Why Geothermal Energy Will Remain A Small Player

Geothermal is presently a minor player in the field of renewable energy and for the reasons discussed here is likely to remain one, but Energy Matters has never featured it before and it deserves its fifteen minutes of fame. Besides, I worked in geothermal a number of years ago and haven't revisited it since, so it's time I updated myself on what's been going on.

I start with a bit of personal memorabilia. Below is an aerial view of the Hudson Ranch 1 plant in the Salton Sea geothermal field, California, a three-stage flash plant with an installed capacity of 49.9MW that was commissioned in 2012. I show it because I bought the land the plant sits on for my then employer Kennecott Copper Corporation in 1980, knowing that a high-temperature geothermal resource was present there. What I didn't figure on is that it would take 32 years to put it into production.

Figure 1: Hudson Ranch 1 plant, Salton Sea geothermal field, California (image credit Leidos)

But such is geothermal.

Geothermal energy is that fraction of the natural heat of the Earth that gets transported by magma flow, conduction and/or convection from the Earth's hot interior to within drilling range of the surface, where it forms two basic types of geothermal resource:

• High-temperature resources (~180C or above) that are hot enough to generate electricity, either from steam extracted directly from the ground, from steam produced by "flashing" pressurized hot brine or from binary cycle heat exchangers. These resources presently supply the world with 99% of its geothermal energy and are the ones I discuss here.
• Low-temperature resources potentially amenable for use in heating, an application I haven't looked into and don't discuss here.

Geothermal electricity is about as close to a perfect source of renewable energy as one can get. It's (almost) carbon-free, doesn't emit large quantities of noxious gases or generate radioactive waste, doesn't require the clear-cutting of virgin forests, doesn't take up lots of room, doesn't blight the skyline (or at least not all that much), doesn't decapitate or incinerate birds, is replenished by the natural heat of the Earth, delivers baseload power at capacity factors usually around 90% and can even if necessary be cycled to follow load. It's also one of the lowest-cost generation sources presently available. No other renewable energy source can match this impressive list of virtues or even come close to it.

So why isn't there more of it?

Because there wasn't much of it to begin with.
While renewable energy sources like wind and solar are exploitable to a greater or lesser extent almost everywhere, high-temperature geothermal resources are found only where there is a coincidence of high heat flow and favorable hydrology, and as can be seen from Figure 2 these coincidences occur only in a few places and only occasionally near major centers of energy consumption:

Figure 2: Geothermal power plants operating in the world (image credit Evergreen)

And it's not as if geothermal development has been held back by technological difficulties. Geothermal electricity generation is a proven technology that's been around for over a century (the first commercial geothermal power plant came on line at Larderello in Italy in 1911). The problem is that huge areas of the world simply don't have the high-temperature resources necessary to support electricity generation. Related: How Greece Crisis Could Drag Oil Prices Down

Figure 3 below (from Bertani, 2015) shows Russia and China with only 109MW of installed capacity between them. Tiny El Salvador, however, has almost twice as much, and as a result El Salvador gets 25% of its electricity from geothermal (and other countries even more - the Philippines gets 27%, Iceland 30% and Kenya 51%) while Russia and China get 0%. But only small countries can "go geothermal" in this way. None of the three large countries with relatively abundant geothermal resources presently fills more than a small fraction of its electricity demand with geothermal energy (Italy fills 1.5%, the US 0.3% and Japan only 0.1%).

(Click to enlarge)

Figure 3: 2015 world installed geothermal capacity by country

The shortage of high-temperature resources is one of the main reasons geothermal growth has not kept pace with wind & solar over the last few decades. Geothermal growth did begin to accelerate after the 1974-5 oil embargo, stimulated by legislation such as the 1978 US Public Utility and Regulatory Policy Act, but there's still less than 13 GW of installed geothermal capacity in the world, and geothermal in the US at least shows unmistakable signs of the low-hanging fruit having already been picked:

Figure 4: Global and US installed capacity growth, 1960-2012

Another factor that has contributed to geothermal's slow growth is that geothermal fields don't contain much usable energy. Some geothermal wells deliver as much energy as an oil well (the three wells that power Hudson Ranch 1 each produce about 15MW, which at 1.6282 MWh per barrel of oil works out to 220 barrels of oil equivalent/day, in the same range as fracked shale wells). But while the Salton Sea geothermal field covers only about 20 square miles oil plays like the Bakken shale cover tens of thousands of square miles. As a result of this huge size differential the ~50-square-mile Geysers field in California, the Big Daddy of the world's geothermal fields, generates the oil equivalent of about 5 million bbl (~8TWh)/year at full production while the Bakken produces sixty times as much.

