Overview of Geothermal Energy:
- Geothermal energy, a renewable and sustainable power source, harnesses heat from the Earth’s interior. This energy can be used in various applications, ranging from powering large utility-scale facilities to heating and cooling homes and buildings. Unlike many renewable sources, geothermal energy provides continuous, baseload power, making it a valuable component of a clean energy system.
- The Earth’s geothermal energy derives from the heat produced within the Earth’s crust, primarily from the natural decay of radioactive materials like uranium and potassium. This energy resource is abundant, with heat within 10,000 meters of the Earth’s surface containing an astonishing 50,000 times more energy than the world’s combined oil and natural gas reserves.
- Hotspots of geothermal activity often occur at tectonic plate boundaries or in regions with active volcanoes, such as the Pacific Rim. These areas, including parts of Alaska, California, Oregon, and Nevada, boast the highest underground temperatures. Seismic activity and magma movement in these regions break up rocks, allowing water to circulate and create natural hot springs and geysers with water temperatures exceeding 200°C (430°F).
- However, geothermal energy is not limited to these hotspots. In many locations, even beneath your own backyard, heat can be tapped from depths of 10 to a few hundred feet below the surface. Furthermore, emerging Enhanced Geothermal Systems (EGS) technology has the potential to extract heat from deep dry rock formations, significantly expanding geothermal electricity production capacity.
- The United States, with more than 3,300 megawatts in eight states, is a global leader in installed geothermal capacity. Ground-source heat pumps, another form of geothermal technology, are widely used to efficiently heat and cool buildings across the country, especially in regions with temperature extremes.
- Geothermal power plants capture energy using three main designs: dry steam, flash systems, and binary cycle systems. These systems extract heat from hot water or steam found underground, using it to generate electricity. While geothermal power is clean and efficient, open systems like the Geysers in California can emit pollutants like hydrogen sulfide, while closed-loop systems release no emissions.
- Looking ahead, geothermal energy holds tremendous potential. Enhanced Geothermal Systems (EGS) could unlock heat from dry rock formations, offering significant capacity for electricity production. Additionally, co-production of geothermal electricity at oil and gas wells, along with low-temperature geothermal resources, presents further opportunities for clean energy generation.
- The geothermal sector is gaining traction due to increasing cost competitiveness. Projections indicate that geothermal energy costs are expected to be less than natural gas and conventional coal. Federal funding and incentives, such as the investment tax credit, are further driving geothermal technology development and adoption.
Market Trends and Growth:
The global geothermal energy market is on a significant growth trajectory, with a projected worth of USD 95.82 billion by 2029, representing a compound annual growth rate (CAGR) of 6.3%. This promising market expansion is driven by the multifaceted applications of geothermal energy, encompassing heating, cooling, and electricity generation. Technological advancements in the sector have enabled the capture of higher volumes of geothermal energy, contributing to its market growth. The increasing global demand for clean and sustainable energy resources is a major catalyst for this industry’s expansion.
One noteworthy development in the geothermal sector is the 15-year Power Purchase Agreement (PPA) announced by Ormat Technologies. The PPA, effective from January 2023, involves Peninsula Clean Energy purchasing 26 MW of geothermal energy from Ormat’s Heber 2 facility, highlighting the growing adoption of geothermal energy solutions.
The market is segmented by type into flash, binary cycle, and dry steam. Among these, the binary cycle segment is expected to dominate due to its cost-effectiveness and suitability for moderate-temperature geothermal energy extraction. The application segment encompasses residential, commercial, industrial, and others. The commercial sector, driven by the increasing use of geothermal heat pumps for cooling purposes, is poised to experience substantial growth, with applications spanning industries such as paper and pulp, food, cement, aquaculture, and lumber.
In terms of geographical distribution, Asia Pacific is projected to lead the market, primarily driven by the high energy demand in Asian countries. North America is expected to witness notable growth, especially in residential and commercial applications. Europe, with various energy projects in development, is anticipated to secure the second-largest market share.
