eastland Generation Ltd.) and the KGL power station (Mercury NZ Ltd.).

Source: Ministry of Business, Innovation, and Employment (MBIE)

Decarbonising the Aotearoa New Zealand Electricity Market

In the Aotearoa New Zealand electricity market, new geothermal generation mainly displaces natural gas fired generation while coal generation mainly compensates for seasonal variations in flow.

In 2014, geothermal electricity generation overtook natural gas as the second largest source of electricity supply after hydro generators. Since that time, the incremental growth in geothermal electricity generation (and concurrent declines in geothermal emission intensity) has lowered the contribution of natural gas fired carbon emissions in electricity generation (Figure 2.1).

The base load character of geothermal electricity generation also helps stabilise system dispatch during periods of weather variability (affecting hydro, solar and wind)

Source: Ministry of Business, Innovation and Employment (MBIE)
Note: the marked increase in quarterly adjusted emissions correspond to low hydro levels.

Evolution of Geothermal Electricity Generation Capacity

In 1958 the New Zealand Electricity Department commissioned the first turbine-generator at Wairakei. This was the second, large-scale geothermal electricity plant in the world and the first to exploit two-phase fluid via a flash plant (rather than dry steam). The impetus to develop Wairakei arose from severe electricity shortages caused by restricted hydro generation in the late 1940s, rapidly growing electricity demand, as well as a policy decision by the New Zealand Government to invest in generation that did not rely on imported fuel.

Geothermal development stagnated in the 1970s and 1980s, due to the emergence of the Maui Gas Field as a more economical fuel source for thermal generation. New capacity investment resurged in the 1990s with the corporatisation and subsequently deregulation of the New Zealand electricity market. The electricity reforms brought new parties to the geothermal industry including Māori enterprises, who own, develop, and operate geothermal assets.

Since 2000, geothermal operators have both refined (through de-rating and re-rating) and expanded the generation fleet in response to market and resource conditions. The activities under this adaptive philosophy are summarised in the table below.

Table 3.1: History of Geothermal Generation Capacity

BPT – Back Pressure Turbine
KA – Kawerau
KGL – Kawerau Generation Limited
NAP – Nga Awa Purua
NTGAL – Ngati Tuwharetoa Geothermal Assets Ltd.
OEC – Ormat Energy Converter
ROK – Rotokawa
TA – turbo-alternator
TAOM – Te Ahi O Māui
TG – Tarawera Generation
TOPP – Tarawera Ormat Power Plant
TPC – Tuaropaki Power Company
TN2T – Tauhara North No. 2 Trust
NST – Norske Skog/Tasman Pulp and Paper

Note: When decommissioning or derating a geothermal plant, its installed capacity is counted as a negative value, hence the cumulative capacity decreasing as well as increasing at times.

New Geothermal Electricity Generation Developments

Responding to Aotearoa New Zealand’s decarbonisation strategy, geothermal developers have 371 MWe either in construction or in development (see tables 4.1 and 4.2 below). This potentially will increase geothermal power generation by 36% to 11 TWh

The announcements of Resource Management Act reform and the development of New Zealand Energy Strategy to adapt to the impacts of climate change and reduce greenhouse gas emissions domestically, is stimulating the exploration of greenfield projects and supporting High-Voltage transmission expansion to allow new capacity.

Table 4.1: Projects Under Construction

COD – Commercial Operation Date
CST-TF – Condensing Steam Turbine – Triple Flash
OEM – Original Equipment Manufacturer

Table 4.2: Projects Under Development

COD – Commercial Operation Date
FEED – Front End Engineering Design
OEC – Ormat Energy Converter
ORC – Organic Rankine Cycle (= binary cycle)
TOPP – Tarawera Ormat Power Plant
WRK – Wairakei

Table 4.3: Potential Greenfield Projects

In addition to these specific projects, the Ministry of Business Innovation and Employment is funding studies on the merits of using additional geothermal resources to back-up hydro generation during dry years, as part of the “New Zealand Battery” project. The concept contemplates installing up to 400 MWe of new geothermal generation (ahead of planned market supply) for dry year operation.

Conventional geothermal systems occur naturally, due to deep heat sources such as magma chambers, which most often occur near plate boundaries where tectonics has induced melting of the Earth’s crust. The fluid in most geothermal systems is groundwater which is heated near this deep heat source and then moves upwards closer to the surface, a heat transfer process called convection. Geothermal systems are therefore dynamic systems, the size and shape of which depends on the depth and temperature of the heat source and the permeability structure of the shallower rocks through which the convecting fluid moves.

