Are Geothermal Energy Advancements on the Horizon?
Posted January 19th, 2012
The U.S. geothermal power industry is poised for rapid growth now that the U.S. Department of Energy’s geothermal development program is maturing.
This growth is being spurred by demonstration-stage pilots but also by an increasing number of municipalities and utilities that are turning to geothermal as an alternative energy option for either renewable mandate or investment reasons. While the U.S. geothermal power market is still tepid in comparison to the international market, U.S. technology exports will help U.S. companies weather the wait for more rapid domestic market expansion.
DOE’s Geothermal Program Rolls Out
The DOE’s Geothermal Technology Program (GTP) was strategically expanded in 2008 and won funding of $368 million under the Recovery Act. President Obama’s “Christmas wish list” to Congress included $101 million for 2012. Within the broad GTP program, enhanced geothermal systems (EGS) is the primary development target.
There are now seven EGS demonstration projects at various stages of activity in several states, including California, Idaho, Hawaii, Nevada and Oregon. The goal is to develop a five-megawatt pilot by 2020.
Utilities, Cities Embrace Geothermal
While utilities, especially in the West, are helping to drive the expansion of geothermal power on a larger scale, municipalities and educational institutions are helping to drive smaller scale applications including power and heating/cooling systems.
Some utilities have been utilizing geothermal power under power purchase agreements since the 1980s. As a result of their comfort level and experience, geothermal is increasing within their renewables mix.
Certain strategically oriented utilities may also move beyond power purchase agreements for geothermal energy and make direct equity investments.
At the same time, more municipalities are turning to geothermal heat and/or power as a renewable resource. The smaller scale economy involved in a municipal geothermal system may not attract utilities, but these systems can have a huge impact on people in the community. There are driving factors at work beyond dollars and cents, such as creation of sustainable local jobs and enhanced quality of life.
Foreign Markets Loom
About 60 percent of the member companies of the Geothermal Energy Association now do business overseas. While there is not yet a “green bank” that finances renewable energy development in the United States, the U.S. Export-Import Bank and the U.S. Overseas Private Investment Corp. are working hard on financing U.S. geothermal technology exports.
And traditional geothermal-tapping countries like Indonesia are setting the stage for large-scale growth. Similarly, the Middle East/Africa and Latin America are warming rapidly to geothermal projects. In fact, leading U.S. purveyor Ormat Technologies has won contracts in Kenya, Guatemala and Nicaragua.
Limits to Growth
There is still a need for more proven utility-scale geothermal power technology to convince private banks to finance the industry, even though they have long financed solar and wind projects. Smaller applications, like oil well associated flows being developed in Florida and Texas may be able to demonstrate the economic feasibility of low-temperature geothermal power over the nearer term.
