Is Geothermal the Next Hot Energy Source? 17 comments
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Practically every major source of power generation in the world involves the production of heat, which eventually becomes the electricity that we use. Nuclear, coal, natural gas – the direct end result of all of these processes is heat, which is usually then transferred to water. This water is then turned into steam, which drives the turbines that give us our electrical end product.
It’s undeniable that making things hotter is one of our most ancient and reliable methods of getting things done – from cooking food to making cars run, the energy often associated with or directly resulting from an increase in temperature is an old and true friend. As it turns out, so is generating power from one of the biggest sources of heat around – around, not out in space... yes, our own planet.
Mantle, Magma... Money!
The Earth, much like an onion, is layered – chemically, though, rather than physically. The temperature of the inner core has been estimated at values of nearly 7,000 degrees Celsius, or 12,000 degrees Fahrenheit.
Geothermal power is an alternative energy source, and as such claims less than 1% of the world’s energy supply. Understandably, while estimates of globally exploitable geothermal reserves vary, they tend to be fairly encouraging. Total worldwide production of electricity in 2005 was 65 exajoules (EJ); that’s a 65 with 18 zeroes next to it. On the other hand, according to a 2006 report on geothermal power by MIT, the world’s total reserves were calculated to be over 13,000 zettajoules (ZJ) – that’s a 13 with a whopping 24 zeroes! Of this, at least 200 ZJ were estimated to be exploitable, with the potential for a further 1,800 ZJ to be extracted through technological advancements.
Other groups, such as the International Energy Agency (IEA), have figured the numbers differently but come to the same conclusion – there's enough geothermal energy for thousands of years. Current geothermal production is only 0.2 EJ, so there’s clearly plenty of room for geothermal power to grow as an alternative energy source.
Now that we know there’s a future for geothermal energy generation, that brings us to the next most important question: how economic is it? The following chart tells an interesting tale:
Geothermal certainly holds its own with the best of them at about 6.5 cents per kilowatt-hour. Coal and nuclear power are still powering the way ahead with their 4-5 cent/kWh generation costs, but geothermal has already proven itself to be a viable alternative, not just on the environmental front but also the economic one.
So, how does the forecast for geothermal energy look? With 75 new geothermal power projects over twelve states underway in 2007 in the United States alone, the answer is: pretty good.
It’s a Small World After All
Geothermal plants are, perhaps fortunately, nothing special. They don’t require any particular manufacturing concerns or exceptionally location-specific design considerations, much like, say, a coal-fired plant. So it's little surprise that most geothermal companies are already as “vertically integrated” as one can get, offering complete geothermal plant solutions or even getting contracts to drill their own wells and build over them, as a private utility.
That’s more or less the extent of the differences between companies. On one hand, you have the problem solvers, the retailers, the companies that sell and operate geothermal systems as their primary business. On the other hand, you’ve got the utilities, the companies that stake geothermal deposits, get licensed, build plants, and sell their electricity. That’s all there is to the geothermal industry – very simple, no frills attached.
Juniors account for a very large portion of the geothermal pie. Geothermal juniors are all junior utilities, companies with tenements on hydrothermal reservoirs looking to get licensed or raise enough money to build their first geothermal plant.
So out of these three constituents, which one should we be betting our money on? Well, the answer should be fairly obvious; much like with, say, uranium, our best hope of profiting from the market lies with the juniors, the ones looking to develop into full-fledged utilities that sell electricity.
So let’s take a look at how the geothermal market shapes up.
Hot Potato
The United States is currently the largest producer of geothermal energy in the world. Nonetheless, geothermal still accounted for less than 1% of U.S. energy production last year. Perhaps surprisingly, the Philippines come in second place, with Mexico holding up third. Geothermal holds a lot of potential in the United States, China, Hungary, Mexico, Iceland, Australia and New Zealand, but that doesn’t necessarily mean said potential is being exploited.