The chemical content of geothermal fluid depends on the original composition of the groundwater, any inputs of fluids from the magma chamber (or deeper), the composition of the rocks through which the fluid travels, and the pressure and temperature (which affect the rate of fluid-rock interaction). Geothermal fluid contains CO2, methane and hydrogen sulphide, and in the natural state (pre-development) these are discharged through obvious natural surface features such as fumaroles and bubbling pools, and less obviously as a flux through the soil.

After development of a geothermal system for power generation, during operation of the power plant some of the geothermal gases (CO2 and others) can become separated from the geothermal fluid as a result of changes in temperature and pressure. The gases that have become separated are non-condensable and are released to the atmosphere as a part of the power generation process.

It is useful to consider emissions for electricity generation in terms of an “emissions factor” (also called “emissions intensity” or “carbon intensity”) of grams CO2-equivalent per kilo-watt hour gCO2(eq)/kWh, which enables comparison to electricity from other energy sources. The measure “grams CO2-equivalent” is a useful way to combine the CO2 and methane into one number – it is the mass of actual CO2 plus an equivalent mass of CO2 to represent the methane. As a greenhouse gas, methane has 25 times more impact than CO2 and so the mass of methane times 25 gives the equivalent mass of CO2.

The emissions factors for geothermal power stations in New Zealand for the calendar year 2018 are given in the table and figures below. These are the emissions of CO2(eq) released from the geothermal fluid during operation of the plant. The median emissions factor for 2018 is 62 gCO2(eq)/kWh and this is a standard measure of the central tendency of this kind of dataset with outliers. The use of the median (and other percentiles) is the same approach as used by the IPCC in the 2011 Special Report on Renewable Energy Sources and Climate Change Mitigation. Another useful statistic is the weighted average of 76 gCO2(eq)/kWh, which is weighted using the total energy generated from each plant, thus accounting for the fact that not all plants are the same size and hence their individual numbers for emission factor do not carry the same weight.

For comparison, the emissions factors from other renewable energy sources during operation are:

- Hydro: > 0 gCO2(eq)/kWh (some methane is emitted from decomposition of organic material in the reservoir, though this is hard to quantify)
- Solar photovoltaic (PV): 0 gCO2(eq)/kWh (no emissions from sunlight)
- Wind: 0 gCO2(eq)/kWh (no emissions from wind)

And emissions factors from fossil fuel plants from fuel combustion during operation are (national average NZ, source MBIE):

- Coal: 970 gCO2(eq)/kWh
- Natural gas (open-cycle gas turbine): 530 gCO2(eq)/kWh
- Natural gas (combined-cycle gas turbine): 390 gCO2(eq)/kWh

All the emissions factors discussed so far are for operation of the plant only. For a true comparison between the different energy sources, the full life-cycle of the plant needs to be considered. A life-cycle assessment (LCA) includes carbon emissions related to: materials/construction, operation, and decommissioning. An international review of LCAs for all energy sources is available in the 2011 IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation (see figure and table below).

(Figure 9.8 from IPCC (2011): Special report: Renewable Energy Sources and Climate Change Mitigation)

(Table A.II.4 from IPCC (2011): Special report: Renewable Energy Sources and Climate Change Mitigation)

For all the energy types currently present in NZ, median LCA CO2(eq) emissions factors from the IPCC report are as follows:

- Coal: 1001 gCO2(eq)/kWh (high certainty – 169 data points)
- Natural gas: 469 gCO2(eq)/kWh (high certainty – 83 data points)
- Solar PV: 46 gCO2(eq)/kWh (high certainty – 124 data points)
- Geothermal: 45 gCO2(eq)/kWh (uncertain – only 8 data points)
- Wind: 12 gCO2(eq)/kWh (high certainty – 126 data points)
- Hydro: 4 gCO2(eq)/kWh (medium certainty – 28 data points)

The IPCC life-cycle (LCA) median emissions factor for geothermal is 45 gCO2(eq)/kWh, which seems low when the median NZ emissions in 2018 were 62 gCO2(eq)/kWh from operation only. This may be due to the limited number of geothermal LCAs – only 8 data points met the criteria to be included in the IPCC review. All the other energy types had many more LCAs and are likely to be more representative.

Although the true median geothermal life-cycle emissions factor will likely be higher, it is still useful to consider these life-cycle numbers, as it can be seen that:

- All energy types emit CO2(eq), there is no zero-carbon energy.
- All the renewable energy types present in NZ (hydro, wind, solar PV and geothermal) have emissions factors at least one order of magnitude lower than the fossil fuel plants (gas and coal).

