Considering that geothermal energy can supply power 24/7 for hundreds of years, it can use existing infrastructure from retired coal and nuclear plants, it is extremely attractive to investors, and that it creates more jobs than wind and solar energy, the question arises: Why does so much of this clean, natural resource remain in the ground?
That was the topic of discussion at the “Geothermal 101” Geosciences Technology Workshop, hosted recently by AAPG and Bureau of Economic Geology at the University of Texas at Austin.
For the United States to be carbon neutral by 2050 – a goal set by the Biden administration – it will need to decarbonize all electrical power by 2035, as a green power grid will allow for the electrification of industrial plants, mass transportation, building heat and other emissions-producing sectors.
The pressure is on, considering that we are just 40 percent there. Although wind and solar are slowly pushing the nation closer to its goal, the United States will ultimately require tremendous supplies of power from clean, base-loading energy sources – and geothermal has the potential to be a heavy lifter.
California, topping Iceland as a frontrunner in geothermal development, produces nearly 6 percent of its in-state energy generation from a 30 square-mile geothermal geyser field with 350 wells, according to the California Energy Commission.
But geysers need not be present to tap into geothermal energy. In fact, geothermal resources are located in formations throughout much of the western half of the country and can be tapped from other regions as well. The path to getting there, however, requires better public relations and better policies.
When asked to speculate why geothermal is losing the PR battle to wind and solar, some suspect its reliance on wells might be too closely associated with oil and gas. Others point to its locational limitations, or they believe there is bias against a predominantly western energy source, said Spencer Nelson, senior research director at ClearPath, a nonprofit organization with the stated mission to “develop and advance policies that accelerate breakthrough innovations that reduce emissions in the energy and industrial sectors.”
A likely reason, however, is the risks and large upfront costs of building geothermal plants.
According to Kathleen Callison, an attorney specializing in issues related to water, geothermal, mineral resources and energy, a 70-megawatt electricity plant requires approximately 14 production wells and seven or more injection wells, with each well costing $5-8 million, assuming a 100 percent success rate. Total facility costs range from $3-5,000 per installed kilowatt hour, making the total cost of a plant anywhere from $210-350 million, she said.
Yet Nelson, who helped develop the Energy Act of 2020 and is author of the Advanced Geothermal Research and Development (AGILE) Act, said numbers do not tell the full story, and that the real value of geothermal is on the precipice of discovery.
“The price of solar per megawatt hour is very low,” he said. “But if all solar in California comes on at the same time, half of it is useless, so the value gets cut in half. That’s the next big reckoning. That’s a conversation we are just beginning to have in the clean energy market world.”
While wind and solar have gained tremendous momentum, they do not operate without controversy. In addition to adversely affecting wildlife and creating hot spots, these renewable energies are intermittent. The pressure to decarbonize the electrical grid by 2035 is forcing states to look toward baseload energy to cut emissions entirely.
In early 2021, the California Public Utilities Commission issued an order procuring 1,000 megawatt hours of a renewable resource with a capacity factor greater than 70 percent, which could not be met by energy storage.
“They essentially created a geothermal mandate of 1,000 megawatt hours by 2028,” Nelson said, adding that he does not foresee the state choosing nuclear as an option. “That, in and of itself, would be a 25 to 30 percent increase in the total geothermal capacity of the United States if all of this was met with geothermal. I think they are beginning to recognize the role that geothermal can play in meeting clean energy goals.”
Nelson also noted that the California Energy Commission has even committed funding for extracting lithium –a critical mineral needed for electric vehicles – and co-producing it with geothermal energy.
“California is going to be a big driver in some of the near-term geothermal growth, and as that starts to pick up, I think we are going to see more activity in other states,” Nelson said.
Life After Retirement
As some coal and nuclear plants near retirement in 2030, they might be ripe for retrofitting for geothermal plants, particularly if they are located near geothermal resources and populated areas.
“They are an excellent place to be, from a transmission perspective, because it’s closer to the customer, the transmission lines and substations already exist, the local workforce and communities are already familiar with having a power plant in their space, so there’s not a greenfield problem creating a new intrusion on the ecosystem or the local community,” explained Michael Webber, the deputy director of the Energy Institute, Josey Centennial Fellow in Energy Resources, co-director of the Clean Energy Incubator at the Austin Technology Incubator, and associate professor of mechanical engineering at The University of Texas at Austin.
Currently, private capital seems to be pushing the geothermal movement forward. Motivated by environmental-social-governance funding, the private capital world has changed dramatically in the last 18 months, Webber said, explaining that ESG projects are no longer satisfied by coal power plants, but by sustainability and carbon avoidance.
“Let’s say you are familiar with funding oil and gas projects and coal mines. Geothermal looks more like them than wind and solar,” Webber said. “So the private money is looking for projects that will qualify – and they want larger scale. Private capital is leading on this, and government will follow at some point,” said Webber, who also is the author of “Thirst for Power: Energy, Water, and Human Survival and Power Trip: The Story of Energy.”
“There are a lot of oil and gas companies with their own internal funding that will push this. I think that is good news. When markets align … things tend to accelerate. It would be nice if the government would do its part also,” he added.
Lobbying for Geothermal
For decades, however, geothermal has largely been ignored by policymakers. To create stronger momentum behind the energy source, the federal government could enact several policies that would benefit its growth.
The first, Webber said, is a price on carbon.
