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geothermal value chain

The geothermal value chain encompasses diverse market participants ranging from small private explorers with little more than a dream to large-scale baseload power generators like Chevron, which is widely recognised as the world’s largest producer of geothermal energy.

Although commercial geothermal energy production is new to Australia, at Activated Logic we have developed significant expertise in the sector enabling us to apply our established corporate research, strategy, investment, finance and communication capabilities to the emerging Australian geothermal sector.

Concerns about the impacts of fossil fuels on climate change combined with high-volatility in commodities including petroleum and coal based energy used for primary power generation, effectively, underpin increased investment in renewable energy production.  For these reasons, the renewable energy sector is increasingly an attractive sector to invest in as it combines the conventional energy business value-drivers whilst providing a solution to greenhouse gas-emissions.  Compared to other renewable energy sources including wind or solar, geothermal is the only major alternative capable of providing high-capacity baseload power. 

For more information on capacity factors for electricity generation capacity factors, refer to the Australian geothermal sector.

 

VALUE CREATION THROUGH GEOTHERMAL PROJECT DEVELOPMENT

The successful delivery of geothermal projects is dependent on the ability of project operators to create and capture significant value for all stakeholders, particularly shareholders and financiers during the project development stages.   Before a geothermal project explorer or initiator embarks on the long journey of developing large scale geothermal projects, the company needs to have a clear understanding of not only the market opportunity, but also the competitive strengths of the company. Directors need to ask themselves.
Are we the best geophysicists to identify a geothermal prospect? Or is our strength in our financial networks and our ability to attract early stage equity investment?

By understanding and leveraging the existing strengths of the organisation and introducing complimentary skills through the engagement of geothermal development experts like Activated Logic will ensure an effective and well rounded, yet tenacious corporate outfit.  As “Ideas” are advanced to specific geological “Prospects” and developed further to advanced “Project” status, the project is partly derisked as the project has an increased likelihood of success. This simultaneous process of geothermal project development and project derisking is the fundamental basis for value-chain derived value creation.

 

 

Value Extraction

Understanding the process of value creation throughout the energy resource development lifecycle is essential in understanding how to optimise project development and effectively maximise value-creation whilst minimising capital investment.  The early exploration stage of projects carries significant risks and realistic expectations are generally based on conceptual information.

risk profile of investors interested in supporting early stage projects differs significantly from the more risk-averse investors which are typically interested in investing during the resource development stage. In stark contrast to the uncertain outcomes at the early stages of exploration, the production stage involves significantly less uncertainty, hence the prospect of exceptional project upside is very limited.

Activated Logic is focused on projects during the geothermal resource appraisal stage of development, as this stage offers the greatest potential for significant value creation whilst requiring considerably less capital than the more costly project development stage.

 

Project Benchmarking

For an independent analysis of competing geothermal project opportunities or to provide supporting evidence for merit based grant applications, Activated Logic can provide detailed project benchmarking services consistent with the objectives of the company.  More advanced reports can provide a comparative analysis between geothermal projects that may be competing for the opportunity to power similar commercial projects.

Analysis of geothermal projects involves the identification and the investigation of commercial enablers/ drivers that are critical to the success of the project such as geothermal resource grade, electricity grid-connection and transmission costs.

 

Australian Geothermal Index

Activated Logic has developed the Australian Geothermal Index™. The Australian Geothermal Index (AGI) is the benchmark composite index of the 9 solely geothermal focused companies listed on the Australian Securities Exchange (ASX). The AGI was based at 100 (as was the XAO) on the 1st of July 2008 to provide an indication of the relative performance of the AGI against the XAO.


How can Activated Logic Help?

  • Assistance with geothermal project investment through a network of experienced strategic partners, attendance at geothermal and renewable energy events, and the coordination of priority investor briefings including the preparation of company roadshow style events.

  • Geothermal project evaluation through comprehensive due-diligence, in-depth feasibility analysis including use of Activated Logic’s Sequential Investments Assessment Matrix (al-SIAM) to determine the attractiveness of geothermal project investment or  other forms of corporate transactions including M&A.

  • Manage geothermal grant applications under the Australian Geothermal Drilling Program (GDP) and the Renewable Energy Demonstration Program (REDP). Activated Logic also can provide assistance with international grant schemes including those available through the International Finance Corporation (IFC) division of the World Bank Group.

  • Preparation and presentation of technical communications including investment proposals and information memorandums with the objective of raising capital or forming alliances with industry participants to develop geothermal projects.

  • Geothermal project development & management - from early stage project initiation through to pre-feasibility, resource definition, FEED, project sanction and all commercial development stages.

  • Develop integrated and effective strategies (including geothermal  power plant technology selection) to accelerate the commercialisation of attractive geothermal projects and maximise likelihood of sustained success of geothermal projects.

  • Government policy – Activated Logic provides research, interpretation and advisory services in relation to the actual and expected implications of current and future government policies in relation to geothermal exploration and development.

  • Effective project and company communications for internal and external stakeholders demonstrating key-benefits. Full suite of graphic services provided to ensure technical communications including seismic-sections, gravity surveys and other geological data is presented professionally.

For more information on how Activated Logic can assist your organisation create and extract value from your geothermal portfolio, please contact us.

 

Other geothermal Sectors:

 

Industry Membership

Activated Logic Pty Limited is a Member of the Australian Geothermal Energy Group. As a member of the AGEG, Activated Logic has a common interest in sharing information to commercialise Australia’s geothermal resources at maximum pace and minimum cost in Australia’s competitive energy markets.

 

 

 

 



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