Keuya/Geothermal-Drilling-Cost

Field-development economics of geothermal drilling: well success rates, drilling CAPEX share, and LCOE scenarios (Kenya-focused) # Geothermal Drilling Cost — What Drives It, and How Much It Matters **Central question:** what drives geothermal drilling cost, and how sensitive are project economics to drilling outcomes? Drilling is the risk that makes geothermal hard to finance. It is typically **35–50% of total CAPEX**, it is spent *before* the resource is proven, and a dry well is a sunk US$5–6m. This repo models a 100 MW field development case with Kenya-style assumptions (Olkaria/Menengai well depths and productivities) and quantifies how drilling outcomes move installed cost per MW and LCOE. ## Headline results (100 MW field) | | Base (Kenya today) | Poor resource | +30% well cost | Learning case (Fervo-style) | |---|---|---|---|---| | Wells drilled (incl. dry + injection) | 39 | 75 | 39 | 34 | | Drilling CAPEX (USDm) | 214 | 411 | 278 | 121 | | Drilling share of CAPEX | 48% | 64% | 55% | 35% | | Installed cost (USDm/MW) | 4.4 | 6.4 | 5.1 | 3.5 | | **LCOE (USD/MWh)** | **74** | **102** | **83** | **61** | ## What the model shows 1. **Resource quality beats cost control.** Dropping from 74% to 55% well success *and* 5→3.5 MW/well pushes LCOE from $74 to $102/MWh — a project-killing move that no EPC discipline can claw back. This is why exploration drilling is the valley of death, and why instruments like GRMF (African Union geothermal risk mitigation) exist. 2. **Well productivity is the strongest single lever** on installed cost ($5.35m → $3.94m per MW across 3.5–6.5 MW/well). Steam-field management and targeting matter more than shaving day-rates. 3. **The learning case changes the game.** Fervo-style drilling improvements (−35% well cost, 85% success) bring LCOE to ~$61/MWh — competitive with dispatchable alternatives and inside typical PPA ceilings. 4. **Finance link:** because drilling risk is front-loaded and binary, lenders fund geothermal only after resource proof. The realistic capital structure is equity/grant-funded exploration, then debt against a proven steam field — t …