European Geologist Journal 47
The role of geothermal in the energy transition in the Azores, Portugal
By António Franco1, Carlos Ponte1
1 EDA RENOVÁVEIS, S. A., Ponta Delgada, Azores, Portugal
The Azores Archipelago is characterised by a challenging power market, where each island corresponds to an independent power generation system and where demand is low and very asymmetric, limiting the size of the renewable projects that can be built and economically feasible locations.
Traditionally, the power generation in the Azores Islands has been based on the consumption of fuel oil in thermal Diesel power plants, and in the early 1990s more than 90% of the electricity supply relied on fossil fuels. However, over the past two decades the share of renewables for power generation has progressively increased; they currently provide 37% of the electricity needs in the Archipelago. Amongst the renewables, geothermal plays the predominant role on the most populated islands, providing up to 42% of the electricity needs of São Miguel Island and 11% of Terceira Island.
This paper summarises the key contributions from geothermal for the ongoing energy transition in the Azores, including plans for and challenges to future expansion of geothermal production in such small and isolated power generation systems.
The Azores Archipelago, in the North Atlantic Ocean, is composed of 9 islands spread along 600 km (Figure 1), with the nearest continental area being Portugal mainland, 1600 km away to the East. There is no electrical interconnection between the Islands or to any continent, so each island corresponds to an independent power generation system. In this context, the climate and the volcanic nature of the Azores Islands offer specific opportunities to use renewable energy sources for power generation, namely geothermal, wind and – hydro. In the Azores, EDA RENOVÁVEIS S.A., is the main renewable power operator, and its only client is EDA, S.A., the power utility of the region.
Figure 1: The Azores Archipelago.
There are no large-scale industries in the Azores and almost 80% of the power consumption derives from households, commerce and services. On top of that, most of the consumption is concentrated in the more populated islands (Figure 2), so the demand is not only low but also very asymmetric, limiting the size of the renewable projects that can be built and where they are economically feasible to build.
Figure 2: Power generation in the Azores, 2018 (sources: EDA, S. A., 2018; Statistics Portugal, 2011).
Formed at the triple junction between the North American, African and Eurasian plates, the Azores are in an active geological zone, with a history of intense seismic and volcanic activity, which is still ongoing. In fact, all the islands are volcanic in origin and most still have active volcanoes (currently dormant). There are abundant surface geothermal manifestations, including fumaroles, hot springs and soil degassing areas, and at certain sites there is great potential for utilising high-temperature geothermal resources for power generation.
The low demand however, limits the geothermal development. This is caused by the high up-front costs and resource risk in the early stages of development, compared to other renewable energy sources, mostly related to the cost of drilling exploratory deep wells. As a result, the development has been only focused in São Miguel and Terceira Islands, where the demand is a bit higher and, consequently, where the projects are economically feasible.
This paper summarises the main milestones of geothermal development and describes the history of power generation in the Archipelago, quantifying the main contributions from geothermal to the on-going energy transition away from fossil fuels. In addition, the challenges in expanding the geothermal capacity are briefly discussed.
In the Azores, the initial geothermal exploration dates from the 1970s and was carried out roughly in parallel on São Miguel and Terceira Islands. However, following the more promising results in São Miguel Island, development was initially focused there, following a stepwise strategy. The Terceira Island project was resumed in 2000, but the first power plant was only installed in 2017. The main milestones of the development and the power generation history are described below.
São Miguel project
The geothermal project is in the Ribeira Grande geothermal field (Figure 3), on the north flank of Fogo Volcano, one of the three active (dormant) central volcanoes of the Island. This is a brown field, with 4 decades of exploitation experience and with a total of 23 deep drillings (1-2 km depth). The geothermal system is characterised by a 240 °C liquid-dominated reservoir, which can be tapped by relatively shallow wells (1–1.5 km depth). The resource has a fluid enthalpy of 900–1100 kJ/kg and most wells discharge up to 25-40 l/s at wellhead pressures ranging from 6 to 16 bar-g.
Figure 3: The Ribeira Grande geothermal field.
The first milestone of geothermal power generation was in 1980, with the operation of a small 3 MW pilot plant in the Pico Vermelho area (Meidav, 1981), consisting of one back-pressure steam turbine designed by Mitsubishi. The pilot plant only generated an average net power of 0.8 MW (1980–2005), but the lessons learnt from its operation supported the next stages of project development.
