Energy Transition: What Role Can Geothermal Power Play?

Charles Adams
March 17, 2024|


Geothermal energy is among the oldest types of power harnessed by humans.

It holds a unique place in the energy mix, thanks to being entirely independent of weather yet not relying on fossil fuels. Once operational, geothermal plants can produce a steady output all year round, day and night, often for at least 20 to 30 years. With the need to transition from fossil fuel power plants, countries around the world are looking for alternatives to stabilize electricity grids. Such alternatives are nowadays most often powered by renewable energy sources such as wind and solar power, many being intermittent in nature.

Geothermal power, thanks to its baseload nature, could play a vital role in the energy transition. However, to date, geothermal energy development has taken place in specific regions only, being those environments most conducive to geothermal power production. The most efficient geothermal power plants require both the hottest resources possible and satisfactory permeability of the hot rocks. For this reason, geothermal power plants have been developed primarily alongside major tectonic plate boundaries or in the vicinity of volcanic regions.

Certain countries, among them notably Iceland, El Salvador, New Zealand, Kenya and The Philippines, already meet a significant share of their electricity demand through geothermal power plants, and these are the main geothermal hubs at present. Although these countries have demonstrated the significant benefits of this technology and continue to lead the way for other nations, the full potential of geothermal energy has not yet been realized on a global scale. There has been a significant growth in investment in renewable energy in the past two decades, with a record high in 2022 of $0.5 trillion. This investment has resulted in unprecedented growth in renewable energy, both in absolute terms as well as in its share of total energy output, with wind and solar power clearly standing out.

However, although total renewables power output showed promising growth by more than doubling between 2012 and 2021, there is still a great discrepancy between the rate at which various types of renewable energy have been developing. In particular, the total installed capacity of geothermal energy in electricity generation is below 10 percent of its global potential, massively overtaken by output from wind and solar energy. This disparity is caused primarily by the fact that investments in geothermal energy have not kept pace with those in other renewables, which to date are favored as they require far less upfront capital and are arguably less risky.

For a long time, exploration of locations for geothermal power plants was limited to regions with the highest reservoir temperatures (mostly above 180ºC) and wells between one and two kilometers deep. Only such conditions were thought to be suitable for investors, with acceptable levels for the risk of project failure and achieving the maximum efficiency of the future generation facility. However, these conditions are present primarily in regions around tectonic plate boundaries, are therefore limited and have already been explored to a great extent, presenting a problem for interested geothermal energy investors. Finding “new” ground for geothermal development is challenging, and so is “proving” a resource, even in more traditional settings.

To begin, identifying the location of a commercially viable geothermal reservoir has always been costly. Proving the suitability of a chosen site usually necessitates drilling and testing of deep wells, but these initial stages are the most risk-fraught and cost-intensive for investors. Geothermal investors have rightly been wary of all but the least risky locations, given that up to 90 percent of the total project costs can be consumed just in the drilling stage. Crossing the hurdle of proving viability is therefore of utmost importance in increasing total geothermal energy power output. There have been various attempts at minimizing investor risk as well as maximizing commercial viability of a wider range of geothermal wells.

There are four key ways in which this has been achieved so far. Use of big data at the exploration stage and technological breakthroughs reduce the risk of drilling in an unsuitable location by ensuring a better survey of the identified location and more precise predictions of its parameters during exploration.

Various machine learning algorithms have been identified as helpful tools in the search for the best locations for geothermal power plants. These tools enhance the visibility of geographical indicators, such as the contours of mountains, hot springs and rock composition, enabling more locations to be identified as viable options to develop new sources of geothermal energy. Although the hype around the application of new technologies in the geothermal space has so far been confined to academic circles, we are now seeing private companies move into this space.

Google has signed an agreement with Fervo – a clean energy start-up – in which it will help develop AI and machine learning technologies to boost overall productivity of geothermal power plants. And in another example, in late November 2023 a new geothermal plant in Nevada became operational; the electricity produced will serve Google’s data centers and supply power to the local grid. This demonstrates that the Internet of Things and Artificial Intelligence technologies can go further than merely helping with resource detection.

Quaise Energy is developing innovative technology to access resources located at greater depths in the Earth’s mantle. The company is betting on vaporizing rocks in order to access deeper reserves through a device called a gyrotron, which emits microwaves. Although the technology has not yet been implemented on live geothermal projects, Quaise is hoping to start harvesting energy from a pilot well by 2026.

Another important technical advancement is the ability to extract power from lower temperature geothermal resources, i.e., those below 150°C. These have traditionally been used in applications such as direct heating, rather than power generation, as the latter would not reach sufficient efficiency to render such projects viable. However, resources with temperatures as low as 70 to 80°C can, under the right conditions, now be used for electricity generation using improved binary cycle electricity generating technology. Although low-temperature geothermal projects will usually be orders of magnitude smaller than typical wind or solar power plants, they have been proven to be technologically viable. One of the larger low-temperature geothermal power plants for commercial power production is located in Alaska at the Chena Hot Springs Resort, which generates around 400 kW of power using Organic Ranking Cycle units. Although such power output might seem insignificant, taken together, these low-temperature geothermal systems could contribute hugely to countries’ energy portfolios.

In that vein, the U.S. Geological Survey has identified more than 120,000 MW of unrealized low-temperature geothermal reserves in the country – showing that, in aggregate, these plants could have a big impact on energy make-up.

While more investments have been pouring into renewable energy sources, the existing oil and gas infrastructure has not disappeared. Once depleted, oil and gas wells cannot be simply abandoned. Unsealed oil wells have negative effects on the environment through both air and groundwater pollution due to methane, arsenic and other toxic substances leakages. It is therefore vital to seal them properly – both for the environment and society and, in addition, for the operators, because not doing so could carry significant liability. The costs of effectively sealing off depleted wells are significant. The well will not bring in any further income at this point, yet it can create significant costs and liabilities if sealing is not done properly.

What if dedicating some of these wells to geothermal development could give them a second life and so, not just postpone or save decommissioning costs, but also generate revenue? Most oil and gas wells are in regions not traditionally associated with geothermal energy power plants, as the temperatures at their depths do not usually exceed 150ºC. However, with improvements around the use of low-temperature resources for geothermal energy, it is possible that existing oil and gas wells could serve as a basis for geothermal exploration.

Charles Adams is global managing partner at Clifford Chance.

About the Author: Charles Adams

Charles Adams

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