Geothermal is the underdog of renewable energy, growing much slower than solar or wind, but its prospects are getting brighter.
64 countries now have geothermal projects slated for development, more than double than a few years ago, according to Pike Research. 454 projects are under construction, adding up to 18.5 gigawatts (GW).
That would almost double the 11 GW that are now online, less than 0.2% of the world's energy sources. The International Energy Agency urges expansion through incentives and strong policies.
Indonesia, which has huge geothermal resources, accounts for 80% of development in the Asia Pacific region, thanks in part to its geothermal feed-in tariff. Chile is the center of activity in Latin America. Activity in Africa, notably in Kenya, is being supported by international development banks and centers on the Great Rift Valley (home to many extinct volcanoes). Germany also has a feed-in tariff for geothermal.
Geothermal, which importantly provides reliable, base power just like natural gas or coal, has been held back because of relatively long development times (4-8 years) and the need for expensive drilling that often ends up not producing results.
Current technology constrains geothermal to locations where naturally occurring pockets of steam or hot water are close to the Earth's surface - in rift zones or volcanically active parts of the world.
The industry is counting on "enhanced geothermal system technology" which creates underground steam reservoirs when water is injected deep into the ground. Although the technology is very expensive 252 MW is of demonstration projects are under development in Iceland and Italy.
AltaRock Energy, which is backed by big names like Google, Khosla Ventures and Kleiner Perkins, is working to bring those costs down by creating multiple geothermal areas from a single drilled well.
Another potential technology is to generate geothermal electricity from fluids that are byproducts of oil and gas production.
Innovative projects are also pushing the industry forward. Last year, the first hybrid solar-geothermal plant came online.
But once project do come online, they provide stable revenues, which is why JP Morgan bought eight plants from the biggest geothermal developer Ormat (Nasdaq: ORA).
In the US, geothermal grew 5% last year, adding a meager 147 megawatts (MW) from seven projects. A total of 3,386 MW in installed in the US, according to the Geothermal Energy Association.
But now there are 175 projects underway for a total of about 5300 MW in Arizona, Colorado, North Dakota, New Mexico, Texas and Washington.
33 projects are under development in California, which has the lionshare of geothermal capacity - 2732 MW. The state leads the world in geothermal installations and has the potential for ten times that amount. Nevada is No. 2 with 517 MW and has 75 projects under construction. Utah has 19 projects, followed by Oregon (18) and Idaho (11).
"To achieve more dramatic growth, geothermal needs continued and predictable federal incentives to spur investors to undertake the risk of investing in new geothermal projects," says Karl Gawell, executive director the Geothermal Energy Association.
"Governments need to cut the time it takes to manage leasing and permitting—it should not take seven or more years to complete a project. Industry needs consistent and sustained research support to develop new technology, reduce risk and spur technological innovation. State renewable standards need to recognize the full benefits of geothermal power to their power system reliability and the environment,” he says.
Federal tax credits were extended for geothermal for this year only along with those for wind and biofuels, as part of the fiscal cliff deal. But one year does little for the industry.
Five companies installed new capacity in the US last year:
- US Geothermal: San Emidio Repower and Neal Hot Springs (Nevada and Oregon)
- Ormat Technologies: Tuscarora and McGinness Hills (Nevada)
- ElectraTherm: Florida Canyon Mine (Nevada's first co-production plant)
- Terra-Gen Power: Dixie Valley (Nevada)
- EnergySource: Hudson Ranch 1 (California)
The US has over 3 million MW of geothermal resources - 10 times the installed capacity of coal power plants today, according to Southern Methodist University's Geothermal Lab. You can view the resources using Google Earth.
The Department of Energy granted $38 million to develop and test new ways to locate and tap geothermal resources in 32 projects in 14 states, and awarded $43 million for enhanced geothermal.