TOPIC #5
Geothermal Energy
A familiar technology garners new interest.
New Technologies and Techniques Spur Interest and Possible Growth of Geothermal Generation
Conventional geothermal power—also known as hydrothermal—extracts thermal energy from the Earth’s crust to generate electricity. This renewable resource is dependent on specific subsurface conditions. Current technologies require both sufficiently hot rocks and natural occurring fractures that allow fluid to flow through at relatively high rates (see Figure 5.1).
A key advantage of geothermal is stable output, allowing the renewable resource to provide baseload energy. However, naturally occurring geothermal resources exist in niche locations and are difficult to identify in the absence of certain geological features on surface (e.g., geyser or hot spring).
The reliance on these naturally occurring geological features constrains the development of geothermal power. There are 93 geothermal power plants—totaling 3.7 GW of capacity—located in seven states: California, Nevada, Oregon, Idaho, Utah, New Mexico, and Hawaii.
However, new technologies and techniques are spurring the development of “next-generation geothermal.” If successful, next-generation geothermal could expand the available geothermal resource and add an important clean, firm renewable resource to the ongoing energy transition.
Figure 5.1: Three Types of Geothermal Power Plant Technologies
Source: DOE
KEY TAKEAWAYS
The term “next-generation geothermal” refers to new approaches that leverage tools and techniques developed in the oil and gas sector to develop enhanced geothermal systems or closed-looped systems.
The emerging industry has shown rapid technical improvements at both government and private sector demonstration sites. Fervo Energy is now building and secured offtakers for a 400 MW utility-scale commercial project.
The DOE estimates that overcoming technology and market challenges could lead to 90 GW of next-generation geothermal being deployed by 2050—a more than 20-fold increase over the 3.7 GW of conventional geothermal operating today.
The term “next-generation geothermal” refers to new approaches that leverage tools and techniques developed in the oil and gas sector to develop enhanced geothermal systems or closed-looped systems.
The emerging industry has shown rapid technical improvements at both government and private sector demonstration sites. Fervo Energy is now building and secured offtakers for a 400 MW utility-scale commercial project.
The DOE estimates that overcoming technology and market challenges could lead to 90 GW of next-generation geothermal being deployed by 2050—a more than 20-fold increase over the 3.7 GW of conventional geothermal operating today.
Next-Generation Geothermal Expands Resource Availability
In simple terms, next-generation geothermal uses modern technologies to create a fluid reservoir in ubiquitous hot rocks. Once heated, the fluids drive turbines to generate electricity or, in some cases, provide district heating (i.e., distributing heat through a series of insulated pipes to multiple residential or commercial buildings).
Two types of next-generation geothermal technologies are under development: enhanced geothermal systems (EGS) and closed-loop systems (see Figure 5.2).
- EGS use commercial bidirectional drilling and hydraulic fracturing to pump fluids through an artificial reservoir.
- Closed-loop systems or “advanced geothermal systems” consist of large, artificial, closed-loop circuits in which a working fluid is circulated and heated by subsurface rocks through conductive heat transfer.
Based on DOE estimates, next-generation geothermal technologies expand the technical resource potential in the United States from 40 GW to 5,000 GW (see Figure 5.3). Technical resource potential considers system performance, topographic, environmental, and land-use constraints but does not consider economics.
With greater resource availability, the DOE estimates 90 GW of next-generation geothermal could be deployed by 2050. Under certain market conditions, such as limited land available for other renewables, deployments could reach 300 GW.
While much of the resource would remain concentrated in western states due to underlying geography, there could be deployment opportunities in midwestern and eastern U.S. states over time (see Figure 5.4).
Figure 5.2: Comparison of Conventional and Next-Generation Geothermal Technologies
Source: DOE
Figure 5.3: Next-Generation Geothermal Resource Estimates
Source: DOE
Figure 5.4: Potential Geographic Extent of Next-Generation Geothermal Deployment Over Time
Source: DOE
DOE Investments Have Been Critical in Fostering Technology Development
Beginning in 2014, the DOE began researching how oil and gas techniques could be used for next-generation geothermal. The effort resulted in the establishment of the Utah Frontier Observatory for Research in Geothermal Energy (FORGE) in 2018.
Utah FORGE functions as a field laboratory to demonstrate the viability of next-generation geothermal technologies. In particular, it allows tools and techniques to be developed and tested at higher working temperatures than what is typically found in oil and gas operations.
The research conducted at Utah FORGE has spanned innovative drilling techniques, reservoir stimulation technologies (i.e., enhancing a reservoir to increase its energy productivity), and well connectivity and flow testing.
Fervo Energy Building Commercial Facility
With a focus on EGS technologies, Fervo Energy may be the most prominent geothermal start-up company. Notable accomplishments include a successful pilot project and the start of drilling at a utility-scale commercial project.
In 2021, Fervo Energy signed an agreement with Google to develop next-generation geothermal. In 2023, the company began supplying power to Google data centers from the 3.5 MW Project Red facility in Nevada.
The company has since moved to drilling wells at the 400 MW Cape Station in Utah. As of July 2024, the company had contracted 320 MW of power to Southern California Edison and 53 MW of power to California community choice aggregators.
Beyond Fervo Energy, multiple geothermal start-up companies have recently raised funding to deploy demonstration projects, including closed-loop projects (see Figure 5.5).
Technology Advancements, But Challenges Remain
Data from public and private sector demonstrations show significant improvements in drilling times and costs (see Figure 5.6):
- Utah FORGE improved drilling speeds by more than 500% in three years, resulting in well development costs decreasing from $12 million to under $5 million per well.
- Fervo Energy demonstrated a 300% increase in drilling rate, which lowered drilling costs from $9.5 million to $4.8 million over six wells in six months.
- The DOE estimates overnight capital costs have recently declined nearly 50%—dropping from $27,800 per kW in 2021 to ~$14,700 per kW in 2023.
Despite these advancements, next-generation geothermal must overcome multiple challenges before achieving wider deployment. In particular, the DOE highlights five distinct challenges facing the technology:
- High up-front costs
- Perceived and actual operability risks for deployment
- Long and unpredictable development life cycles
- Existing business models
- Community opposition
Addressing these challenges will require multiple solutions, which may range from power purchase agreements that value clean, firm power to enhanced business models that provide heat to offtakers (see Figure 5.7).
The solutions outlined by the DOE align with the “Enhanced Geothermal Shot,” an effort to reduce the cost of EGS by 90% to $45/MWh by 2035.
Figure 5.6: Next-Generation Geothermal Learning Curves
Source: DOE
Source: Fervo Energy
IMPLICATIONS
Conventional geothermal power is constrained to naturally occurring geological features. Next-generation geothermal technologies could vastly expand the availability of geothermal for power generation in the United States.
A major appeal of next-generation geothermal power is the ability to provide clean, firm renewable energy. Government-funded R&D and start-up companies are showing early successes, but many hurdles remain before the technology can scale more broadly. Over the long term, next-generation geothermal could play an important role in the energy transition.
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