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Geothermal Developm in Ieland Geothermal Policy Options and Instruments for Ukraine Based on Icelandic and International Geothermal Experience Report Prepared for the Ministry for Foreign Affairs in Iceland April 2016 Geothermal Policy Options and Instruments for Ukraine Based on Icelandic and International Geothermal Experience Report Prepared for the Ministry for Foreign Affairs in Iceland Orkustofnun, National Energy Authority Iceland April 2016 Publisher: Orkustofnun, Grensásvegi 9, 108 Reykjavík Tel: 569 6000, Fax, 568 8896 Email: [email protected] Website: http://www.nea.is/ Editors: Baldur Pétursson, Jónas Ketilsson. Cooperation Team: Guðni A. Jóhannesson, Alicja Wiktoria Stoklosa, Jón Ragnar Guðmundsson, Sveinbjörn Björnsson, María Guðmundsdóttir, Erla Björk Þorgeirsdóttir, Kristján Geirsson, Skúli Thoroddsen, Rakel Jensdóttir, Hanna Björg Konráðsdóttir, Ingimar G. Haraldsson, Lúðvík S. Georgsson, Þorvaldur Bragason, Anna Lilja Oddsdóttir, Linda Georgsdóttir, Jón Ásgeir Haukdal, Kristinn Einarsson, Benedikt Guðmundsson, Sigurður Ingi Friðleifsson, Jakob Björnsson, Harpa Þórunn Pétursdóttir, Erna R. Bragadóttir and Petra S. Sveinsdóttir. Geothermal Policy Options and Instruments for the Ukraine, is published on the Orkustofnun website and printed in limited copies. OS-2016-01 ISBN 978-9979-68-380-3 Material may be reproduced from the Report, but an acknowledgement of source is kindly requested. April 2016 2 Table of Contents ACKNOWLEDGEMENTS ....................................................................................................................... 5 INTRODUCTION ..................................................................................................................................... 6 EXECUTIVE SUMMARY ......................................................................................................................... 8 CONCLUSION AND RECOMMENDATIONS ....................................................................................... 10 I. GLOBAL GEOTHERMAL EXPERIENCE ...................................................................................... 16 1. DEVELOPMENT OF THE GEOTHERMAL SECTOR WORLDWIDE .............................................. 16 1.1. OVERVIEW AND CHALLENGES OF THE GEOTHERMAL SECTOR .......................................................... 16 1.2. RENEWABLE / GEOTHERMAL POLICY – OPTIONS AND INSTRUMENTS ................................................ 18 1.3. SUPPORT FOR RENEWABLE ENERGY IN THE EUROPEAN UNION ....................................................... 21 1.3.1. Operational Support ............................................................................................................ 21 1.3.2. Financial Support ................................................................................................................. 22 2. DEVELOPMENT, COMPETITIVENESS AND RISKS OF GEOTHERMAL PROJECTS................. 25 2.1. RISK AND FINANCING OF GEOTHERMAL PROJECTS ......................................................................... 25 2.2. COMPETITIVENESS OF GEOTHERMAL TECHNOLOGY – COMPARISON ................................................ 26 2.3. COST AND STRUCTURE OF GEOTHERMAL PROJECTS ...................................................................... 27 2.4. GEOTHERMAL DISTRICT HEATING .................................................................................................. 28 2.4.1. Cost Structure of Geothermal District Heating .................................................................... 28 2.4.2. Policy towards Geothermal District Heating in Europe ....................................................... 30 2.4.3. Legal, Financial and Cost Structure of Geothermal District Heating Projects ..................... 32 2.4.4. Global Price Comparison of Geothermal District Heating ................................................... 35 2.4.5. The Geothermal Global Market Structure ........................................................................... 36 2.4.6. Demo I - Business Model for Geothermal District Heating and Gas ................................... 37 2.4.7. Demo II - Business Model for Geothermal District Heating and Gas .................................. 41 3. INTERNATIONAL DEVELOPMENT AND FINANCING OF GEOTHERMAL PROJECTS ............. 47 3.1. INTERNATIONAL DEVELOPMENT MODELS OF GEOTHERMAL PROJECTS ............................................ 47 3.2. INTERNATIONAL FINANCING MODELS OF GEOTHERMAL PROJECTS................................................... 47 3.2.1. Financing Options for Different Project Phases .................................................................. 48 3.2.2. Geothermal Development Assistance – Global Lessons Learned ...................................... 49 II. GEOTHERMAL RESOURCES AND OPPORTUNITIES IN UKRAINE ........................................ 