THE ORGANIC RANKINE CYCLE FOR ELECTRICAL POWER GENERATION

THE ORGANIC RANKINE CYCLE FOR ELECTRICAL POWER GENERATION University of Houston GEMI Conference 11/17/2004 Kip Waddell ORMAT Nevada, Inc. Sparks, www. ormat. com Nevada 1

ORMAT Background Innovative power generation technologies for geothermal and heat energy recovery since 1965 Recognized world leader in the use of organic motive fluids (hydrocarbons) in power generation systems Demonstrated capabilities in design, engineering, manufacturing, installation, financing and operation of power plants Over 750 MW of geothermal and heat recovery power plants have logged 14 million operating turbine-hours, avoided emission of 12 x 106 tons of CO 2 & saved 4 x 106 tons of fuel 2

ORMAT Technology Powering the ORMAT Energy Converter (OEC®) Chimney Condenser Vapor exit Wheel Turbine Vapor inlet Alternator Canister Feed Pump Controls Burner Organic fluid Thermostat Fuel inlet Fuel control panel ORMAT Closed Cycle Vapor Turbogenerator 1971 ORMAT Geothermal Combined Cycle OEC Heat Energy Recovery System 3

ASME MANAGING Manufacturing & Quality Heat Exchangers Workshop CNC Machining Organic Vapor Turbine Assembly ISO 14001 ISO 9001 1986 TUV CNC Measurement 4

ORMAT’s Organic Rankine Cycle Power Technologies Reliable Distributed Power Heat Recovery - Pipelines 1473 Geothermal Power Plants Industrial Waste Heat Recovery Resource Recovery: Biomass Heat Recovery – Gas Plant 5

Geothermal Basin and Range Type Resource Reservoir 6 © Geothermal Education Office 2000

Production/Injection Well Flow Diagram Production Well © Geothermal Education Office 2000 Injection Well 7

Geothermal Well Drilling Rig - 12, 000’ 8 © Geothermal Education Office 2000

WHY GEOTHERMAL COST EFFECTIVE FROM 300 k. W TO 0 VER 100 MW Modular power plants are easily expanded as needs increase Power costs competitive with hydro, coal and diesel RELIABLE, SUSTAINABLE & ENVIRONMENTALY SAFE Many projects operating over 10 yrs at 98%+ availability Geothermal is non-combustion - near zero emissions MINIMAL SURFACE USE- INDEPENDENT OF WEATHER FIELD PROVEN TECHNOLOGY - 8, 000 MW WORLD WIDE EASY TO INSTALL, OPERATE AND MAINTAIN Plants constructed in 6 to 12 months- O&M by local staff 9

ORMAT GEOTHERMAL POWER PLANTS Fang, THAILAND 1989 Upper Mahiao, The Philippines 300 k. W 1996 The Philippines Thailand Zunil, GUATEMALA 1999 1966 Olkaria, KENYA 24 MW Guatemala 125 MW 2000 8 MW Kenya 10

U. S. Geothermal Potential 5000+ MW Estimated Developable Resources. Up to 2, 000+ MW In Nevada Potential exists For power plants Potential for direct uses 11

Average Capital and Delivered Costs 22000 Capital Cost (US$/k. W) Solar Photovoltaic 4000 Biomass - Energy Forestry Energy Crops 3000 Recovered Energy Projects Solar Thermal Power Geothermal Projects 2000 Coal Wind No PTC 1000 Cost of delivered energy (US$/k. Wh) Gas Combined Cycle (Aug. 2004) 0 0 0. 02 11/2/2020 0. 04 0. 06 0. 08 0. 10 0. 12 0. 14 0. 16 0. 18 0. 20 0. 86 12 0. 88 Source: International Energy Agency & Others

DESERT PEAK 10 MW SINGLE FLASH POWER PLANT Churchill County Nevada 13

Brady Geothermal Binary Plant – Churchill County, Nevada 5 MW Binary Bottoming Cycle Operating From 230 o Brine 14

