Geothermal financing barriers include relatively high up-front investment costs as well as high drilling and exploration risks. The development process of a geothermal facility is more site specific than with other generation technologies, such as wind and solar. The depth and size of the reservoir and the nature of the surrounding rock formation affect the cost of drilling. The pressure, temperature, chemical composition and permeability of the resource affect both the design of infrastructure as well as the operations costs the facility will face once online.
Other variables affecting design and cost are those which most power developments face: site accessibility, distance from transmission, materials costs and administrative costs. Geothermal projects are small compared to fossil fuel and nuclear generation facilities. Their size, coupled with their often rural locations, increases transaction costs. Economies of scale do apply to geothermal facilities and a better resource will face lower per MW development and operations costs because it warrants a larger plant.
As with other renewables, the capital investment provides a lifetime of fuels negating the market fluctuations of other fuels needed to run fossil fuel plants. Geothermal energy's lifecycle cost is low and moderately utilized reservoirs yield energy for many decades. Unfortunately, fossil fuels are still often subsidized and this technology has to compete against unsustainable practices in a distorted marketplace.
