Geothermal Energy: Past, Present, and Future

Geothermal Still Unsung Alternative Energy Source
Geothermal energy has long been called “the forgotten renewable,” as I explained three years ago in an article in E: The Environmental Magazine, then promptly forgot about it. Okay, I did not actually forget, but was concerned with other issues, such as the rise of fracking, which has led in the intervening years to a huge natural gas boom that has rapidly brought the United States closer to energy independence. Fracking shares many qualities with geothermal energy; both require lots of cash in an early, risky exploration phase; both rely on drilling beneath the Earth’s surface; and both provide reliable baseline power that can be counted on 24 hours a day, which works synergistically with such intermittent energy sources as wind and solar power. Yet, natural gas has also been charged with polluting groundwater, causing earthquakes (through the storage of fracking water), and releasing the powerful greenhouse-gas methane (the amount varies greatly depending on the study—we really do not know). So why have we gone with environmentally problematic natural gas rather than far safer geothermal, which has been operating for over a hundred years (the first plant was built in Italy in 1913) with close to zero pollution and greenhouse emissions?

© Jamie Slomski, CC/Flickr

Because it’s cheap! Since the fracking boom, natural gas has bottomed out at $1.89 per thousand cubic feet in April of 2012 according to the U.S. Energy Information Administration. Full disclosure: I do not really know what this number means, but I do know that it is a price no other energy source can match. Yet, according to Karl Gawell of the Geothermal Energy Association, natural gas is like the Yugo, the car that Americans briefly feared would take over the automobile industry in the 1970s until they realized it was a piece of junk. Gawell was speaking at the recent geothermal showcase in Washington, DC. Fortunately, Americans quickly realized that quality matters (at least to some degree) and the Yugo went into the scrapheap of history.

Conversely, we continue to expand fracking despite its numerous environmental drawbacks. The low price of natural gas is also undependable; the substance has a history of price volatility. As recently as July 2008, the price was more than five times the recent low. Particularly if the United States begins to export natural gas, the cost is likely to surge. If you “want affordable, sustainable, reliable electricity,” combined with low carbon, geothermal is best, exclaimed Jonathan Weisgall of MidAmerican Energy Holdings Company, speaking at the showcase. Geothermal also has a capacity factor above 90%—that is, less energy is wasted than in almost any other mode—and an infinite production period if well managed according to Alejandro Melandri of the Inter-American Development Bank.

There are, however, shortcomings to geothermal, the most important being its availability (mainly in the West and Southwest in the United States, but with some surprising Midwest locations). If one is located in a city near geothermal resources, great; otherwise transmission lines must be built, and if one is too far way, geothermal is simply not an option. Still, it is a shame that geothermal has not been exploited anywhere near its full potential, since it is the only renewable that can provide baseline capacity (besides hydroelectric power, which has its own set of environmental problems). Geothermal is also the only renewable that has long been cost competitive with other forms of energy, even without subsidies. What has kept it from being exploited on a much wider basis, as came out repeatedly at the showcase, is the high cost and high risk of exploration, combined with a long payback time (versus the typically quick payback for natural gas). As Ambassador Carlos Pascual of the U.S. Department of State put it during the opening address, “Something has to fundamentally change to carry through the high risk period.” The trick, therefore, is to find financial instruments to draw early investment in geothermal. This is really a matter of scale; a large enough entity needs to be involved to guarantee the early stages. (The government, for instance, has long provided guarantees for nuclear power.) Government guarantees, an extremely large and committed corporation, or perhaps some kind of international consortium are possible ways of making it happen on a more routine basis.

Government guarantees allowed Iceland to expand geothermal and largely energy independent in the latter part of the twentieth century. Of course, Iceland’s enormous geothermal capacity has also helped. In the United States, a series of grants in response to the 1970s energy crisis allowed a surge of geothermal in the 1980s, a decade during which U.S. production quintupled according to the 2014 Geothermal Energy Association report. Those plants continue to generate energy today, largely in California. Yet since then, government incentives for renewable energy have not been kind to geothermal, and production has leveled off. This is because incentives have been unreliable, stopping and starting depending on the vicissitudes of Congress, confounding geothermal’s high-risk period of some seven years or so (it varies greatly depending on the project) before it begins to pay off. Tax incentives from the federal government have been unpredictable for all renewable energy, but have been much harder on geothermal given its timeframe. Incentives have also failed to account for geothermal’s high capacity factor and for its 24-hour daily availability. Thus in the past few years, geothermal energy producers have watched booms in wind, natural gas, and solar, while their favored power source remains dormant. Globally, though, there is some action, with the international market “growing at a sustained rate of 4% to 5%” according to the 2014 Geothermal Energy Association report.

The deeper problem, however, is that renewables should not have to rely on government incentives. Rather, fossil fuels have long been given a free ride, allowed to pollute the environmental commons on which we all depend. A tax on carbon and other environmental damage would be the best way to level the playing freedom and allow renewables, including geothermal, to compete fairly. Unfortunately, geothermal continues to compete in a world where its advantages are not valued monetarily. Some companies are doing so, however, and their knowledge needs to be leveraged.

Because each geothermal project is different, the technology requires in-depth knowledge and experience to minimize financial risk and maximize output. Explained Bob Sullivan of Ormat, a highly successful geothermal company, the process is iterative, beginning with a pre-explorative phase. Planners must build geologic models, but must be willing to constantly change the models as new facts are distilled. Sullivan quoted former U.S. president Dwight D. Eisenhower that “plans are useless, planning is essential.” As the process goes forward, it becomes more expensive, with $5 million a typical number for the exploratory phase. Of course, some projects must be abandoned altogether. And successful initiatives must have a way to deliver electricity to customers. The process, then, requires a dizzying array of geological, technological, and business knowledges. It requires a long-term commitment from experienced companies with a knowledgeable array of experts, which explains why geothermal has remained the “forgotten renewable.” Yet the payback in clean and steady energy is unique to geothermal. New technological developments, notably modular units that allow plants to scale up as discoveries become larger, also mitigate risk. In addition, geological mapping has improved, making it easier to find usable and exploitable resources. Geothermal thus has great potential to take off should it find a way to overcome the initial risk.

Internationally, it is beginning to do so, notably in Indonesia, but also in such far flung countries as Turkey and Chile. Indeed, it is in the developing world that energy use will continue to grow most dynamically; geothermal is one way that this can be done in a sustainable manner. In the United States, energy use has leveled off, thanks to a combination of improved energy efficiency, evolving demographic shifts, and a flat economy. Yet the American market for renewable energy is likely to grow as coal plants close, a trend that might increase in June when the Obama administration announces new emissions standards. Explained Weisgall, the Environmental Protection Agency has been “regulating the hell” out of such environmental hazards as regional haze and coal ash, with “60 thousand megawatts of coal-generated energy in the process of shutting down between now and 2017.” We are moving toward a renewable economy, and the need for geothermal as a clean, dependable source is growing. Let us hope that it can soon join its sister energy sources—namely wind and solar (and its black-sheep brother natural gas)—and have its own “unprecedented” surge in use.