Figure 5: Geysers geothermal field, California: installed capacity ~1.5GW, annual generation ~8TWh

Another disadvantage of geothermal is that geothermal heat can't be transported. It must be used where it's found, and it's often found too far away from centers of consumption to be used. Geothermal resources in places such as the Andes, Kamchatka and Indonesia remain unexploited largely (although not entirely) for this reason. Related: Demand Response Key To Utilities' Survival

Yet another is that geothermal is, well, hard. Installing solar panels or onshore wind turbines is a comparatively simple and predictable undertaking, but like oil and gas, geothermal requires exploratory drilling and testing to confirm the presence of a resource, more drilling and testing to determine size and productivity and ultimately a wellfield and power plant that's specifically tailored to the resource (there is no one-size-fits-all design). All this takes time and money and involves risk, and as a rule investors will shy away from risk if they can avoid it.

Yet geothermal has one advantage that goes at least some way towards offsetting its drawbacks - cost. There is general (although not universal) agreement that the levelized cost of geothermal electricity is among the lowest if not the lowest of any power generation source. According to the Geothermal Energy Association geothermal has lower levelized costs than wind, solar, small hydro and nuclear:

Figure 6: Levelized costs of electricity generation from the Geothermal Energy Association

And according to EIA it has the lowest levelized cost of all US generation sources, conventional or renewable, and by a large margin too:

(Click to enlarge) 

Figure 7: Levelized costs of electricity generation in the US from EIA

According to the World Energy Council geothermal doesn't do quite so well globally as the EIA says it does in the US, but it's still lower-cost than everything except landfill gas. IRENA also places geothermal at the low end of the levelized cost range, on a par with onshore wind. Only Lazard places geothermal mid-pack.

But prospects for future expansion remain limited despite Geothermal's low cost. The Geothermal Energy Association's 2015 Annual Geothermal Power Production report expects installed global geothermal capacity to grow from 12.8MW in January 2015 to between 14.5 and 17.6GW by 2020 and to 27-30GW by the early 2030s "if all countries follow through on their … development goals and targets". Related: Top Shale Takeover Targets

But even if they all do follow through 27-30GW is still an inconsequential amount of power in the context of global energy demand.

Geothermal also has another question mark attached. Is it really renewable? A geothermal field will produce electricity indefinitely if a) the rate of heat extraction does not exceed the rate of heat replenishment and b) reservoir hydrology remains intact, but geothermal fields are usually operated by commercial producers who are more concerned with cash flow than longevity and therefore have an incentive to produce as much as they can as quickly as they can.

Most geothermal fields have not yet reached unsustainable production levels, but one that did is the Geysers, where overproduction in the early- and mid-1980s led to an abrupt decline in steam production after 1987. The decline was halted by taking wells off line and injecting wastewater into the reservoir, but had the operators continued with business as usual the Geysers field would by now be exhausted, or close to it:

Figure 8: Steam production and injection at the Geysers geothermal field 1960-2010 (Figure 12.15 in Geothermal Power Plants, 3rd ed." by DiPippo)

The Geysers experience nevertheless demonstrates that a geothermal field can withstand years of reservoir mismanagement and still continue to produce. How long production will continue at or around current levels is uncertain, but there's no immediate end in sight and by 2060 the Geysers field will have been producing commercially for 100 years, which I'm going to say meets the definition of "sustainable" adopted by the UN Brundtland Commission in 1987.

(Sustainability, it turns out, isn't forever; it only has to be long enough to allow future generations to find something to replace the depleted resource.)
So there you have geothermal - a proven source of cheap, low-carbon, environmentally-friendly, dispatchable renewable energy. It's a pity there isn't more of it.

By Euan Mearns

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