50 4. UKRAINIAN GEOTHERMAL CHALLENGES AND OPPORTUNITIES .......................................... 50 4.1. UKRAINE NATIONAL RENEWABLE ENERGY ACTION PLAN, TO 2020 .................................................. 50 4.1.1. Policy Overview ................................................................................................................... 50 4.1.2. Geothermal Energy ............................................................................................................ 53 4.1.3 Implementations Priorities .................................................................................................... 53 4.2. GEOTHERMAL POTENTIAL IN EUROPE............................................................................................. 55 4.2.1. Heat Production from Geothermal sources in European Union .......................................... 55 4.3. GEOTHERMAL CONDITIONS IN UKRAINE .......................................................................................... 56 4.3.1. Overview of Geothermal Potential Resources in Ukraine ................................................... 57 4.3.2. Development Forecast of Geothermal Capacities in Ukraine ............................................. 59 4.3.3. Assessment Results of Potential Geothermal Resources in Ukraine ................................. 61 4.3.4. Priority Development of Geothermal Resources in Ukraine ................................................ 62 4.4. THE USE OF GEOTHERMAL AND MINERAL WATERS IN THE AREA OF UKRAINIAN CARPATHIANS ........... 63 4.4.1. The use of Geothermal Waters in Carpathian Ukraine ....................................................... 63 4.4.2. The use of Geothermal Waters for Heating Purposes in Ukraine ....................................... 64 4.4.3. The use of Geothermal Waters in Ukraine - Electricity Production ..................................... 65 4.4.4. Prospective Areas of use of Geothermal Energy in Carpathian Ukraine ............................ 66 4.4.5 Geothermal Projects in Carpathians .................................................................................... 67 3 4.4.6. Prospective Areas of use of Geothermal Energy in Zakarpattia Region ............................. 69 4.4.7. Prospective Areas of use of Geothermal Energy in L’viv Region ....................................... 70 4.5. THE CIS-CARPATHIAN DEPRESSION .............................................................................................. 71 4.5.1. Cis-Carpathian ..................................................................................................................... 71 4.6. ADDITIONAL AREA OF INTEREST FOR GEOTHERMAL DISTRICT HEATING ........................................... 74 4.7. SUMMARY OF POTENTIAL AREA FOR GEOTHERMAL DISTRICT HEATING IN WEST UKRAINE ................ 76 4.7.1. Potential Area for Geothermal District Heating in West Ukraine ......................................... 76 4.7.2. The Authorities have made Progress in Reforming the Inefficient Energy Sector .............. 82 4.7.3. Legislative base of Geothermal Energy in Ukraine ............................................................. 82 4.8. THE DISTRICT HEATING SYSTEM IN UKRAINE .................................................................................. 83 4.8.1. Modernization of the District Heating Systems in Ukraine .................................................. 83 4.8.2. What Needs to Happen Next ............................................................................................... 85 4.8.3 What Can the International Financial Institutions Do to Help? ............................................ 87 4.9. COMPETITIVENESS OF THE GEOTHERMAL SECTOR IN UKRAINE........................................................ 88 4.9.1. Opportunities and Policy Options ........................................................................................ 89 4.9.2. Demo – Example of possible Geothermal District Heating Project in Eastern Europe ....... 90 4.10. OPPORTUNITIES AND POLICY OPTIONS FOR UKRAINE ................................................................... 91 4.10.1. Proposal - Two Steps, 1. Pre-Feasibility Study and 2. Project Implementation ................ 92 4.10.2. Proposal – Step 1 - Pre- Feasibility Study of Geothermal District Heating in Ukraine ...... 93 III. GEOTHERMAL DEVELOPMENT AND EXPERIENCE IN ICELAND ......................................... 95 5. GEOTHERMAL RESOURCES IN ICELAND ................................................................................... 95 5.1. THE NATURE OF GEOTHERMAL RESOURCES .................................................................................. 95 5.2. THE NATURE OF OW-TEMPERATURE SYSTEMS ...............................................................................
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