Geothermal Renewable Grid Connected Base Load Power PUNA (Hawaii), since 1993 CONDENSER GENERATOR TURBIN PREHE E 30 MW plant comprising 10 combined cycle OEC units Utilizes saturated steam and injects 100% of spent fluid to reservoir 1147 NON CONDENSABLE (NCG) COMPRESSOR MOTIVE FLUID PUMP STEAM PRODUCTION HOT GEOTHERMAL FLUID INJECTION PUMP WELL INJECTION COOLED GEOTHERMAL FLUID 15 ORMAT Geothermal Combined Cycle WEL

Geothermal Base Load Power AZORES ISLAND (Portugal), since 1984 Sao Miguel Modular Geothermal Power Plant Phase B of a 14 MW geothermal power plant comprising 4 air cooled ORMAT® Energy Converters (OEC) The OEC units use two phase geothermal fluid, steam and separated brine Phase A was commissioned in March 1994 -Phase B was commissioned in October 1998 1497 16

Geothermal High Capacity Factor Resource 17

Geothermal Plant CO 2 Emissions Coal 2000 Oil Tons/ 1500 MWh 1000 Natural Gas Geothermal 500 Binary Combined Cycle Flash Steam 0 Source EIA 1998; Bloomfield and Moore 199918 © Geothermal Education Office 2000

IMPLEMENTING GEOTHERMAL PROJECTS (25 MW hydrothermal development) Exploration And Resource Assessment Probability of success in exploration is about 50% Development related expenses add $0. 5 M Exploration, including drilling test wells, assume $1 M Resource assessment, incl. drilling & flow testing 2 wells, $ 3. 5 M Timetable typically about 12 months Result to be “bankable” report – typically: “resource can reasonably be expected to support 25 MW of electricity production for over 30 years” 19

DRILLING AND WELL FIELD DEVELOPMENT 25 MW project would require 7 prod. wells Production/injection wells $1. 0 to $5. 0 M each Wells provide between 3 MW and 30 MW A typical project would require 3 injection wells @ 3, 000 foot average total depth per well, and Assume $ 1. 8 M per well with 10 active wells and 2 spare Well drilling success averages over 70% SUMMARY: Budget for 12 wells @ 3, 000 feet depth is $ 21. 5 M Timetable including permitting would be 12 to 18 months 20

TYPICAL GEOTHERMAL PROJECT BUDGET Exploration & resource assessment $ 5. 0 M Well field drilling and development 21. 5 Power plant and surface facilities, turn-key including transmission etc. 35. 0 Financing “soft costs” including: o Legal, Commitment, Accounting, Consultants, and o Interest during construction 5. 0 Debt service and operating reserve 1. 5 $ 68 M 30 TO 36 MONTHS TOTAL FINANCED COST FOR 25 MW PROJECT OVERALL TIMETABLE 21

OEC Heat Energy Recovery In Industrial Applications v Cost effective utilization of waste heat to 15 MW v Fail Safe Installation with no impact on primary process v Unattended operation with high reliability v Power Output Availability above 98% v Produces competitive base load energy v O&M cost approximately $ 2 to $ 2. 50 per MWh 22

ORMAT SELECTED ENERGY RECOVERY PROJECTS PROJECT NAME LOCAT’N MW YEAR ORMAT ROLE OWNER OPERATOR Neptune Gas Luouisiana USA 4. 0 MW 2003 EPC Design, supply/ install equipment for recovery of heat from turbine exhaust Enterprise Partners LLC. Heidelberger Cement Germany 1. 5 MW 1999 Design/supply of equipment for recovery of heat from clinker cooler Heidelberger Cement Gold Creek Canada 6. 5 MW 1999 Design/supply of equipment for recovery of heat from gas turbine exhaust Maxxam Energy Minakami Japan 600 KW 1998 Design/Supply of equipment for recovery of heat from MSW Incinerator Ishikawajima Hanyoki Service TG 2 Kawerau New Zealand 3. 5 MW 1993 Design/Supply of equipment for recovery of heat from Paper Process Bay of Plenty Electric Power Board Shijiazhuang Heating & Power China 1. 3 MW 1993 Design/Supply of equipment for recovery of heat from MSW Incinerator Shaijiazhuang Thermal Power Gas Company 23

