The Big Question: Where Are the Major Geothermal Opportunities Around the World Today and What Should the Industry Do to Take Advantage of Them
Geothermal technology offers renewable energy that comes from under the earth. The energy is baseload, dispatchable, and 100-percent renewable. The industry is making slow-but-steady progress in various regions of the world. As attendees head to the Geothermal Energy Expo and Geothermal Resources Council Annual Meeting in this week, we ask our readers this issue’s Big Question.
Director of Communications, Geothermal Resources Council
In organizing the biggest annual event in the industry (the GRC Annual Meeting & the GEA Geothermal Energy Expo), the Geothermal Resources Council (GRC) gets an insight into current trends. From these, we can see that the biggest opportunities remain in Indonesia and The Philippines in Asia and in Kenya and Ethiopia in Africa.
However, the recent news that the Japanese government will allow drilling for geothermal resources in parts of national parks bodes well for the industry there. Also, new legislation in Mexico will potentially be a boon for geothermal energy.
I hope legislation will be passed to restore the Salton Sea in Southern California. This would involve the development of more than a GW of geothermal energy, providing a much-needed push for the industry in the United States.
In addition, the research into Enhanced Geothermal Resources (EGS) here in the United States, in particular at the Frontier Observatory for Research in Geothermal Energy (FORGE) program, might provide the breakthrough for the industry that will make geothermal energy available anywhere in the world.
There are probably many untapped areas. But in Kenya, they have enough geothermal potential to possibly power a major part of East Africa. The added bonus is that the transmission lines that are being installed for the Lake Turkana Wind Project pass close by allowing connection points and substations to be built. External companies should be encouraged to invest and be a part of Kenya’s 5,000-MW vision for future energy provision.
The age-old issue for geothermal power generation is proving resources and developing risk with a utility rate of return on completing a successful project. This single issue has sidelined potential projects for decades. Sponsor Energy Capital is forming a fund to solve this issue for worthy projects.
Geothermal is abundant in many places around the globe. I see the real problem as that in most areas where geothermal is present, there is insufficient grid capacity to handle the load that can be generated.
If you closely examine the geothermal domes that exist throughout the southwestern United States, for example, you will find that the grid necessary to support larger amounts of energy is not present or is dedicated to the transfer of energy from areas supplied by larger fossil-fuel generation plants.
The costs to upgrade this power structure and to connect these plants to the grid end up being higher than the developers of the projects can bear.
Founder, Steady State Asset Partners
There are two important trends in geothermal energy that have the opportunity to drive new growth in the ground-source heat pump industry. First, the development of innovative geothermal HVAC-financing models will enable many more buildings to keep their occupants comfortable while conserving energy and keeping operating costs low.
These new business models are allowing property owners to avoid large upfront cash outlays for upgrading to geothermal while still keeping monthly cash payments below their properties’ previous monthly heating and cooling bills.
The geothermal industry is following in the footsteps of successful solar PV financing models, which are growing rapidly by selling no-money-down solar installations.
Second, there is a growing recognition that geothermal heat pump systems can be used for thermal energy storage. While there is a lot excitement around solar PV and grid storage, much of that electricity is ultimately used to provide thermal comfort and water heating.
Storing BTUs underground and simply pumping them into or out of buildings as needed is a smart way to use electricity and heat energy. It is also a great opportunity for utilities to comply with the Clean Power Plan by reducing overall energy loads on the grid.
In California, we need the California Independent System Operator (CAISO) to recognize the importance of geothermal energy and eliminate barriers to its development.
There is something wrong when geothermal is only 4 percent of California’s renewable energy portfolio. The area around the southern end of the Salton Sea is the richest deposit of geothermal energy in North America and has resources to replace the shuttering of San Onofre.
Today there are almost 80 countries around the world at some stage of exploring or developing their geothermal resources, so there are opportunities on every continent. The best scenarios for success and growth are those where there is an understanding of the resource and geology, the governments support its development and the economies needs power. All three of these factors are found in East Africa, particularly in Kenya and Ethiopia, making this a leading region for geothermal opportunities.