Geothermal emissions intensities are relatively complex, and change over time. The intensity decreases due to field degassing, and can increase or decrease to some degree due to operational changes to the steamfield or plant, as shown schematically in the figure below. Additionally, there are two important factors which offset some of the CO2(eq) emissions from geothermal electricity generation, which are not usually accounted for:

1. Geothermal plants have the benefit of producing large volumes of hot water. This is often just reinjected back into the reservoir, however the hot water can be used (and is being used) as process heat for various industries, which would otherwise burn fossil fuels to obtain that heat.

2. Geothermal systems in their natural state emit CO2 and methane from natural surface features, such as fumaroles, bubbling pools, and flux through the soil. Development of geothermal power stations has often resulted in a decline in surface CO2 and methane emissions, although this is very difficult to quantify.

Geothermal Fluid Use and Emissions Trading Requirements

1. Application – Electricity Generation and Industrial Heat

The New Zealand Emissions Trading Scheme applies to using geothermal fluid for generating electricity or industrial heat, where the emissions of carbon dioxide-equivalent (CO2-e) exceed 4,000 tonnes from a given installation per annum.

2. Legislative Requirements

The Climate Change Response Act 2002 (update as at 8 Dec 2009) requires industries to register, to set up holding accounts, to gather data, to monitor emissions, to provide regular data returns for prescribed periods at specified times. Payment is according to default emissions factors for a given facility as specified in the Climate Change (Stationary Energy and Industrial Processes) Regulations 2009 unless an application for a unique emissions factor is made and approved under the Climate Change (Unique Emissions Factors) Regulations 2009.

Geothermal facilities supplying geothermal fluid for generating electricity or industrial heat are subject to the Climate Change (Stationary Energy and Industrial Processes) Regulations 2009. These regulations consider fluid supply as either geothermal steam (Schedule 2, Table 6, Part A) or geothermal fluid (Schedule 2, Table 6, Part B). Prescribed or default emission factors are defined in Schedule 2, Table 6 of the regulations for these two fluid types. The measured annual fluid production is multiplied by the prescribed emissions factor to derive the reportable annual emissions from a given facility.

There is an option for the prescribed emissions factor to be substituted with a unique emissions factor. The methodology to develop a unique emissions factor for a geothermal facility is covered in the Climate Change (Unique Emissions Factors) Regulations 2009, clauses 14 to 17. Aspects of determination of unique emissions factors covered are in a letter on the Climate Change Act – Geothermal Sampling Procedures dated 23 September 2010 from GNS Science to the New Zealand Geothermal Association. This letter identifies appropriate sampling methods that comply with the legislative requirements.

3. Other Commentary and Information

A number of companies have analysed their processes, determined that it is cost effective to make an application for a unique emissions factor and have subsequently applied for and been granted a unique geothermal emissions factor.

The carbon emissions scheme effectively taxes industries for their emissions. For the geothermal industry, which has comparatively low carbon emissions, this increases their economic performance with respect to other higher emitting generators.

For more on the emissions trading scheme visit the NZ Government climate change web site

Links

- Waikato Regional Council
- Bay of Plenty Regional Council

Publications

- Bromley, C. Practical methods of minimizing or mitigating environmental effects from integrated geothermal developments; recent examples from New Zealand
- Houghton, B.F. 1989: Inventory of New Zealand Geothermal Fields and Features. Geological Society of NZ
- B.F. Houghton 1982. Geyserland: A Guide to the Volcanoes and Geothermal Areas of Rotorua. Geological Society of New Zealand Guidebook N. 4.
- B.F. Houghton, E.F. Llyod and R.F. Keam 1980: The Preservation of Hydrothermal System Features of Scientific and Other Interest – A Report to the Geological Society of New Zealand.
- Parliamentary Commissioner for the Environment 2003. Electricity, energy and the environment. Part A making the connections.

New Zealand’s geothermal resources have been used for many years. Geothermal areas are important to Māori, who use the heated waters for cooking, washing, bathing, warmth, preserving, ceremonial use and healing. Māori also use geothermal minerals as paints, wood preservatives and dyes. In recent years, Māori have become significant players in the geothermal space with several of the major operators owned by iwi. Through many Treaty of Waitangi settlements, many iwi have had land returned to them and their traditional relationships with the geothermal resource formally recognised by the Crown.

Geothermal fields also have significant landscape, ecological, amenity, scientific and conservation value.

Other key uses include tourism, mineral extraction, direct heat use and electricity generation.

For more information on uses of geothermal energy, including New Zealand case studies – visit GNS Science’s Earth Energy webpages.