More so than many of its fellow alternatives, geothermal has kept fairly low-key in the last few years, garnering very little interest despite being a clean and renewable source of energy. As a matter of fact, between the U.S. and Canadian exchanges, there are only ten geothermal companies. Even if you include the Australian exchange, which sees a lot of geothermal action thanks to its abundance of HFR-type deposits, the count only gets brought up to 23 companies.
As we’ve previously seen, most of the companies in the geothermal sector are juniors, a statistic that is reflected in these market cap charts. Many have nothing more than a couple of stakes in the ground as far as development is concerned, but that’s where every junior starts out in this industry.
In any case, the geothermal market is certainly a small one, but even in a small sector there are bound to be winners. And with the increasing demand for clean, green energy, it’s only a matter of time before more people pick up on the fact that geothermal is not a strange and rare form of alternative energy, but rather a source of power just as viable as its cousins hydro or wind – perhaps more so, because geothermal plants tend to stay off the radar screens of nature lovers griping about their spoiled views or ecosystems. Low-key works both ways.
Getting Warmer
What do we anticipate for geothermal in the future? Will there be a surge in popularity, a sudden eureka as people and governments alike flock to geothermal as the next savior in this current energy crisis?
Probably not. Geothermal has always been one of those technologies with very low public awareness, and we see nothing to indicate how that might change anytime soon. So, barring some kind of strange series of coincidences, a geothermal bull is not in the cards for now.
Still, does that mean that geothermal is a dead-end market? By no means – as previously mentioned, there were 75 geothermal projects being developed last year in the United States alone. With less than 75 plants currently operating in five states, that’s a significant number. Just because there’s no public awareness doesn’t mean it’s not happening.
In fact, it's the plain-Jane doggedness of geothermal that we're counting on: despite lack of knowledge about it, despite the extremely small value of the market as a whole, geothermal still happens. And it will keep on happening because it hits on the three hot buttons of today's energy market: it's tested, economically viable, and environmentally acceptable.
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> jack
This free, carbon-free energy source has the capacity to produce 1.5 billion barrels of oil sand annually and would make North America's unconventional oil sources like bitumen and shale viable even at current oil prices. Importing the global inventory to this end would quadruple the potential output of unconventional oil and insure plutonium contained in the waste never fell into unwanted hands.
A recently published study by Australian, French, Canadian and U.S. scientists notes the unprecedented capacity of bitumen to sequester radioactive materials and much of Canada’s oil sands are found beneath a capping shale formation that would further preclude either hydrocarbons or radionuclides from migrating to the surface.
Using spent nuclear fuel in this fashion is technically indistinguishable from generating geothermal energy and when this heat source has decayed, in about 100 years, the fuel can safely be recycled again. A reactor like the CANDU can burn pressurized water reactor spent fuel - the majority - as is without having to reprocess it.
Nuclear waste (?) is a $120 billion opportunity on this continent alone with no end of upside if implemented in a technically sound manner.
> jack
On Mar 01 10:32 AM john s. gordon wrote:
> will the alberta provincial government allow the import of u.s high-level
> waste (spent fuel) for the purpose you propose?
Second, in response to J. Gordon's comment: no, geothermal heat is not the product of radioactive decay--where did you get that idea?? It's from the pressure of the earth's gravity on itself. At least you have the inexhaustible part right.
Huffington Department of Earth Sciences, Southern Methodist University, Dallas, Texas
On Mar 01 08:03 PM Aalan wrote:
> First, it's strange that the author didn't mention any specific stocks,
> and that the editor only labels HTM, a penny stock. The established
> player in this space is ORA.
>
> Second, in response to J. Gordon's comment: no, geothermal heat is
> not the product of radioactive decay--where did you get that idea??
> It's from the pressure of the earth's gravity on itself. At least
> you have the inexhaustible part right.
----------------------...
