According to a report released last week by Pike Research we’ll see a significant increase in the use of geothermal as an energy source between now and 2020.
The Pike Research analyst constructed several scenarios based on an estimated 10.7 gigawatts of geothermal capacity in existence throughout the world in 2010.
The U.S., the world’s leading user currently possesses 3.1 gigawatts of installed geothermal systems compared to the 10.7 added gigawatts of new resources. Pike’s research shows 88 percent of the world’s geothermal energy systems currently in operation are used in only eight countries, leaving lots of room to grow the industry.
Pike Report On Regional Geothermal Growth Potential
Peter Asmus, senior analyst of the report, emphasized that geothermal is currently one of the world’s least-tapped opportunities for alternative energy and said in a press statement, “Worldwide potential for geothermal energy is immense, but geothermal remains an underutilized resource and represents only a small fraction of the global renewable energy portfolio. Improved access to resource data, more efficient drilling processes, increased understanding about the industry’s potential, and improving access to financing are driving expanding interest in the sector.”
Pike reminds that the worldwide potential is immense, but geothermal remains an underutilized resource and represents only a small fraction of the global renewable energy portfolio. Improved access to resource data, more efficient drilling processes, increased understanding about the industry’s potential, and improving access to financing can drive expanding interest in the sector.
Registered users can view the executive summary and report brochure without a fee, but full access costs a cool $3,800.00 for licensed access.
What jumps out from the report is what’s missing, particularly in the U.S., the ground source heating or cooling. Those systems while small and still over priced use heat from the ground in simple heat pump systems to extract heat or dump heat as needed for space heating.
Even so, the Pike hot rock based research, high growth projection, estimates a sharp increase in online geothermal capacity over the next decade, reaching 25.1 GW by 2020 and representing a 134% increase over current capacity and a 9% compound annual growth rate. Under this optimistic scenario the projected the value of the global geothermal power market would exceed $11.7 billion by 2020.
Using only conventional sources of hydrothermal, enhanced geothermal systems (EGS) in hot dry rock and co-produced and geopressured methods, Pike estimates from compiled data that, at minimum, 190 GW of conventional geothermal resources are exploitable with current technology. This represents 1,022 terawatt hours (TWh) of clean base load electricity. No small thing at all. Lets look at some highlights.
Pike notes a need and progress of a change in financing. With high upfront costs and long project development timelines, the geothermal power market was dealt a blow by the economic downturn over the past two years. Despite the setback, geothermal development appears to be gaining renewed support from the global financial market. In addition to key loan guarantees and grants distributed across 123 projects in the United States through the American Recovery and Reinvestment Act of 2009, non-financial government support for geothermal power is also accelerating.
Geothermal exploration, although still largely speculative is on the rise, aided by improving technology, more sophisticated techniques, and streamlined land leasing programs. Emerging standards – most notably from the Canadian Geothermal Association (CanGEA) – aims to mitigate persistent exploration risk and attract investors to the industry.
The large countries/companies are going after big geothermal resources – at least 200 MW – primarily located in areas of high volcanic activity. Smaller companies are targeting smaller resources (50 MW or less) and utilizing modular approaches to developing resources in order to reduce costs.
Today flash steam and dry steam turbines dominate the market, representing 87% of current online capacity. However, binary turbines, which are smaller, are coming on strong – aided by their lower price point and suitability for lower temperature resources. Binary turbines are increasingly being employed to develop marginal wells on the outskirts of currently producing geothermal sites as well as for co-produced and geopressured resources.
Once the financial business calms, or common sense takes hold, despite high upfront costs, geothermal compares favorably to other renewable energy and fossil fuel sources due to its low emissions, capacity, and levelized cost of energy. That might mean a cash cow situation could unfold for investors in soundly engineered projects.
Another industry drag is at least 350 projects are currently under development throughout the world, shortages of financing, drilling rigs, and skilled labor persists. These factors will continue to impede development over the next decade.
There is some cheerful insight for many on where the likely growth could be. More efficient land tenure programs, as well as drilling assistance, renewable portfolio standards, and feed-in tariff pricing are beginning to accelerate the industry’s growth.
But, to realize its full potential, the geothermal power industry needs: more effective policy regimes that encourage development, financing support to get projects developed, and a legislative framework that mitigates risk. Upfront costs for initial exploration and development are a persistent hurdle to attracting financing, and the industry needs to more effectively educate the financing community about geothermal economics before it can realize its full potential. Some of the countries in the graphic can get support organized, but the tenure of such programs should be thought out much more carefully than the biofuel efforts used so far.
The full report runs nearly ninety pages. The attendant documents, the executive summary, brochure and the press release cover the basics. At the price it’s likely out of reach for all but the most interested people. There is at such a price an indication that the information is pretty solid. Even at the low range of growth, geothermal has a good future. The problems as explained aren’t about the energy, but that the economics and political impacts have the brakes on.
By. Brian Westenhaus of New Energy and Fuel