Nice one Scoop. The following redaction, crafted in the afternoon sun, is far more comprehensible.
"It is unlikely that the thermal conditions of the Cooper Basin can be matched in Australia.
You state that "Coal, gas and nuclear power stations all use fuels which are either scarce or which are costly to produce. Geothermal, as proposed by Geodynamics, uses a fuel which is neither."
It is easiest to consider the geofluid (the underground fluid that is run through the fracture zone) as the fuel. In the case of Geodynamics, a saturated reservoir of over 11,000,000 cubic metres has been engineered. This 'fuel body' was created through hydraulic stimulation and can be repeated with deeper targets (290C-300C modelled at 5000m). In the case of other geothermal companies that are not specifically targeting saturated sediment-hosted reservoirs (i.e other HDR companies), it is unknown whether there will be enough in situ fluids to facilitate heat-exchange, and whether those fluids will circulate in a closed-loop fashion (there may be mechanisms that will bleed the fluid into the surrounding environment).
That GDY have proven an enormous (world's largest) geothermal fuel body is an excellent advantage that will allow an initial monopoly over the sector.
Expanding on this, you also stated that a "secured fuel supply at a lower cost" would help GDY. This is exactly the advantage that will help secure returns for GDY shareholders. As with all heat engines, there is an exponential increase in efficiency as the input temperature is increased. For example, ceteris paribus, an increase in input temperature from 210C to 270C increases the power output by roughly 100%. Specifically regarding secured supply, a thermal resource at 280C is expected to last nearly 100 years longer than a resource at 210C - how's that for security of supply?!
"the Cooper Basin does have some of the hottest rocks, although they are deeper than some of the others".
To get an accurate interpretation of the value of a thermal resource, consider the thermal gradient. The units that GDY are targeting are indeed at 5000m, but their thermal gradient is the highest in Australia (nearly 60C/km), meaning that every other geothermal resource in Australia is inferior to that of the GDY's
Now, the gist of your posts are that GDY's competitive advantage will be eroded away in the face of significant competition. If this were the case (and the current thermal resources render this scenario unlikely), there is another advantage in GDY's favour - the Kalina Cycle, a "technology involved in geothermal power generation" that has been shown to increase the efficiency of extraction for an increased capex. Accessed through a holding in Exorka, the Kalina Cycle has been shelved for the simplicity of the off-the-shelf Rankine Cycle (the focus is, at this stage, proving viability), though management have stated that they consider the Kalina Cycle to be an option for future use.
It is not possible for GDY to develop a monopoly, but they could be the dominant participant in an oligopoly (particularly over the next couple of decades).
As Opaline pointed out, there are huge barriers to entry, ideal for an initial monopoly and eventual oligopoly, and the wealth of knowledge and experience add significant advantages to the GDY business model.
They're in the dominant position, Whippet. Have you ever run the calculations for annual revenue? They'll blow you away!"
RNE Price at posting:
0.0¢ Sentiment: ST Buy Disclosure: Held
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