Does the cost of nuclear power include all the taxpayer money used for providing security, maintaining a vast regulatory bureaucracy, transporting waste, dealing with lawsuits, researching what to do with the waste, burying the waste (e.g. Yucca Mountain), and covering the cleanup costs, human losses, or political fallout of any accidents (e.g. Chernobyl) or terrorist attack? Many of the expenses of nuclear power have been "socialized" so to speak because of the public risks involved.
Does the geothermal power cost include the many inefficient small scale 1970's research prototypes that are still running or is this the cost of modern utility-scale plants? Also, how do you amortize the cost of something that costs a lot to build upfront, but then provides minimal-cost energy forever? An accounting decision to amortize over 30 years instead of 40 years could have a major impact on the per-unit cost calculation. Italy has a geothermal plant that has been running for 100 yrs!
Finally, if we are comparing coal with geothermal, how do we account for the fact that years from now, a geothermal plant will not have to buy fuel, but a coal-fired plant will be paying future market rates for millions of tons of coal (plus transportation)? To calculate a comparable future cost of coal electricity, we would have to know the future cost of this commodity. What will coal and transportation cost in 2030? Your guess is as good as mine, but I suspect it will be more than today's prices. How can we justify applying a discount (increase) to the current cost of coal power based on higher expected future costs? I suspect we don't, and that's a problem. It's like estimating the expense of buying gasoline for the next 20 years based on today's prices.
sooner, rather than later, the water tables dry up on geo thermal and in order not to have a financial disaster on their hands, geo thermal companies install the closed loop system and start water injection.
One, the western part of the US is geologically active and the eastern part is not. Therefore, in the east they have to drill much deeper to find 600 F degree heat. This is expensive and it has proven to be a deal killetr even with grants and subsidies. so the east is out.
In the west of the Mississippi, drilling is far more shallow and 600 F degree heat is darn near everywhere. But, the west is short of water and you need water to re-inject, sooner or later.
Last and certainly not least are the earthquakes, yes boys and girls real earthquakes.All re-injected wells suffer from quakes about magnitude 3.5 on the old Richter scale.
Currently, there appears to be no exception to this rule. In Californis, they are used to earthquakes but in North Carolina they are not.
Hooray, we have people who are trying to solve the problem but no one knows when.
sooner or later the eathquake info will get out to the general public, but until then you might make money on the hype in a trading situation.
sciam.com/article.cfm?...
Water:
Binary systems reinject the cooled water back into the ground for reuse resulting in zero H20 loss. Most flash steam systems exist near ample groundwater or surface water. Is this a greater engineering challenge than horizontal drilling for gas, oil sands, "clean coal," or hydroelectric reservoir maintenence? Sounds pretty simple to me. Even if losses occurred, how much would it cost to bring in a tanker truck of lake water every year or so? A lot less than being dependent on a fuel source!
Drilling Costs:
Geothermal takes advantage of 100 years of cost reductions and technological improvements in the oil and gas industry and utilizes the exact same equipment. Computer guided drill bits, horizontal drilling, ultradeep drilling, etc. have revolutionized the process in the last 20 yrs and brought costs down on a comparable-hole basis.
The major problem is capitalization vs. expensing. Almost the entire cost of geothermal is upfront - building the plant. Fossil fuel plants are cheaper to initially build, but require a steady stream of expensive fuel. As any entrepreneur will tell you, it's easier to pay the steady stream than the big upfront payment.
I suspect that resources east of the Mississippi would be economical with deep enough drilling and enough startup money. Until then, the tech is being perfected in the easy locations. Keep in mind that part of ORA's business is waste energy recovery, which can be applied at factories and fossil fuel plants.
Earthquakes:
Since geothermal plants are typically located in geologically active areas, can they really be blamed for earthquakes? Binary reinjection systems don't even remove any material from the ground on a net basis. On the other hand, mining activities and reservoir building have been linked to very tiny tremors as a result of adding or removing weight from the crust. There's no reason to think geothermal could have that effect.