Key market players are strategically employing acquisition strategies to bolster their market presence. For instance, Ormat Technologies acquired TG Geothermal Portfolio, a subsidiary of Terra-Gen, in a deal valued at USD 171 million, expanding its installed capacity to 1,100 MW. This trend of capacity expansion and innovation underscores the industry’s efforts to attract a broader consumer base and contribute to the growth of the geothermal energy market.
Key Players and Projects:
In the dynamic geothermal energy market, several key players are making significant contributions to harnessing the potential of this clean energy source. Here are some of the leading geothermal energy companies, each with its unique strengths and contributions:
- Calpine: Based in Texas, USA, Calpine is a major player in geothermal and natural gas-based electricity generation. The company’s diversified operations encompass industrial, commercial, and residential retail segments, positioning it well in competitive power markets.
- Ormat Technologies Inc.: Headquartered in Nevada, USA, Ormat Technologies is a renowned provider of renewable power and energy solutions. The company is known for its expertise in recovered energy, geothermal power, and energy storage solutions. Ormat’s projects, such as the Unalaska geothermal power plant in Alaska, reflect its commitment to clean energy.
- Enel Green Power: This Italian-based company has a strong global presence in renewable energy. With over 12,000 power plants spanning five continents, Enel Green Power operates in 21 countries and boasts a substantial geothermal operational capacity of 0.92 GW.
- Chevron: A major integrated oil & gas company headquartered in California, USA, Chevron specializes in developing cleaner, more affordable energy solutions. The company’s operations span the entire oil & gas value chain, making it a significant contributor to cleaner energy production.
- Toshiba Energy Systems & Solutions Corporation: Based in Tokyo, Japan, Toshiba is a prominent player in geothermal power generation. The company offers a wide range of power generation systems and continuously works on improving the reliability and performance of geothermal turbines.
- First Gen Corporation: Operating in the Philippines, First Gen Corporation is one of the oldest and largest corporations in the country. It focuses on power generation and distribution, with a strong emphasis on renewable energy sources.
- Mitsubishi Corporation: Headquartered in Yokohama, Japan, Mitsubishi Corporation has a substantial foothold in geothermal power generation. The company is known for introducing innovative technologies like the two-phase flow transportation system and the double flash cycle in geothermal power generation.
- Fuji Electric: A pioneering company based in Japan, Fuji Electric has been actively involved in the geothermal business since 1960. It specializes in designing and manufacturing geothermal steam turbines and generators, contributing to the growth of geothermal energy capacity.
- KenGen: Headquartered in Kenya, KenGen is a prominent geothermal energy company with approximately 713 MW of installed geothermal capacity. Geothermal energy is a key component of the company’s energy generation portfolio, particularly after hydroelectric power.
Technological Advancements:
In recent years, there has been a renewed surge of interest and progress within the geothermal energy sector, largely attributable to the breakthroughs in next-generation geothermal technologies. These innovations, exemplified by Enhanced Geothermal Systems (EGS) and Advanced Geothermal Systems (AGS), have revolutionized the industry by enabling the harnessing of geothermal energy in regions that were previously deemed unsuitable. One of the standout advantages of these next-gen geothermal technologies lies in their remarkable resource potential, all achieved with minimal land utilization. For instance, according to estimates by the US Department of Energy, these technologies could potentially contribute up to 120 gigawatts of dependable capacity to the US energy grid by 2050. On a global scale, they hold the promise of meeting double the existing global energy demand. Furthermore, these advanced geothermal systems offer dispatchable and highly flexible electricity generation capabilities, rendering them impervious to weather-related constraints. They can swiftly modulate their output to match demand fluctuations and operate continuously, thereby enhancing the overall reliability of the power grid.
Several innovative startups, like Eavor Technologies and Fervo Energy, have been conducting pilot projects to test the feasibility and effectiveness of these technologies. The positive outcomes of these tests have led to early-stage commercialization efforts. Eavor Technologies, for instance, is set to produce energy in Germany by 2024, with full capacity expected by 2026, and has secured substantial funding for additional projects. In the United States, there has been a surge in geothermal power purchase agreements (PPAs), especially in California, which is actively seeking to procure geothermal resources to ensure resource adequacy.
