Global Geothermal Growth Highlights Evolving Technology
The Under-appreciated Renewable
I’ve been fascinated by geothermal energy for years, and the publication of the latest “International Market Overview” from the Geothermal Energy Association (GEA) provides a good opportunity to examine how this proven, low-emission energy technology is changing and expanding into new opportunities.
Global geothermal power capacity grew by just under 5% in the 16 months since the group’s previous international survey. That’s slower than the recent growth of wind and solar power, although its worth recalling that global solar output only caught up with geothermal in 2011 and still lags behind it in the US. Sufficient projects are apparently now under development or construction eventually to double global geothermal capacity to over 23 gigawatts (GW).
International Growth and Technological Diversification
The report cites geothermal development in 70 countries, but growth is focused in three main regions: Southeast Asia (Indonesia and Philippines), North and Central America, and East Africa. The expansion of geothermal energy in developing countries is particularly encouraging, both as an alternative to cheaper but higher-emitting electricity generation from coal, and as another option for reliable generation to enable smaller grids to accommodate intermittent sources like wind and solar.
Most new geothermal plants outside the US employ traditional dry-steam or “flash” technologies. This is the kind of geothermal power that people generally envision when they hear the term, involving wells drilled into high-temperature underground hydrothermal reservoirs, yielding steam to run turbines on the surface. The global distribution of suitable resources for this technology goes a long way to explaining why development is occurring in some countries but not others.
Yet while the US doesn’t lack high-quality hydrothermal resources, particularly in the West, the GEA reported that “since 2007 all but one of the new power plants that came online in the United States was binary,” referring to a newer technology in which wells producing hot water or brine provide the energy to vaporize another fluid like butane or even liquefied CO2 to drive a turbine generator. This technology generally results in higher capital costs but greatly increases the available resource that can be tapped.
Geothermal Overlaps Oil & Gas
Low-temperature geothermal technology also creates opportunities for “co-production” in conjunction with oil and gas, particularly in mature oil fields in which the produced water sometimes exceeds oil volumes by a factor of 20:1. It takes a lot of electricity to pump all that water out of the ground, process it, and pump it back down. That power must either be purchased or generated onsite. If co-production can just provide enough power to cover an oil field’s operating power requirements, it represents a savings in the cost per barrel of oil produced, while net power generation offers a potential new revenue source. GEA cites estimates of up to 3 GW of co-production potential from US oil and gas fields.
Of course that’s not the only commonality between geothermal energy and oil and gas production. Geothermal development involves many of the same steps of resource identification, lease or concession negotiation, exploratory drilling, and production drilling accompanied by the construction of production facilities. Development risks, including the risk of failing to find a commercial reservoir, are also similar, as is the business model of an operating geothermal field, with its large up-front investment and gradually declining output, boosted at later stages by enhanced-recovery projects. This is all very different from the way a wind farm or utility-scale solar plant is planned, built and run.
The report highlights other areas in which geothermal technology is advancing. Perhaps because of large installations like the Geysers in California, I tend to think of geothermal–other than for home heat pumps–as a utility-scale technology. However, geothermal innovators have produced binary devices that can extract distributed-scale quantities of power from hot water or brine, producing as little as 50kW, as described in the report’s section on new technologies. It also mentions the possibility of using binary geothermal plants to provide flexible power to the grid.
In my view the most important advances discussed relate to EGS, or enhanced geothermal systems (also referred to as engineered geothermal systems) which use techniques similar to hydraulic fracturing to create artificial hydrothermal reservoirs where only dry, hot rocks exist underground. This opens up the potential for geothermal power to vast areas that have good underground heat sources but lack a coincident subsurface water source. GEA includes a good discussion of EGS and mentions several milestone projects that came on-line in the last year in Australia and the US.
Show Me the Money
With ample resources and suitable technology, the biggest challenge that geothermal developers must overcome is financial. Because of its long development cycle and capital costs–typically a multiple of wind-turbine costs per megawatt–it’s a hard sector for start-ups to be successful. This has been especially true since the financial crisis, and we’ve seen at least one high-profile geothermal company file for bankruptcy. Geothermal energy has benefited from various government incentives intended to reduce these risks and make geothermal more attractive, including tax credits, loan guarantees, and the World Bank Global Geothermal Development Plan described in the report, which as of 2012 was financing over $300 million of geothermal projects in developing countries.
In 2006 MIT issued a detailed report on “The Future of Geothermal Energy“. The authors estimated that the potential for unconventional geothermal energy (mainly EGS) in the US alone was over 1,200 GW. Currently operating geothermal facilities and those under construction or in the planning stages barely scratch the surface of what this technology could contribute in baseload, low-emission power generation. Achieving even a fraction of this potential will require further improvements in technology, but just as importantly it will take the involvement of large corporations with the patience to work through long project timelines and the financial flexibility to manage the associated risks.