With the global transition to clean energy in full swing, traditional renewable energy sources such as solar and wind have, unsurprisingly, been hogging the limelight. Unfortunately, one powerful renewable energy source has been conspicuously missing in the conversation: Geothermal energy. Despite its many obvious benefits, geothermal energy--which taps the heat within the earth's crust--is criminally underutilized in the United States. In 2019, the U.S. generated ~18,300 GWh from geothermal sources. While that appears impressive at first glance, here's the kicker: that figure works out to just 0.4% of U.S. power generation. Geothermal energy has two primary applications: electricity generation and heating/cooling.
Geothermal energy can be found almost anywhere: other than seismically active hotspots, there is a steady supply of milder heat--useful for direct heating purposes--at depths of anywhere from 10 to a few hundred feet below the surface. This heat can be found in virtually any location on Earth since it has its origins from when the planet formed and accreted, frictional heating caused by denser core material sinking to the center of the planet as well as heat from the decay of radioactive elements. Indeed, just 10,000 meters (about 33,000 feet) of the Earth's surface contains 50,000 times more energy than all the oil and natural gas resources in the world. Further, unlike solar and wind which are intermittent energy sources, geothermal is highly reliable with a high capacity factor of 74.3% vs. 24.9% for solar and 35.4% for wind.
Another key benefit: geothermal is much cleaner than any fossil fuel out there. Whereas geothermal power plants are frequently associated with sulfur dioxide and silica emissions as well as traces of toxic heavy metals including arsenic, mercury, and boron, the emissions profile of geothermal energy is nowhere near as bad as those of fossil fuels. The U.S. Energy Information Administration (EIA) says geothermal power plants emit about 99% less carbon dioxide and 97% less acid rain-causing sulfur compounds than fossil fuel power plants of similar size. Further, geothermal power plants are frequently equipped with scrubbers to remove the hydrogen sulfide naturally found in geothermal reservoirs. It's, therefore, hardly surprising that a country like Iceland--which derives ~two-thirds of its primary energy from geothermal sources--has only one-third the greenhouse gas emission per capita as the United States.
But the same technology that powered the U.S. shale boom might help unlock the full potential of U.S. geothermal resources.
Source: Center for Sustainable Systems
Geothermal 'Shale' Boom
According to the U.S. Department of Energy, continental U.S. has over 100 GW of geothermal electric capacity or 40 times the current installed geothermal capacity, meaning geothermal has the potential to supply 10% of the country's power needs.
Unfortunately, high drilling and production costs compared to other clean energy sources has impeded growth for the geothermal sector. Indeed, in 2021, the Levelized Cost of Energy (LCOE) for geothermal energy in the U.S. clocked in at $84.80/MWh, much higher than $36.60/MWh for utility-scale solar and $40.90/MWh for onshore wind projects.
LCOE calculates the present value of the total cost of building and operating a power plant over an assumed lifetime. Even more worrying is the fact that geothermal development costs have been expanding, increasing by 47% from 2010-2021 at a time when solar PV costs fell 82%; onshore wind development declined 35% while offshore wind costs decreased by 41%.
Enter "enhanced geothermal systems" (EGS) â¦
EGS promises to not only boost the energy output of wells over a smaller footprint but also increase the areas where geothermal energy can be exploited.
For the most part, geothermal has only made economic sense in countries such as Iceland, where heat and water can be found close to the surface of the Earth. However, much like shale drilling, EGS creates a subsurface fracture system that increases the permeability of rock and allows for the injection of a heat transfer fluid (typically water). The injected fluid is then heated by the rock and returned to the surface to generate electricity. In June, the U.S. Department of Energy announced a $165 million investment in geothermal energy research and deployment. The Enhanced Geothermal initiative by the DOE aims to lower the cost of EGS projects to $45 per MWh by 2035, thereby vastly increasing the competitiveness of geothermal power. Further, the 2021 bipartisan infrastructure law included $84 million for research into EGS projects.
The private sector is also beginning to take tentative steps into geothermal energy, with a slew of geothermal energy startups raising millions of dollars in capital. Last month, Chevron Corp. (NYSE: CVX) partnered its clean energy subsidiary Chevron New Energies with Sweden's Baseload Capital to develop geothermal projects in the United States. Two years ago, Chevron and BP Inc. (NYSE: BP) invested $40 million in Canadian geothermal energy company, Eavor Technologies. In the same year, Aloha State energy utility Hawaiian Electric unveiled a plan to increase its geothermal generation capacity as part of its goal to lower greenhouse gas emissions by 70% by 2030.
"It's like solar: If you look at solar 20 years ago, nobody's interested in solar because it costs too much. But as solar has grown, the cost has come down as it's improved in scale. We're kind of on the cusp of moving into the cost-effective range [for geothermal], just like we did with solar, over the next 20 years," Roland Horne, a professor of earth sciences at Stanford University, has told Yahoo News.
But it's not just about technology and lower costs, the global energy crisis has triggered a sense of urgency by governments everywhere to enhance their energy security.
"It's unbelievable how geothermal has gone under the radar. Now, when you see the bills [in] electricity and the gas prices go up everywhere--at least, around us--it doesn't affect us. This can be done all around the world. you don't need to be the most active volcanic island in the world to use geothermal" Iceland's environment minister, Gudlaugur ThÃ³r ThÃ³rdarson, has told Yahoo News.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More
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