Is geothermal poised for growth?

Geothermal energy remains a very small part of the global energy equation, contributing about a quarter of a percent to the global energy mix. The global installed capacity for geothermal power is 11 gigawatts, with about a third of that actually installed in the U.S.

The last year, though, has seen some signs that some folks are anticipating demand growth. Kenya laid out ambitious plans to drill a 3 gigawatt steam field located in its Rift Valley. And Siemens decided to enter the market last year with its 60-megawatt steam turbine, its vice president of global marketing and sales Werner Altmeyet pointing out that research indicated that the global installed capacity could triple to 33 gigawatts by 2020.

Finally, in a recent discussion with the Marietta Sander, the Executive Director of the International Geothermal Association (IGA), she said the IGA had met recently with Japanese decision makers who are reconsidering geothermal. Japan sits on good geothermal hotspots and is aggressively seeking renewables in the wake of the Fukushima disaster.

The huge barrier for geothermal development is the initial cost of drilling for wells. Unlike wind and solar surveys, which take place above the surface, geothermal requires drilling kilometers below the earth. And if you do hit a geothermal hotspot, the temperature and pressure of the well must be sufficiently high to support power generation. Add to this the fact that the geochemical properties of the fluids and steam coming out of the hotspot must be assessed for their corrosive qualities so that the fluids don’t destroy the pipes and turbines that generate power.

On the plus side, geothermal proponents often like to talk about the Lardarello geothermal station in Italy, which was tapped in 1911 and is still producing power. A carefully managed geothermal field can have a very long lifetime. Perhaps as important is that you have very little shutdown time because, unlike wind and solar, steam isn’t an intermittent source of energy. Which means you have to spend much less money on grid energy storage because the utility doesn’t have to manage volatility on the supply side.

Geothermal power costs for the end customer can get as low as 3 cents per kilowatt hour, running up to about 8 cents, which is a pretty large range that depends on the quality of the geothermal field. But at the lower end of the range, geothermal gets cost-competitive with the cheapest form of renewable energy, which is hydroelectric. Hydroelectric costs  3-4 cents per kilowatt hour, which is as cheap and often cheaper than coal and nuclear. But interestingly in Kenya, after a full analysis that took into consideration problems with drought, the government concluded that geothermal was more cost effective than continuing to tap less reliable hydroelectric power.

A recent area of interest in geothermal has been so called co-generation, pairing geothermal with another energy source. In El Salvador, solar has been paired with geothermal to reduce intermittency and smooth out the flow of energy from the plant. And in Northeast California, the Honey Lake power plant pairs geothermal with biomass. In this case geothermal power is tapped to process and dehydrate wood waste prior to combustion.

Due to the fact that geothermal power generation is highly dependent on locating promising wells and that geothermal drilling is often more difficult than fossil fuel drilling, GigaOM contributor Tom Murphy has written that he doesn’t believe that geothermal offers a significant solution to the globe’s energy crunch. That’s true, and geothermal should remain fairly niche even if it does see some growth as individual countries like Kenya and Japan reconsider their energy policies. But as countries move toward “all of the above” energy policies and show greater willingness to explore new energy sourcing, geothermal just might get a slightly bigger seat at the table.

Question of the week

Is geothermal poised to see accelerated growth?