It’s sustainable with low emissions. It’s available 24 hours a day.
So, why does geothermal energy remain untapped for the most part as a renewable energy source?
“If there’s one major thing that is preventing geothermal from unlocking its full potential is really its cost competitiveness with other renewables,” Ajit Menon, vice president of geothermal and energy transition for Baker Hughes, told Hart Energy. “It’s related to the risk and uncertainty of a geothermal project [in the subsurface] because you have to make such a large upfront investment,” and it may take years to see cash flow.
However, efforts are underway to change that using the technologies and skills adapted from the oilfield services sector to help bring down costs, improve existing geothermal techniques and address other operational challenges.
Geothermal energy is seen as a critical enabling technology capable of shifting society toward renewable energy resources as part of the energy transition.
Using wells to drill into reservoirs, geothermal energy taps heat within the subsurface of Earth. Temperatures can range from 60 C for shallower depths to 380 C or higher at deeper depths, stretching about 2 to 8 miles beneath the Earth’s surface for most applications today. Conventional geothermal follows a basic principle where water or steam is produced from these wells and then reinjected after the heat is extracted to keep the system operating for long periods of time. The heat extracted can be used to heat or cool homes and buildings via direct use heat or to generate electricity with higher temperature geothermal resources.
However, the initial cost for a geothermal field and power plant can cost about $2,500 per installed kW in the U.S., according to the Energy Department’s Office of Energy Efficiency & Renewable Energy.
There are also resource risks, as Baker Hughes pointed out.
“When drilling in search of geothermal energy, there is a chance the temperature may not be suitable for commercial exploitation, or the well could ultimately prove to be unsuccessful,” the company explained in a report. “Conventional geothermal projects require a site that has heat, water, and the right kind of subsurface permeability to succeed. If any one of these elements is missing, a conventional geothermal well will not be suitable for commercial development.
“A history of unsuccessful wells drilled in previous decades only adds to the perception among some investors that the risk of geothermal is not worth the reward.”
Technology is changing that by helping address the risks.
Several companies are developing new frontiers of geothermal, taking on complex designs of high-temperature wells that go deep, using enhanced geothermal systems (EGS) and advanced geothermal systems (AGS), Menon said. Such systems are used when subsurface conditions are insufficient, such as not having water or poor permeability.
With EGS, a well is drilled into a hot, but dry reservoir and water is injected at pressures high enough to shear the rock, creating new flow networks for the water to move. A second well is then drilled to bring the heated water to the surface, then reinjected, repeating the process. AGS generates power via closed-loop systems where a contained working fluid is circulated within the wells, which brings the heat to the surface without disrupting the reservoir. The systems open doors to expand geothermal energy to new areas.
To advance the technology and bring down costs, Baker Hughes announced in March an investment in San Francisco-based GreenFire Energy, a closed-loop geothermal tech company. The two companies plan to retrofit existing non-producing geothermal and oil and gas wells to closed-loop heat-producing wells for power generation and direct use.
“We’re collaborating with them and marrying what they do best, which is the solution they have for AGS, with what we do best, which is just translating that solution into a practical and economic well design,” Menon said. “To achieve this expansion of geothermal it can often mean drilling deeper and more exotic well designs. That’s where technology comes in and being able to do that in a cost-competitive way.”
Geothermal energy can be used in the production and transportation of green hydrogen, he added.
“There’s also the application that’s in the news a lot in California on the extraction of lithium from geothermal brines, which the car companies are very excited about,” Menon added. Plus, “Europe is a huge market for direct use applications, or heating and cooling, and we do a lot of work in Europe for various customers as well.”
Menon suggested looking to California as a possible blueprint to scale up geothermal in other parts of the U.S.
Its location near the Pacific’s ring of fire and tectonic plate conjunctions enabled the state to produce 11,345 GWh of electricity in 2020, according to the California Energy Commission, though the amount (combined with an additional 700 GWh of imported geothermal power) accounted for less than 6% of the state’s in-state generation portfolio. The state is home to about 40 geothermal plants.
The oil and gas industry can leverage its reservoir modeling and project execution skills alongside expertise in drilling and remote operations to not only get projects off the ground but also scale up projects, Menon said.
Policy and incentives can also help. The U.S. has made moves favorable on both the commercial and residential sides. New geothermal plants, for example, receive a tax credit of $25 per MWh of generation.
In early May, the Department of Energy announced plans to release $13 million to support community geothermal projects as part of the Biden administration’s clean energy push.
The Geothermal Technologies Office’s multiyear program plan aims to deploy 60 GW of enhanced geothermal systems and hydrothermal resources, as well as the installation of 17,500 geothermal district heating installations and 28 million geothermal heat pumps nationwide by 2050.
Having incentives that last longer could also help companies working to capture some of geothermal energy’s potential, Menon said.
However, “at the end of the day, if we want to move to a new energy transition world, we have to make it work. … I believe the solutions are there,” Menon said during a session at the Offshore Technology Conference in Houston in early May. “You’re not going to get there by complaining and moaning about it or by requiring government to help you do it. You’re going to get there how you always get there—by using technology to drive down cost [to] actually make these things economic.”
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