1994 marked the beginning of the commercial exploitation of geothermal resources in the Azores, when Phase A of the Ribeira Grande ORC (organic Rankine cycle) binary power plant came online (Figures 3 and 4). The plant was designed by ORMAT and in 1998 it was later expanded to 13 MW (Ponte, 2002). More recently, the pilot plant was dismantled and was replaced by the 10 MW Pico Vermelho ORC binary plant (Kaplan et al., 2007), also designed by ORMAT, installed at the same location (Figures 3 and 4). The Pico Vermelho plant has been online since December 2016.
The power demand on São Miguel Island showed progressive growth from 1990 to 2010. In the early 1990s, the power generation was based on the consumption of fossil fuels in thermal diesel power plants, producing 90% of the electricity needs. However, over the past 30 years, the growth in the demand was accompanied by an increase in renewables production, from 10% to 51%, and this has been directly linked to the expansions of the geothermal installed capacity (Figure 4). On São Miguel Island, the current share of renewables reaches up to 51%, with geothermal assuming the predominant role, providing 42% of the island’s electricity needs. The remainder is provided in roughly equal parts by hydro and wind.
Figure 4: History of power generation on São Miguel Island (source: EDA, S. A., 2007 to 2018 and EDA RENOVÁVEIS, S. A., 2007 to 2018).
Terceira project and power generation history
On Terceira Island, the project is in the Pico Alto geothermal field (Figure 5) located on Pico Alto Volcano, one of the three active (dormant) volcanic complexes of the island. This is a greenfield site, with only five deep drillings and an exploitation experience of less than 18 months. The geothermal system is characterised by a 270–300 °C liquid-dominated reservoir, which can be tapped by 1–2 km depth wells. The resource has a fluid enthalpy ranging from 1200 to 1900 kJ/kg, and, as in many other greenfield sites, the output from the first set of wells is relatively low, discharging 6-13 l/s at variable wellhead pressures (4 to 12 bar-g).
Figure 5: The Pico Alto geothermal field.
The geothermal exploration in Terceira Island started in the late 1970s, but there were no significant developments for 20 years. In 2000, GEOTERCEIRA (which merged into EDA RENOVÁVEIS in 2014) deployed a new exploration program, concentrated on the central part of the island near the fumaroles of Furnas do Enxofre. The initial program included a detailed audiomagnetotelluric (AMT) survey and the drilling of 4 temperature gradient holes to 400–600 m depth (Henneberger et al., 2004). The results from these supported the drilling of five exploratory wells to 1100–1900 m depth and the subsequent flow tests indicated an estimated available output of 3.5 MW (Franco et al., 2017).
Like in Ribeira Grande (São Miguel), the Pico Alto project is following a stepwise strategy, with Phase A being the installation of a small pilot plant and Phase B being the expansion of the plant capacity (up to 10 MW), supported by additional drillings. As part of Phase A, a 3.5 MW ORC binary power plant was installed in Pico Alto, designed by the consortium EXERGY S.p.A. & CME, and it has been online since August 2017.
Before 2008, more than 98% of the power generation relied on fossil fuels, with a small contribution of hydropower (1–2%). During this period, demand was growing rapidly, and this created interest in utilising the endogenous resources of the Island, including geothermal resources. Despite the stagnation of the demand after 2008, the energy mix became more diverse as new projects were installed, utilising wind, waste-to-energy and geothermal resources (Figure 6). As a result, the proportion of renewables has increased significantly, initially based on the operation of wind turbines, and more recently also on the Pico Alto geothermal plant.
In 2018, the island is still reliant on fossil fuels to meet its electricity needs (66%), but with the operation of the Pico Alto geothermal plant, the share of renewables reached a historical maximum of 27%, with geothermal providing 11% and wind 16%. The remainder was provided by a waste-to-energy facility (7%).
Figure 6: History of power generation in Terceira Island (source: EDA, S. A., 2007 to 2018 and EDA RENOVÁVEIS, S. A., 2007 to 2018).
Power generation history in the Azores
In the early 1990s, the share of renewables was minimal, with 95% of the power generation deriving from fossil fuels. However, over the past 30 years and accompanying the growth in demand, EDA RENOVÁVEIS S. A. has made several investments to increase the installed capacity of renewables. The contribution from renewable power generation increased from 5% to 37% (Figure 7), progressively reducing the dependency on fossil fuels. This energy transition was essentially fostered by the growth of geothermal, from 1% to 26%, and, on a smaller scale, by wind power production (currently 8%). On the other hand, the proportion of hydropower has remained constant, as the main resources have been already in use for several decades. Currently, there are 12 hydropower plants in the Azores with a total installed capacity of 8.7 MW, distributed on four of the nine islands of the Azores. Categorised by capacity, 2 are small plants (1.6 MW) and 10 are mini plants (0.1 to 0.8 MW). All are run-off river plants with a limited amount of storage, where a fraction of the water’s stream is diverted downhill through a penstock to a small size turbine that sits downstream alongside the river. In summer, the runoff may be rather low, reducing the output of the plants. There are also small solar photovoltaic installations on six of the nine islands of the Archipelago, but they are mostly microgeneration for domestic dwellings. Despite having a so-far restricted share in the power generation in the Azores (<0.1%), photovoltaic microgeneration is growing at a rather promising pace, from 0.01 GWh in 2010 to 0.28 GWh in 2017.
