Is Geothermal Power About to Become The Next Great Battleground Over Fracking?

by | published September 12th, 2014

Of all the renewable energy sources, geothermal power remains by far the smallest.

But that may not prevent it from becoming the next energy “hot potato.”

A good example of its potential can be found in Iceland, where the entire country runs on geothermal power. Of course, it does help to have a string of active volcanoes to tap. 

As for the U.S., believe it or not, we are currently the world’s leader with about 3.4 gigawatts of geothermal generating capacity already in operation.

Still, that only accounts for about 0.4% of all the electricity currently produced nationwide.

Naturally, it would seem that tapping the geothermic pressure produced beneath the earth’s surface would be a positive addition to the energy landscape.

After all, Mother Nature seems to be handing us a gift by providing a readily available power source.

But there are two problems quickly developing in this part of the energy spectrum.

And they are shaping up to create the newest controversy in the energy sector…

The Brewing Battle Over Geothermal Fracking

First, there is the prospect of utilities being legislatively forced to buy a percentage of their power from geothermal generating companies in California. While the state legislature has adjourned its latest session without taking any action, the issue has once again brought charges that a designated renewable has been given an unfair playing field.

Similar approaches have been used in the past for both solar and wind power in various (usually western) states. That brought on claims of higher utility bills as consumers were forced to subsidize the higher costs of infrastructure and network development.

Opposition to the proposed geothermal bill was strong from both traditional utilities and renewable energy companies. Utilities felt that requiring the purchase put a burden on its customers, while renewable energy companies felt that it created an unequal playing field for renewables, since it set aside a large portion of the market only for geothermal.

San Diego Gas & Electric has estimated that the requirement contained in the bill to purchase 500 megawatts of power from geothermal producers in the Salton Sea (part of Southern California’s Imperial County) would cost consumers $450 million a year.

The battle will rage on as the prospects for subsidies are renewed when the legislators return.

However, this may pale in comparison to the second focus of controversy, because the contentious views now raised against shale gas extraction are going to be the primary rallying point against geothermal moving forward.

This involves a process called “enhanced geothermal systems” (EGS), and in certain quarters this is another form of fracking. Tapping into these subterranean fractures holds the promise of releasing significant new sources of power.

In fact, in a 2013 report the Geothermal Energy Association projected that the EGS approach could easily more than double the worldwide availability of geothermal power. And the U.S. has by far the largest portion of that potential largesse.     

But for environmentalists and others, EGS comes at an unacceptable price.

Geothermal companies recoil from the comparison, but it’s true, EGS is the equivalent of geothermal fracking.

Millions of gallons of water and chemicals are injected into mostly vertical wells at relatively high pressure, and the combination of cold-meets-hot, pressure and chemistry shears the deep, hot rock.

This creates new “fracture networks” through which water can be pumped, heated and sent back to the surface to generate power. Conventional geothermal wells cost at least $5 million to develop, with a failure rate of around 50% (just about one in every two wells drilled fails).

EGS could reduce that failure rate and extend the size and life of existing geothermal fields. Some proponents believe the process will eventually allow geothermal fields to be established wherever there is suitable hot rock.

Gearing Up For Another Fight

Several U.S. Department of Energy (DOE) officials support the process. For example, Doug Hollett, who oversees DOE geothermal policy, points to a project completed with Ormat Technologies Inc. (NYSE:ORA), a leading geothermal firm. It took place in Desert Peak, Nevada, where EGS boosted the productivity of an existing field by 38%; it also became the first EGS project to supply America’s power grid.

Doug calculates that EGS adds capacity to existing fields at a cost of 2-5 cents per kilowatt-hour. For low-cost natural gas the same equivalent is 6-7 cents. Preliminary DOE guesstimates posit that EGS contributions might allow for geothermal power to account for some 10% of America’s electricity needs.

On the other hand, aside from the environmental opposition, EGS does have one technical problem. Despite being a steady source of renewable energy (unlike wind or solar power), having very high capacity-utilization rates, zero fuel costs and near-zero greenhouse-gas emissions, the application of this process has become an issue.

The trouble is that successful existing geothermal plants do not need EGS, and for many failed wells it is simply not economical to introduce it. And the ability to apply EGS to current fields is still unknown.

Nonetheless, DOE believes that EGS techniques could be commercially viable as soon as next year, at which point more private investors, and perhaps utilities, might move into demonstration projects. In addition, government-sponsored EGS research programs are up and operating in the UK, France, and Germany, adding to the international interest.

All this has environmentalists gearing up for another fight.

EGS can trigger earthquakes. Most of them are minor, but an early project on a seismic fault in Basel, Switzerland was scrapped after several not-so-small quakes. It is also possible that the water used for EGS may leak, contaminating surface water or soil.

Of course, there are water standards rules in place, and every American project is surrounded by seismometers.

But the political battle has yet to begin, and there is every indication that this one will be at least as fiery as the crusade to prohibit fracking in shale development.

The fact the geothermal industry has less data from fewer existing projects will simply fuel this battle.  More on this story as it develops.

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