Furthermore, these next-generation technologies are catching the attention of corporate energy buyers, like Alphabet Inc.’s Google, which is collaborating with Fervo Energy to develop a 5MW EGS plant to power its data center in Nevada. The international interest in geothermal energy is also expanding, with countries like Japan and Taiwan recognizing its potential in achieving net-zero carbon emissions and enhancing energy security. However, challenges remain, including the high capital costs associated with geothermal power development, scalability concerns, and the need for enabling regulatory frameworks. Nevertheless, the progress made through PPAs, pilot projects, and government support is driving the commercialization of next-generation geothermal technologies, positioning them as a promising solution in the global shift towards cleaner and more reliable energy sources.
Environmental Impact:
Geothermal power facilities do not rely on fuel combustion for electricity production; however, they can discharge minimal quantities of sulfur dioxide and carbon dioxide. When compared to fossil fuel power plants of comparable capacity, geothermal power plants emit significantly lower levels of sulfur compounds, which are associated with acid rain formation, at a reduction of approximately 97%, and carbon dioxide emissions are remarkably reduced by around 99%. To manage the hydrogen sulfide naturally present in geothermal reservoirs, these power plants employ scrubbing technology. The majority of geothermal power plants adopt a practice of reinjecting the geothermal steam and water they utilize back into the Earth. This recycling process serves the dual purpose of rejuvenating the geothermal resource and curbing emissions originating from the geothermal power plants.
Challenges and Barriers:
The utilization of geothermal energy comes with several challenges that need to be considered. One significant drawback is its location-specific nature, as geothermal plants must be situated in areas where this energy source is accessible. This restricts its deployment to regions with suitable geological conditions, limiting its global reach. Additionally, while geothermal energy generally has fewer greenhouse gas emissions than fossil fuels, the digging process can release stored gases from the Earth’s surface into the atmosphere, contributing to environmental concerns. Moreover, there is a risk of inducing earthquakes, particularly with enhanced geothermal power plants that alter the Earth’s structure to enhance resource exploitation. Although most geothermal plants are located away from densely populated areas, this issue warrants attention. Geothermal energy also involves high initial costs, with plant expenses ranging from $2 to $7 million per 1-megawatt capacity, although these expenditures can yield long-term benefits. Lastly, to maintain sustainability, proper management is crucial, including the re-injection of fluid into underground reservoirs at a rate that exceeds depletion. Thus, while geothermal energy offers advantages, industry stakeholders must carefully assess both its benefits and potential challenges.
Conclusion:
Geothermal energy, derived from the Earth’s natural heat reservoirs, offers a sustainable and continuous power source, making it a valuable component of clean energy systems. This renewable energy, abundant within the Earth’s crust, is primarily harnessed through hotspots near tectonic plate boundaries and volcanic regions. However, innovative technologies like Enhanced Geothermal Systems (EGS) are expanding its reach, promising substantial capacity for electricity production. With the United States leading in installed geothermal capacity and growing global demand for sustainable energy resources, the geothermal energy market is on a significant growth trajectory. Despite challenges such as location-specific requirements, environmental concerns, and high initial costs, geothermal energy holds promise as a clean and reliable solution in the transition towards a greener energy landscape.
Reference:
- https://www.twi-global.com/technical-knowledge/faqs/geothermal-energy/pros-and-cons#:~:text=The%20largest%20single%20disadvantage%20of,able%20to%20exploit%20this%20resource.
- https://about.bnef.com/blog/next-generation-geothermal-technologies-are-heating-up/#:~:text=Next%2Dgeneration%20geothermal%20technologies%20%E2%80%93%20like,geothermal%20energy%20for%20many%20countries.
- https://www.fortunebusinessinsights.com/blog/top-geothermal-energy-companies-10721
- https://www.fortunebusinessinsights.com/geothermal-energy-market-106341
- https://www.globenewswire.com/news-release/2023/08/10/2722570/0/en/Geothermal-Energy-Market-Size-Worth-USD-95-82-Billion-Globally-by-2029-at-a-CAGR-of-6-3.html
- https://www.marketsandmarkets.com/Market-Reports/geothermal-energy-market-205152720.html
- https://unsplash.com/s/photos/geothermal
- https://www.ucsusa.org/resources/how-geothermal-energy-works
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