In addition, on the tiny Graciosa Island a hybrid plant came online at the end of 2018, combining a Battery Energy Storage System (6.0 MW/3.2 MWh) with renewable power generation (4.5 MW of wind and 1.0 MW of photovoltaic). The project is promoted by Graciólica Unipessoal Lda and is expected to generate up to 65% of the electricity needs on the island (Wartsila, 2019).
Figure 7: History of power generation in the Azores (sources: SOGEO, 1991; EDA, S. A., 2007 to 2018).
Utilisation of low-temperature geothermal resources
In site-specific locations of the Azores, there are abundant low-temperature resources (<100 °C; <250 m depth) suitable for direct uses of the geothermal heat. However, only a small part of these shallow resources has been utilised, and most are yet to be assessed. Historically, the direct uses of geothermal heat have been essentially for thermal baths, either using the natural discharge of hot springs or by tapping hot water in pumped wells (<100 m depth).
On São Miguel Island, the steam discharge from the natural fumaroles at Furnas Volcano, and since 2014 also at Caldeiras da Ribeira Grande, has been utilised to cook a traditional Portuguese meat stew with vegetables, which is highly appreciated by locals and tourists. In the 1990s a small greenhouse demonstration project promoted by the INOVA Institute used heat from the geothermal water discharged from the Pico Vermelho pilot power plant for horticulture, but the project was abandoned upon the dismantling of the pilot plant in 2005. There are no ground source heat pumps in the Azores.
The Azores Archipelago has mild ambient temperatures, limiting the need for space heating. Thus, apart from those described above, there are no other direct uses of geothermal heat in the archipelago. Over the past decade, some projects were envisaged for São Miguel Island. The more prominent are the use of geothermal heat for industrial uses in dairy processing plants or to heat the swimming pool of the Ribeira Grande municipality, but the greatest challenge to development has been the demonstration of economic feasibility, because of the low demand and the lack of investors.
Contributions of geothermal energy
Traditionally, power generation in the Azores has been based on the consumption of fuel oil in thermal power plants. However, over the past 30 years, the contribution of renewables to power generation has increased significantly, predominantly driven by the geothermal developments on São Miguel and Terceira Islands, and this has produced important environmental and economic benefits.
In the Azores, the geothermal tariff is relatively stable (~0.10 €/kWh), whilst the production cost from the thermal plants fluctuates highly over time (Figure 8), as it is greatly dependent on the crude oil price on the international market. Moreover, geothermal production allows the investment to stay in the local economy, whilst the money spent on purchasing fuel is lost by the region.
Figure 8: History of power generation costs by energy source (sources: EC, 2019; EDA, S. A., 2007 to 2018, and EDA RENOVÁVEIS, S. A., 2007 to 2018).
Since 2007, geothermal production in São Miguel Island has replaced about 390,000 tonnes of fuel, with an estimated total worth of 178 million euros (Figure 9). Likewise, in 2018, the geothermal production in Terceira Island replaced about 4,700 tonnes of fuel, corresponding to savings on the import of fuel of 2.2 million euros.
Figure 9: History of savings on fuel imports by the geothermal production on São Miguel Island (source: EDA, S. A., 2007 to 2018 and EDA RENOVÁVEIS, S. A, 2007 to 2018).
Geothermal energy is also environmentally friendly, helping to reduce the carbon footprint of power generation. The geothermal fluid is composed of hot water and steam, and a small fraction of the steam corresponds to non-condensable gases. These are the same gases that are released in the natural fumaroles, corresponding mostly to CO2, minor amounts of H2S and vestigial fractions of CH4 and H2 (Ferreira et al., 2005). After the heat exchange process in the binary plants, these gases are released to the atmosphere, along with some water vapour.
