One of the oldest forms of clean power is ready for a comeback — and it’s not wind or solar.
Geothermal energy — the technology that harnesses the heat beneath the Earth’s crust — is drawing fresh interest after lawmakers boosted funding flows for it in the bipartisan infrastructure law and Inflation Reduction Act, dovetailing with advances in technology, new state incentives and interest from the oil drilling sector.
While the next generation of geothermal projects are still in the early stages of development, advocates say the underground energy source has the potential to supply more than 60 gigawatts of firm, flexible power by 2050 — a more than 15-fold jump from the 3.7 GW of capacity it now has in the United States.
“It just really seems as though geothermal has an upward trajectory at the moment, in terms of innovation, funding, interest at all levels of business, but also the government,” Blake added.
The Biden administration is pushing oil and gas companies to take a serious look at incorporating geothermal projects into their business plans. At a December meeting of the National Petroleum Council, Energy Secretary Jennifer Granholm described geothermal as a favorite topic of hers.
“That’s kind of irresistible when you consider the skills set and the know-how that this industry already has in extracting energy from the subsurface,” Granholm told the gathering of oil companies executives, which included Exxon CEO and Chair Darren Woods. “I know you manage [carbon] molecules, but you can manage a lot of things. Think: You drill holes, too. You go beneath the surface, you know where things are. And fracking really opens up a huge opportunity for enhanced geothermal.”
Like its name suggests, geothermal refers to the heat energy from below the Earth’s surface. It relies on tapping into reservoirs of hot water that are brought to the surface to generate electricity and for heating and cooling. Most of the United States’ reservoirs are located in the West, but the emergence of potential new technology could also expand its use.
Companies that invest in geothermal projects and meet prevailing wage requirements would be eligible for a 30 percent tax credit under the Inflation Reduction Act, with an additional 10 percent applied if the project meets domestic content requirements or is located in an energy community, which include areas where a coal mine has closed or that have been economically reliant on fossil fuel extraction and processing.
The bipartisan infrastructure law authorized $84 million for four enhanced geothermal systems demonstration projects — applications for which are expected to open early next year. The Energy Department has also set a target to cut the cost of enhanced geothermal systems — which could enhance existing reservoirs or create new ones — by 90 percent by 2035. And it’s examining the geothermal energy and heat production potential from abandoned oil and gas wells.
“Over the last 15 years, huge numbers of wells have been drilled in the United States because of the shale revolution,” said Sarah Jewett, head of strategy at Fervo Energy, a company that develops next-generation geothermal projects. “All of this technology has evolved and grown and that can be directly applied to geothermal power, but has just never needed to be applied.”
Companies already normally associated with oil and gas drilling in the United States have started delving more deeply into geothermal projects. Baker Hughes, one of the largest drilling companies in the world, is expanding its geothermal business and has formed a partnership with Continental Resources and Chesapeake Energy — two giants in the independent oil and gas sector — to test whether they can profitably turn spent natural gas wells into geothermal facilities.
The increased interest stems from a number of carrots and sticks, said Ajit Menon, Baker Hughes vice president of geothermal. While government subsidies help, there’s also a desire in the private sector to find ways to conform with new reliability regulations in California and elsewhere that are seeking carbon-free, baseload electricity that can be produced around the clock.
“The development today, both from a technology startup perspective and with strong interest and support from or at least potential support from institutions from the government, it’s probably the most exciting time I’ve seen for geothermal in a long time,” Menon said.
Geothermal development may also benefit from the know-how and data that oil and drilling companies have already accumulated over the past decade. The industry already possesses maps of existing geothermal hot spots, and engineering advances hold the potential to make even “dry” geothermal wells — those that have heat but no fluid — profitable in the future.
Oil and gas giant Chevron Corp. signed a partnership in December for its Chevron New Energies business to partner with Sweden’s Baseload Capital to develop a new generation of geothermal development technologies, including a project in Weepah Hills mountains in Nevada.
“If you look at geothermal, we’re leveraging some of Chevron’s core capabilities,” said Barbara Harrison, vice president of offsets and emerging technology at Chevron New Energies. “That’s why we’re looking at geothermal to be able to support our operations versus some other more traditional renewable energy resources.”
Still, the technology faces its own challenges beyond the technical barriers like the need for better exploration technologies. Among them, are permitting obstacles and comparatively higher costs than traditional renewable energy sources, like wind and solar.