“Because geothermal is either low carbon or zero carbon, putting a price on CO₂ from other options – say coal or natural gas or oil in some places – would improve the competitiveness of geothermal,” he explained.
A policy that would reward power companies for providing rotational inertia could also benefit geothermal energy. “Inertia,” in power systems, refers to the energy stored in large rotating generators and some industrial motors, which gives them the tendency to remain rotating. This stored energy can be particularly valuable when a large power plant fails, according to the National Renewable Energy Laboratory.
Webber explained that rotational masses are used to maintain the frequency of a power grid.
“In Texas, in (2021) winter storm Uri, we had a frequency problem with the grid that almost caused a system-wide blackout,” he said. “We should develop a market to reward (rotational inertia) in geothermal benefit.”
Webber noted that solar and wind do not provide rotational inertia.
Furthermore, a policy to reward 24/7 generation would also benefit geothermal energy, Webber added, reminding that it continuously flows from the Earth’s hot core.
Existing policies, such as the Renewable Portfolio Standards and the Clean Energy Standard, target wind and solar.
“Geothermal should be a part of that mix, but sometimes it’s left out, partly because it’s the forgotten child by policy makers, so that’s a challenge,” Webber said.
The Production Tax Credit and Investment Tax Credit often include geothermal, but not as robustly or generously as wind and solar, he added.
And, funding for research and development and deployment would most definitely support the energy resource, but there is little set aside for geothermal, despite the fact that the United States invests a lot in the “innovation ecosystem,” Webber said. “Nuclear gets a lot of money partly because it’s very interesting science but also because of its connection to weapons.”
Should geothermal energy begin to gain more traction in the United States, the thick red tape of the Bureau of Land Management and the Environmental Protection Agency might also pose a challenge.
Particularly in the western half of the country, 60 percent of high-quality geothermal resources are located on federal land, Nelson said. BLM policies can make leasing federal land a long and complicated process, as it requires a thorough evaluation for potential sites, site selection and competitive auctions before exploration can begin, he explained.
Subsequently, a developer must complete the arduous NEPA process, including submitting an environmental impact statement. Developers must complete a wholistic review of all potential impacts to the land, water, air, endangered species, cultural and archaeological artifacts.
Nelson also said that allowing categorical exclusions for exploratory drilling is “probably one of the single largest things that can be done to expand geothermal development.”
“Understanding the risk of a project is really going to be predicated on whether or not you have good data on the quality of the resource. And right now, you have to go through a pretty extensive environmental assessment just to be allowed to access the resource and actually conduct flow and temperature testing and chemistry to understand the quality of your geothermal resource,” he added.
But the battle for geothermal energy is not all uphill.
The fact that geothermal energy generates three times the number of jobs as wind and solar make it attractive, Webber said. Many of the jobs overlap with existing workforces, including those workers who might be displaced from the world of drilling.
“The jobs created for geothermal might be satisfied by jobs lost in other industries, and that’s less true for wind and solar,” he said.
Furthermore, the Biden administration is encouraging merit-based projects, which would include geothermal projects, funded through the U.S. Department of Energy’s Loan Office Program.
“There is money there for deployment, and this is the part of the Energy Department that actually writes checks,” Webber said. “This is a place where things can actually be done.”
Referring to the Loan Office’s non-recourse debt financing, Webber explained, “this is the cheapest, best kind of money a company can get. I urge all of you who are in the world of deployment and development to consider going to the DOE Loan Office for that big policy opportunity.”
Language in Biden’s Build Back Better plan also points toward the availability of funding for clean electricity generation projects, including geothermal.
“There is money there,” Webber said.
Whatever type of clean energy is built, it must meet a specification of 0.1 tons of CO₂ per megawatt hour, Webber said.
“This is like a 90-percent reduction to burning coal. Gas doesn’t meet it. Gas and (carbon) capture probably meet it. Coal and capture might meet it. Geothermal, wind and solar – absolutely – as well as nuclear,” he added.
In the Clean Electricity Performance Program, which passed the House Energy and Commerce Committee in September, an electricity supplier or power plant owner would be required to increase the amount of clean energy they supply by 4 percent each year beginning in 2023 or pay a penalty. Furthermore, the federal government would provide $150 per megawatt hour for increases over that 4 percent.
“The general cost of electricity is $30 to $40 per megawatt hour. This is enough to reward geothermal,” Webber said. “Imagine if you are (a) geothermal (provider) and you can get a 2.5-cent-per-kilowatt-hour tax credit for your (production tax credit) plus $150 per megawatt hour for the utility. This should cover the cost and really accelerate deployment.”
Referring to the GeoVision study of the Geothermal Technologies Office, Nelson said the right combination of regulatory and technological improvements could potentially create up to 60 gigawatts of new geothermal capacity by 2050. Citing other studies that alluded to an uptick in the value of geothermal energy, Nelson said he believes that an interest in geothermal is on the rise, emphasizing that many technological advancements made in shale plays – with a bit of adaptation – can be readily applied to geothermal energy projects.
He also pointed out that funding (particularly ESG funding) for the Geothermal Technologies Office has increased 50 percent over the last five years. And, Biden has proposed increasing that amount to a total of $160 million.
“There is a lot of support for this,” Nelson said.
It is hoped that such support will become a vehicle for moving geothermal power into a prominent and competitive place in the new energy mix.
“I wish people would broaden their view of what it means to be renewable or low carbon, Webber said. “People forget that the United States is the leader on this, and we have a lot more we could do.”