Compared to the fossil fuel alternative, for the same given power generation, the geothermal emissions are one-third to one-quarter of those released by the thermal power plants (Figure 10). However, a more appropriate comparison between geothermal and the fossil fuel alternative should include the CO2 emissions resulting from the direct combustion of fuel and also the emissions generated by its extraction, processing, and transportation to the Azores. Thus, to make more realistic comparisons, the complete fuel-cycle emissions are required. For 2018, geothermal production in the Ribeira Grande field has avoided the emission of about 87,000 tonnes of CO2, which is equivalent to the electricity use of about 15,000 homes in one year (EPA, 2019). Moreover, recent studies have estimated that natural CO2 emissions occurring in Furnas volcano (Pedone et al., 2015), released by fumaroles, hot springs and degassing soils, make up 1,030 t/day. This is 10 times greater than the combined emissions from the Pico Vermelho and Ribeira Grande plants (~90 t/day).
Figure 10: History of CO2 emissions by energy source (source: EDA, S. A., 2007 to 2018, and EDA RENOVÁVEIS, S. A., 2007 to 2018).
Challenges for the geothermal expansion
Due to the relevance of the current geothermal contribution on São Miguel and Terceira Islands, there are on-going plans to expand the geothermal installed capacity in the Ribeira Grande (+5 MW) and Pico Alto (+7 MW) fields. In addition, there are several prospects with potential for development on other smaller islands (Faial, Graciosa, Pico and São Jorge) waiting to be evaluated.
Worldwide, geothermal projects for power generation are generally designed to fill the base of the load diagram. This is because geothermal output is always on, with the power plants operating continuously and at higher capacity factor than other renewables with intermittent output. This favours geothermal development, securing it the status of guaranteed power. However, in the small power systems of the Azores, geothermal expansion faces some challenges imposed by the low demand.
In fact, following the load diagram of São Miguel and Terceira power systems, the demand during off-peak hours constrains the additional geothermal capacity that can be installed. This is because geothermal production shares the base-load needs with the thermal plants, with the diesel generator units operating at the minimum required technical limits to ensure the stability of the power systems, namely by providing the grid forming capabilities (spinning reserve and the controls of frequency and voltage). Moreover, during the off-peak hours, production from intermittent renewables (wind) is already being partly or completely curtailed.
Bearing this in mind, and with the stagnation in demand throughout the last decade, the integration of additional geothermal production may depend on the ability of geothermal to provide the same grid forming capabilities that are currently assured by the thermal plants. This may require the geothermal projects of the Azores to follow the example of Puna Ventura in Hawaii (Nordquist et al., 2013) and possibly adjust the operation of the ORC binary plants into flexible and dispatchable units that can swiftly ramp up and down, following the load needs.
An alternative (or complementary) solution is to implement energy storage projects. For São Miguel and Terceira Islands, there are projects under development to install Battery Energy Storage Systems (BESS). These will allow the integration of additional renewable production by storing the excess power produced during off-peak hours and discharging it to the grid during peak-load or medium-load hours, and securing the grid forming capabilities. The success of the BESS projects will surely benefit geothermal expansion.
In addition, geothermal development in the smaller Islands, where the base-load demand is less than 4 MW, is currently not economically feasible. However, exploration works in the more promising prospects should be encouraged by the Azores Regional Government to assess the resource potential, as investment opportunities may follow.
Over the last 30 years there has been a significant increase in renewable power generation in the Azores, where its contribution has grown from 5% to 37%. Geothermal is at the forefront of this energy transition away from fossil fuels, currently providing 42% of the electricity needs on São Miguel and 11% on Terceira Island.
Geothermal production is environmentally friendly, reducing the carbon footprint from power generation. For the same given power generation, the geothermal emissions are one-third to one-quarter of that from the thermal plants consuming fossil fuels, not counting the emissions from the extraction, refining, and transport of the fuel oil to the Azores. As a result, in 2018 the geothermal production on São Miguel Island avoided the emission of 87,000 tonnes of CO2, which is equivalent to the electricity use of 15,000 homes in one year.
In the Azores, geothermal is also a cost-effective option, capable of competing with the fossil fuel alternative. The geothermal tariff is very stable over time, as it is not dependent on the fluctuations of the crude oil price in the international market. Therefore, geothermal has great economic value, acting as a price stabiliser for power generation, reducing the dependency on the import of fuel and fostering the energy self-sufficiency of the Azores.
There are on-going plans to expand the geothermal capacity on São Miguel and Terceira Islands, but there are challenges imposed by the low demand during off-peak hours. This may require geothermal to adjust its binary plants into a more flexible operation that can quickly ramp up and down, following the load to meet the electricity needs throughout the day or it may require solutions for energy storage to be implemented (or both). The Battery Energy Storage System projects that are under development for these islands will be crucial to integrating additional geothermal power generation.
The authors would like to thank EDA RENOVÁVEIS S.A. and EDA S. A. for authorising this paper and providing valuable data from the geothermal projects in São Miguel and Terceira Islands.
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This article has been published in European Geologist Journal 47 – Geology and the energy transition.