Geothermal: The most misunderstood renewable

By Richard Martin, Pike Research

Richard Martin, Pike Research

Although not technically "renewable" in the sense that resources may be depleted if not managed effectively, geothermal resources present a very clean, reliable and abundant source of energy, and its unique advantages make geothermal a particularly attractive clean energy option. Geothermal remains largely misunderstood as a power source. But it offers one of the cleanest and most efficient (i.e., highest capacity-rate) sources of base load power available.

Briefly, geothermal power is thermal energy derived from the Earth's geology.  It is produced by drilling wells deep into the earth and tapping into underground heat, through naturally occurring steam or other heated fluids, to generate electricity. The use of geothermal power has grown steadily over the last several decades, reaching 10.7 GW of installed capacity worldwide in 2010. Pike Research forecasts that by 2020 global installed capacity will reach 25 GW.

For the moment, however, the barriers to new geothermal development are high. The biggest hurdle is access to financing; investors are wary because geothermal exploration carries a high resource risk (not all exploratory drilling leads to commercially productive resources) and long timelines for development. From discovery to commercial product can take as long as seven years; wind and solar farms, by contrast, can be up and running within two years.

Once operational, however, geothermal projects can provide clean, cheap power for decades.

Enhanced technology offers breakthroughs

While the geothermal power industry has been hit hard by the global recession--2010 saw only one plant come online in the United States--activity is expected to pick up sharply in the next few years. California, which boasts the strongest geothermal industry in the U.S., will see five new geothermal projects come online in the Salton Sea area, in Imperial County, in 2012.

What's more, the advent of enhanced geothermal systems (EGS), which have the ability to tap deep, unconventional resources as opposed to the relatively shallow geothermal heat found in regions of volcanic and tectonic activity, promises to make many hundreds of megawatts available in the coming decade.

Countries with ample shallow geothermal resources, such as the United States, Indonesia, and the Philippines, are the primary focus of current production and development; but EGS, if it can be economically proven, promises to unlock geothermal energy from a wide range of countries and geologies. For that reason, geothermal energy is expected to increase as a percentage of the worldwide renewable energy mix, as growth accelerates in countries looking to exploit domestic resources.

Three countries in particular are poised to realize dramatic growth in their utilization of domestic geothermal resources: Australia, Kenya and Chile.

Although lacking the volcanic geothermal resources of some of its neighbors in the South Pacific (i.e., New Zealand, Philippines, and Indonesia), Australia is ground zero for the development of EGS technology. Currently, more than 50 companies exploring geothermal projects in Australia have taken out over 400 licenses for areas covering nearly 500,000 square kilometers, a combined area roughly the size of Spain. The Australian Geothermal Energy Association (AGEA) believes that, under current government incentives, the country could develop 2.2 GW of geothermal power by 2020.

With its power grid struggling to keep pace with rising demand, Kenya hopes to expand geothermal generating capacity by 4 GW over the next 20 years. Already the center of geothermal activity on the African continent and the target of significant foreign investment, the country currently generates 167 MW of geothermal power at the Olkaria geothermal field. Kenya's potential geothermal resources are vast: the Rift Valley, in the western part of the country bordering Uganda, contains a projected seven to 10 GW of power potential.

In 2010, the energy minister of Chile, Ricardo Raineri, announced that the country would invest over $200 million in geothermal power projects and granted over 170 concessions to geothermal developers through 2012. Despite strong economic growth over the last decade, Chile's geothermal resources remain untapped. The Chilean government hopes to increase the country's geothermal capacity by more than 1 GW and eventually generate 20% of its electrical power from geothermal resources.

The geothermal industry in the United States, meanwhile, is the world's most developed, with just over 3 MW of installed capacity. Currently 188 projects in 15 states are moving forward, with the potential to triple U.S. geothermal generating capacity. Pike Research believes that the United States could add up to 5.8 GW over the next decade. The major players with interests in geothermal, both U.S. and worldwide, include Chevron and Calpine.

For utilities, geothermal presents an appealing renewable option with sizable upfront risks. Geothermal power is not sporadic; the scale of the resources is huge; the fuel cost, once plants are built, is zero. Financing, transmission issues, exploration uncertainty and public opposition, however, all present significant downsides to aggressive development of geothermal resources in the near term. The successful development of economically viable EGS technology will go a long way toward allaying those concerns.

About the Author     
Richard Martin is the editorial director of Pike Research. His writing on the future of energy has appeared in Time, Fortune, Wired, The Atlantic, The Asian Wall Street Journal and many other publications. His book on thorium power will be published by Macmillan Science in April 2012.

Editor's Note: This is the fourth article in a weeklong series on renewable energy.

For more:
- see the pros and cons of geothermal

Other Articles in the Series:
Wind: Leader of the renewable power pack   
BioPower: Lost in the Forest
Solar Energy: The Power of Apollo