Betting on Steam 

The Obama administration is boosting its investment in renewable, geothermal power. But will it solve our energy problems?

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"We're really hopeful that this is going to be successful," said Susan Petty, founder, president, and chief technology officer of AltaRock. "The only renewable energy source that can replace coal power would be geothermal, and the only way you can scale it big enough to do that is with EGS."

But Petty knows there's more to it than simply generating enough steam. As Calpine's trials have demonstrated, the trick is doing it at a price that the market can bear. While Petty estimates that AltaRock's Newberry well could produce energy at 16 cents per kilowatt-hour, her target is below 10 cents. The Department of Energy's goal for EGS nationwide is even lower, said Lauren Boyd, the department's EGS technology development manager: 6 cents, a value designed to compete with natural gas over the long term. "We've been able to demonstrate that we can actually do this," she said. "The next step is trying to do this at a bigger scale and at a cost we can afford."

Imagine, for a moment, erasing the US geothermal industry's entire fifty-year history. What you end up with is a vaunted new energy technology on the cusp of a breakout. Its 3,200 megawatts of current production are paltry, after all, compared with its long-term potential.

But for geothermal to truly happen, costs will have to come down at both traditional reservoirs and enhanced systems. As the California Energy Commission's 2010 cost survey showed, it's possible. But those calculations were based primarily on new plants at known or existing geothermal fields; most of the cost and risk currently involved in exploration isn't accounted for. Developers can spend more than $10 million drilling a single well, even an unsuccessful one.

To reduce risk and improve return on investment, drilling will have to become not only cheaper, but also less of a gamble. And that will require better maps and remote-sensing capabilities allowing developers to see what's underground before they drill. "People are still finding geothermal reservoirs while drilling for something else," said Karl Gawell of the Geothermal Industry Association. "We're still trying to find out what's there." Even with enhanced geothermal systems, developers need to know the depth, temperature, and permeability of underground heat stores.

Plenty of solutions are underway. Google, which has invested more than $1 billion in renewable energy and clean technologies, announced a $10.25 million EGS program in 2008 that included nearly $500,000 for a detailed mapping project. (Dan Reicher, Director of Climate and Energy Initiatives for, called enhanced geothermal systems at the time "the 'killer app' of the energy world.") Google's partner, Texas' Southern Methodist University, used the money to develop a detailed online map that breaks down the nation's geothermal resource by state and places its ultimate value at nearly 3,000 gigawatts, four times higher than any previous estimate.

Other mapping projects are being undertaken by both the National Renewable Energy Lab and the United States Geological Survey, whose current maps cover only the western half of the country. The Department of Energy also is investing in remote-sensing technologies that will permit developers to view rock formations miles into the earth's crust.

Yet price alone doesn't tell the entire story of geothermal's economics. After all, throughout the solar explosion of the last few years, solar technology has remained one of the most expensive forms of energy available. Prices of photovoltaics have plunged, but they're still roughly three times those of coal and natural gas. The difference has been government incentives, said Bill Glassley and Elise Brown of the California Geothermal Energy Collaborative, based at UC Davis.

The same production tax credits and cash grants from the federal government that jump-started the solar and wind industries in 2009 and 2010 had a far smaller impact on geothermal because they do little to defray its up-front costs. "Roughly half of the total project costs for a geothermal plant are in the exploration and drilling phase, which makes financing difficult and suggests that perhaps a different set of incentives would make sense," Glassley said. The incentives would also need to be maintained over the long-term, due to geothermal's extended development time line. The current batch expires at the end of 2013, not nearly enough time to get any new projects off the ground — effectively rendering them useless.

With mapping, remote sensing, and effective incentives in place, the industry would be poised to take off. New technologies and equipment would grow more reliable and efficient, further driving down costs. It's a clear path to success, but one that many onlookers will believe only when they see it. "You're talking about a technology that is still being developed," said Dave Hamilton, Director for Clean Energy in the Sierra Club's Beyond Coal Campaign. "We regard it with a lot of potential, but there's a lot of unanswered questions."

That reticence is shared by many within the industry. "Most people think that EGS can be oversold," Gawell said. "They have a reaction to people who are very outspoken about it. Most people in the geothermal business will tell you that this is not an easy business to be in.


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