Heat Recovery of Gas Turbine Exhaust 6. 5 MW Gold Creek Gas Compressor Station at Alberta, Canada 24

Qualified Energy Recovery A “Green” Power Technology No additional fuel consumption Near zero emissions with air cooled ORMAT Energy Converters (OECs) Inside the fence installation on existing sites. No water consumption - closed loop operation No creation or disposal of waste Displaces fossil fuel based energy No new transmission required 25

Qualified Energy Recovery A “Green” Power Technology NEVADA: AB 429 accepts “Qualified Energy Recovery” from non electrical generating sources such as mining processes, as eligible for RPS NORTH DAKOTA: Pipeline Compressor GT Exhaust Gas Energy Recovery Is “eligible for green tags or green energy sales” SOUTH DAKOTA: “Consider these projects as renewable energy resources” OTHERS: Under Consideration in Many States including Oregon and Washington 26

Qualified Energy Recovery A “Green” Power Technology Green Tags attached to energy Renewable Energy Credits (RECs) may be sold – estimated value for base load RECs = $5/MWh Qualified Energy Recovery production should meet state and proposed federal RPS standards May qualify for international carbon trading programs (CDM) 27

ORMAT® Energy Converter (OEC) Closed Loop Organic Rankine Cycle Power Generation System Closed: System fully recycles working fluid, with no discharges to the environment Organic: Working fluid is a hydrocarbon or other organic fluid Rankine cycle: Standard power generation cycle used in steam turbines – OEC air cooled condenser smaller and more efficient than steam system 28

OEC Advantages Over Steam Simpler system No blow down and replacement of working fluid No vacuum pumps or steam ejectors Air cooled Rugged design 1800 RPM turbine, direct connection to generator Outdoor installation typical (even in severe climate) Very low O&M requirements No licensed steam technicians required Packaged modular system – low installed cost 29

OEC Heat Energy Recovery Permitting Issues Inside-the-fence installation simplifies permitting v Federal: v State: v County: v Other: Self-certification by FERC as a QF, and amendment of industry related permits. a) Amend Air Quality Permit for possible fugitive emissions from binary plant, b) Inspection of OECs by OSHA, c) Amend permits to include storage of hydrocarbons on site a) Building permit for construction, b) County planning permit may require amendment. a) Amend process/safety management manuals 30

Costs And Configuration Capital installed costs for ORMAT OEC facilities is approximately $1, 800 - 2, 000/k. W net System is matched with gas turbine exhaust heat source for optimum utilization and operational flexibility Operating costs based on experience are extremely low- less than 0. 25 cents per Kwh 31

Economics vary by application n Heat source utilization Physical configuration Value of power generated 32

Market potential –North America Excluding Mexico Natural Gas Pipelines – 994 MW(1. ) Gas Processing Plants – 134 MW (1. ) Cement – 100 MW (2. ) Incinerators – 100 ? MW Other applications - ? ? MW (1. ) Assumes 50% of single gas turbines > 12, 000 HP (2. ) Assumes 30% of Cement plants at 3 MW each. 33

Texas Gas Turbine Driven Compressors 34

Enterprise Products – 5 MW Neptune Plant 35 2337

Reliable Power From Recovered Heat 500 to 6500 k. W units in Canada, Germany, Japan, Spain, China and USA 6. 5 MW ORMAT® Energy Converter at a Gas Compressor Station along the Trans. Canada Pipeline, in Gold Creek, Canada, since 1999 1. 5 MW ORMAT® Energy Converter clinker cooler heat recovery system at Heidelberg. Cement AG, in Lengfurt, Germany, since 1999 36 2337

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