U.S. Geothermal Industry Heats Up as It Sees Most Gov’t Support in 25 Years

While wind farms and giant solar plants have been grabbing the headlines lately, another renewable energy industry has been quietly grabbing millions from the government.

In late 2009, geothermal energy research projects landed $338 million in Department of Energy (DOE) funding, as part of a flurry of stimulus act announcements. Somewhat surprisingly, stimulus funds for solar, which were included in the same announcement, amounted to only $117.6 million.

As that money began to make its way to grantees last month, DOE announced another $20 million in grants for the research, development and demonstration of "cutting-edge" geothermal technologies. Geothermal companies, as well as wind and solar companies, are also eligible for the federal government’s $7 billion renewable energy loan guarantee program.

It’s the most money the geothermal industry has seen in at least 25 years. In fact, the last time the industry garnered this much attention was during the Carter Administration.

When the plug was pulled on geothermal funding after the 1970s oil crisis, though, that was pretty much it for the industry. Most industry experts expect a different outcome this time around.  

Dan Kunz, CEO of U.S. Geothermal Inc., a Boise, Idaho-based renewable energy development company, says he expects the boom to continue, not peter out the way interest did decades ago. "You’ve got a confluence of factors now that you just didn’t have then."

"First the environmental impacts of the oil and coal industries are being taken seriously in a way that they weren’t back then, and once the true cost of both those fuels is taken into consideration, they stop sounding so cheap," Kunz says.

"Then we’ve got technology that is more proven and more readily available; in many cases geothermal power plants are plug and play now in a way they weren’t before. And then you’ve got tax credit support and investor interest that wasn’t there before."

Geothermal Sees 26% Leap in One Year, But Fate Not Sealed

While the solar and wind industries rely on above-ground natural resources that are fairly easy to pinpoint — it’s either windy or sunny in a particular region, or it’s not — the geothermal industry is more similar to the oil and natural gas industries, in that it requires exploring for underground resources and drilling wells to tap the buried energy.

Unlike the natural gas or oil industries, however, geothermal is emissions-free power. Kunz points out that it is also a uniquely stable energy source.

"With wind and solar, you might have a 100-megawatt capacity plant that only actually generates 30 megawatts by the end of the year because it’s an intermittent power source," he explains. "With geothermal, once it’s going, it’s going and you can pretty much leave it alone."

Utility companies, which have been struggling with managing variable and intermittent power sources on the grid, are starting to like the sound of that. And it might not be too much longer before geothermal is a more regular part of their energy portfolios.

Since April 2009, there’s been a 26 percent growth in new geothermal projects under development in the U.S., with 188 projects underway in 15 states that could produce as much as 7,875 megawatts of new electric power, according to the April 2010 U.S. Geothermal Power Production and Development Update.

Nonetheless, if the U.S. doesn’t continue to act fast, it could be lapped on geothermal by its closest competitor, Germany, in the same way that it was on solar.

Even Known Resources Largely Untapped

Stimulus funding has been allotted to companies and universities working in a wide variety of areas related to geothermal power. But according to Dr. Lisa Shevenell, a research hydrogeologist at the Nevada Bureau of Mines and Geology of the University of Nevada, Reno, most of the larger grants have gone toward drilling, either as part of the exploration of geothermal resources or the capture and use of them.

"The first big issue is exploration, and then you need to be able to drill and produce water," she explains. "Drilling is expensive, so when it doesn’t hit what you’re looking for, that’s a big problem. It also makes it hard to get financing to do the drilling when you don’t know what you have."

"We just need to explore and drill, and there hasn’t been any work done for 20 years or more to turn even known geothermal resources into reservoirs, much less explore to find new ones," Kunz says. "That’s because it’s expensive to do that and we haven’t had the support. And if the oil industry, which is the most profitable industry ever, still needs government support to drill and explore for oil, then certainly renewable energy deserves the same attention."

Kunz also points out that while exploring and drilling for geothermal resources makes the initial cost of providing geothermal energy expensive, the operational costs of geothermal plants are very low, thus driving down the cost of the energy over time.

Moreover, technologies developed over the last few decades make it possible for geothermal power to be created from fluids that are not as hot as they once had to be, making the resource more available.

"Twenty-five years ago, when the big oil companies were looking into geothermal, they only wanted steam, so if the geothermal resources they found weren’t hot enough they’d say ‘forget it,’" Kunz explains. "But now we have technology that allows us to take geothermal resources from the earth in fluid form at lower temperatures — 260 degrees Fahrenheit or so — and use it to heat other compounds to create a vapor."

In U.S. Geothermal’s case, the company uses lower temperature water to heat a compound with a low boiling point — such as butane, pentane or iso-pentane — to create a vapor. The vapor turns a turbine, which generates energy, and then the condensation creates a liquid, which goes back into the ground.

The process is known as the Rankine Organic Cycle, and technologies that can apply it to geothermal energy production are one of the things the DOE is looking for.

The three stated areas of interest for the $20 million research grant are: low-temperature geothermal fluids at temperatures up to 300 degrees Fahrenheit; geothermal fluids produced from productive, unproductive, or marginal oil and gas wells, mining operations or other hydrocarbon or mineral extraction processes; and highly pressurized or geopressured fluid resources that show potential for cost-effective recovery of heat, kinetic energy and gas.

"One of the most interesting things to me is the use of defunct oil wells for geothermal," Shevenell says. "There are a lot of existing deep wells in this country that are hot, so that would really expand geothermal past the Western states, which is where it’s concentrated now."

DOE Hedging Its Bets 

Shevenell points to funding of super-deep drilling technologies as an example of a technology that might not be worth the expense.

"The idea is that if you drill deep enough it’s hot at some point everywhere, but that sort of drilling is really expensive."

Nonetheless, the DOE is hedging its bets, placing money in all of the primary areas of geothermal research and implementation. According to Shevenell, it’s a boom time in geothermal that’s long overdue.

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