Equally strong potential exists for new geothermal development in Mexico and Indonesia as these governments each move forward on geothermal initiatives and open doors for new investment. Opportunities also abound in the ripening geothermal markets of Central American countries, Caribbean Islands, and Pacific Islands.
But don’t write off the United States. As climate emissions become a market driver, the firm and flexible attributes of geothermal power make it an essential part of any greenhouse gas emissions reduction plan. Only a small fraction of geothermal resources are developed, so it’s still a pioneer industry with a lot of room for advancement.
To take advantage of the opportunities, first support GEA as it works to open and promote new markets and to keep companies informed of new opportunities. Second, develop the best technology and the best team. Then prepare your plans knowing the risks...and seeking to reap rewards.
Geothermal opportunities are best capitalized upon in physical locations where the potential exists. Such opportunities are greatest on or near major volcanic activities or tectonic plate underlap areas. The entire tectono-magmatic activities around the Red Sea gave rise to several geothermal provinces over the continents surrounding the Red Sea, represented by thermal springs and fumaroles at several locations in the State of Eretria, Djibouti, Ethiopia, Yemen and Saudi Arabia.
Ideally, an offshore system in the Red Sea could provide a major source of steam energy for electrical production. A high-voltage DC undersea cable could carry this energy ashore for mass storage or immediate use.
The United States Navy Operates the COSO Geothermal Well in California. The energy produced from this facility powers an entire base plus overcapacity for adjoining communities.
Geothermal planning requires high-quality research on understanding location, technology, environmental impact, the cost of feeder transmission lines, mass storage, maintenance and operation.
Most geothermal systems require extensive maintenance and lifecycle support which must be factored into the business case for any such project.
The perspectives on what constitutes a great geothermal opportunity differ. For developers and investors, it is about accessibility and supporting schemes. For suppliers, it is about the market structure, openness and competitiveness.
Overall, the key markets for suppliers are Indonesia, Philippines, Kenya, Turkey, Mexico, and the several smaller nations with smaller projects. For investors supporting schemes such as the Geothermal Risk Mitigation Facility in Eastern Africa, a new insurance scheme in Mexico and Latin America, as well as good feed-in-tariffs, are helpful.
Germany, for that matter, still is likely one of the better return opportunities, despite its smaller project size and higher perceived risk.
There are some good geothermal resources in East Texas.
One of the things that concerns me the most about geothermal is the water withdrawal and consumption. I know that a lot of companies are looking for ways to reduce their water impact (in particular by using recycled water - much like in the natural gas industry), but the water component is still one I think needs to be part of any discussion.
If the geothermal potential is in areas that are predicted to see an increase in drought or heatwaves in the coming decades, I think that water availability should be part of the calculus of whether it is worth harvesting those resources. At the very least, developers should consider how to be smart about reducing their freshwater use.
When we talk about geothermal energy development, we should not forget geothermal, or ground-source, heat pumps (GHPs). This technology for the past few decades has been quietly building its contribution to pollution reduction, job creation, and energy/cost savings for millions of people around the world.
Here in the United States, it’s a “50-state” technology that is not dependent on ideal natural conditions of heat source availability and permeable rock.
Around 700 MWt of capacity is installed every year in the United States alone, by far outpacing development of “hot rocks” on an equivalency basis with electrical production. Best of all, GHPs eliminate onsite use of fossil fuels like fuel oil, natural gas, and propane that are not only pollutants, but are hazardous as they are burned by conventional equipment.
The GHP industry is still nascent in the United States, primarily because of its higher upfront installation cost. This cost is due to the need for excavation or drilling to install ground-loop heat-exchange systems.
The industry is working to overcome that initial cost barrier through innovative financing that secures cost savings immediately for building owners. It is also seeking to apply government incentives resulting from amendments to energy-efficiency laws and renewable-energy portfolio standards.
The industry also advocates renewal of its tax credits for residential and commercial installations at the federal level, which are set to expire next year. Several business tax incentives are now under scrutiny by a cost-conscious Congress.
Most of all, the GHP industry must continue its efforts to inform the public about its economic and environmental advantages, especially carbon emission reduction, at a time when climate change is on everyone’s minds.