Incentive impact analysis of geothermal power plants in oil and gas fields using a life cycle assessment–system dynamics model

Oil and gas fields frequently host substantial subsurface thermal energy, particularly in depleted reservoirs or adjacent geological formations, as a result of inherent geothermal gradients. The integration of geothermal power generation into oil and gas field infrastructures represents a technically viable and environmentally advantageous approach for reducing carbon emissions and enhancing energy sustainability. However, the commercial viability of such projects depends on the coordinated deployment of multiple incentive mechanisms from both industry and government. This study develops a system dynamics model to evaluate the long-term effects of policy incentives—including R&D investment, electricity price subsidies, carbon pricing, and tax relief—on geothermal power plants operating in Chinese oil and gas fields. The simulation results reveal that early-stage R&D investment, favorable electricity pricing, progressive carbon pricing, and value-added tax reductions are critical drivers of cost reduction and economic feasibility. Policy design must be tailored to the unique characteristics of the resource, economic, energy, and policy subsystems. Specifically, a 30–40 % increase in R&D investment and a 50–100 % reduction in the value-added tax rate can significantly lower upfront costs, while corporate income tax relief and electricity price subsidies effectively shorten the payback period.