Iceland's Glitnir Bank (OMX15: GLB, U.S. citizens cannot buy stock) which opened its first U.S. office in New York September 6, said it plans to invest $1 billion in U.S. geothermal energy projects over the next five years in order to exploit some of the $40 billion market that they predict will develop over the next 25 years.
An extensive U.S. Geothermal Energy Market Report has been prepared and published by Glitner to back up their investment decision.
I recommend saving a copy of this report if you have any interest in renewable energy, as it has extensive charts and graphs on the whole industry, perhaps with a bias toward geothermal, although I find it quite objective. It is quite current with data through May of this year. Although geothermal cannot meet nearly the potential of some other renewable sources, a 10-11% share of renewable technologies is much larger share than expected by some and a very worthwhile resource that is has quite mature technology. This does not include any implementation of enhanced geothermal systems (EGS) which, although not proven, offers the potential to allow the use of geothermal energy over a much wider geographical area.
The report’s main findings:
- The U.S. with total installed capacity of some 2,800 MW and annual electricity generation of approximately 16,000 GWh. It will continue to be at the forefront of the world’s geothermal development and currently has projects underway that, when completed, will boost U.S. installed capacity by a further 2,500 MW. Given an overall estimated resource base of up to 30,000 MW for hydrothermal, and an even greater potential for direct use of geothermal energy, the opportunities for the industry are tremendous. These figures do not include any exploitation of hot dry rock or deep geothermal/EGS.
- The biggest potential for geothermal energy applications in electricity production is in the Western States, primarily in California, Nevada, Idaho and Oregon. In California, geothermal could provide about 20 percent of today’s electricity needs. In Nevada this could be even 60 percent and 17 percent of the electricity in Idaho could come from geothermal.In Hawaii, the potential of geothermal power is particularly interesting, as it could provide around 30% of the islands’ electricity needs, decreasing the state’s dependence on fossil fuels. Most of the current development is taking place in Nevada and California.
- Glitnir estimates the investment requirement to service current projects to be some USD 9.5 billion. A total Investment of USD 16.9 billion will be required to develop available resources over the next 8 years with a further USD 22.5 billion during the following 10 years. We forecast that the total investment needed to develop the resources available is in the region of USD 39.4 billion until 2025.
- Sales of geothermal powered electricity could increase from currently USD 1.8 billion to USD 11.0 billion, without taking into consideration the vast opportunities for the development of geothermal direct use applications, e.g. geothermal heat pumps.
- The geothermal industry in the U.S. is still very fragmented, consisting of relatively few big companies and many small ones. Some of the smaller companies lack the financial strength to fully develop projects that in many cases could be profitable. Therefore Glitnir believes there will be considerable consolidation in the industry in the next few years.
- For successful development of the geothermal industry it will be necessary to increase the capacity of drilling equipment and related human resources. As the industry is recovering from a decline that took place in the late 1980s and is to some degree competing with the oil industry for human resources, it is crucial to train and educate people to work within the sector.
A summary of the advantages of geothermal as claimed by Glitner:
- Base-load power (capacity factor)¹
- 24 hours a day (e.g. wind powered energy requires more than double the installed capacity of geothermal power to supply electricity to the same number of households)
- Availability of electricity throughout peak hours
- Dispatchable- capable of being shut-down/ turned on if needed
- Pollution Prevention
- Geothermal power plant emits 35 times less carbon dioxide (CO2) than the average U.S. coal power plant per kilowatt of electricity produced (NREL)
- Geothermal plants’ cooling towers emit mostly water vapor and do not emit particulates, hydrogen sulfide or nitrogen oxides.
- Land use
- Geothermal uses by far the least land for electricity production per billion kWh than all other renewables.
- Social Economics²
- National security advantage of having a resource on one’s own soil
- No dependence on outside factors, such as oil prices, weather etc.
- Potential for rural development around power plants
- There is far greater job creation potential within the geothermal industry than within other renewable energy sectors
- Electricity costs − USD 0.05-0.08/ kWh
- Way below solar and other renewables
- Direct use/ Energy & Fuel Cost Savings
- Extensive savings on fuel costs through geothermal (up to 5-8 percent of operating cost, DOE)
(1) See also: NREL, at: http://www.nrel.gov/analysis/power_databook/docs/pdf/db_chapter12_2.pdf,
(2) See also a detailed analysis by GEA, “Kagel, A. – Socioeconomics and Geothermal Energy”, at: http://www.geo-energy.org/publications/power%20points/SocioeconomicsKagel.ppt
The following charts show their assessment of the market share of various energy sources, with geothermal representing 9.4% of renewable energy, which they peg at 2.7% of total energy, excluding large hydroelectric.