Geothermal energy next-generation technology is gaining ground in the western United States as states seek to reduce financial risks that are hindering new investments.
Unlike conventional geothermal power plants, new technologies allow the use of hot rock formations in locations where traditional geothermal resources are unavailable. This could significantly expand the areas capable of generating electricity from geothermal heat.
Currently, the United States has around 4 GW of geothermal capacity, but new technologies could raise that potential to hundreds of gigawatts, according to information gathered by Canary Media from a Clean Air Task Force report.
Capital is one of the main obstacles for geothermal energy
On the other hand, developing these projects requires considerable investment before electricity sales can begin. Initial drilling costs are high, and investors must wait for extended periods to see returns. Added to this is the uncertainty surrounding the performance of geothermal resources and the time required to obtain permits.
Ann Garth the policy officer for superheated rock geothermal energy at the Clean Air Task Force warns that the combination of these factors complicates access to the capital needed to build commercial projects. Therefore, Western countries are using different tools to reduce the risk. These include direct investments, regulatory changes, exploration incentives, and measures aimed at creating demand for geothermal electricity.
California geothermal energy promotes new contracts
In this scenario, California has become one of the most important markets for the geothermal energy american. In 2021, the California Public Utilities Commission ordered electric companies to incorporate at least 1 GW of firm, clean resources to support their climate goals and maintain grid reliability.
The decision favored the contracting of geothermal generation through power purchase agreements. One of the beneficiaries is Cape Station the Fervo Energy project in Utah. Southern California Edison agreed to purchase 320 MW of electricity from this facility, which is designed to reach 500 MW of capacity. California already has approximately 2.9 GW of installed conventional geothermal capacity, the largest amount in the country.
Colorado and New Mexico are betting on new projects
While California boasts a robust energy industry, Colorado is seeking to develop its first geothermal power plants. The state legislature passed a bipartisan initiative requiring private electric utilities to solicit proposals for projects exceeding 25 MW, as well as for smaller installations.
In addition, Colorado awarded $494,000 to Fervo Energy to study the geothermal potential of two regions. New Mexico is pursuing a different strategy; the state is using its sovereign wealth fund, financed by oil and gas royalties, to support the commercial deployment of new technologies. Among the initiatives supported is a closed-loop geothermal system of 150 MW developed by XGS Energy together with Meta.
Geological data can also accelerate projects
Before drilling, developers need to know the composition of the rock formations and the temperatures at different depths. Much of this information already exists due to decades of activity oil and gas the problem is that the files can be difficult to access.
Therefore, several states are digitizing geological records. Arizona allocated $1 million to integrate historical subsurface information with new data, while Washington passed legislation to create a public database of geological information and support programs for exploratory drilling. These tools can reduce some of the uncertainty during the early stages of a geothermal project.
Permits and transmission continue to limit expansion
In addition to financing, permitting times pose another risk for developers; each delay prolongs the period before revenue generation begins and increases costs. Nevada has experience in this area. Since 2008, state agencies have maintained an agreement aimed at clarifying regulatory responsibilities regarding the drilling and operation of geothermal wells.
The state has 892 MW of conventional geothermal capacity, there, Fervo Energy is also developing an enhanced 115 MW geothermal system in conjunction with Google however, there is a challenge that transcends the individual capabilities of each state where electricity transmission is involved. Many areas with good geothermal resources are far from major consumption centers. Connecting them will require new power lines and long-term regional planning.
The development of the advanced geothermal energy it will depend on a combination of investment, more predictable permits, accessible geological information, electricity demand, and transmission capacity. The experiences of Western countries show different ways to reduce these risks and bring more projects from exploration to commercial operation.
Source: Canary Media
Photo: Shutterstock
