It’s … time to frack and drill?
Solar and wind get all the love. At least, I can imagine it might seem like that if you don’t spend most of your working week covering climate tech and following a diverse mix of folks.
There are many other renewable energy resources, however. A question I often ask myself as a result is … how are they doing? It’s good to check up on all of your friends.
Here’s a fun tidbit. Hydropower still provides more clean energy than solar and wind combined. By a solid margin. It has for decades. Someday this decade that might change, but it could take longer than that.
That said, many of the top sites for hydroelectric dams have already been developed. Some new hydroelectric dams are being built (China is often involved in financing the infrastructure in some way), but growth rates in the industry pale in comparison to other resources like solar.
Other renewable energy sources, like tidal energy, continue to get a look but aren’t making a huge splash either. Building things in the ocean is hard. As an aside, maybe the sector should rebrand as moon energy! I know a number of astronomy-inclined Brooklyn-esque folks who would get behind that.
I digress. There’s one resource poised to prove the exception to the rule, i.e., to break renewables not named solar and wind out of their rut – geothermal.
There are lots of reasons to love geothermal. Beyond the fact that it is renewable (there’s an inexhaustible wellspring of heat beneath our feet), it’s also constant unlike variable sunshine and wind.
Solar and wind are great for what they are. But the power grid of the 20th century was designed around relatively constant assets and power generation facilities. At least ones capable of providing constant power. If geothermal energy projects can mimic the dispatchability and reliability of fossil fuels, they’ll have a leg up on variable renewable energy resources. And, as we’ll explore, this doesn’t have to be a competitive dynamic; geothermal can ideally help accelerate solar and wind deployment, too.
♨️ Giddy up, geothermal
As I’ve paid closer attention this year, momentum is coalescing for geothermal firms. This week alone, we’ve seen a raft of announcements for developers across a few markets:
- Eavor, based out of Houston, received ~$96M in grant financing from the EU Innovation Fund to develop a geothermal energy project in Germany (Munich, specifically).
- Geothermal Engineering raised £15M to develop and operate geothermal plants in the U.K.
- XGS Energy raised $14M in Series A funding for its closed-loop well architecture that helps geothermal developers harvest geothermal energy.
At their core, all these companies are involved in some way in efforts to harness geothermal energy in more places, including ones not known for the abundance of their geothermal resources. Neither the U.K. nor Germany generates much electricity from geothermal, even though both are keenly focused on their clean energy transitions.
To date, geothermal energy generation has been closely coupled with where higher temperatures sit closer to the surface. In countries endowed with easily accessible geothermal resources, like Kenya and Iceland, geothermal energy already provides a lot of power. And most geothermal power plants in the U.S. are in western states, especially in California, tracking higher near-surface temperatures.
To develop geothermal elsewhere, companies need to work harder to tap it. But that doesn’t mean folks are discouraged. Some of the same technological advances that made fracking for natural gas and oil possible have gotten firms excited about “enhanced” or “advanced” geothermal, i.e., leveraging the same or similar hydraulic fracking techniques to access geothermal heat more places.
It’s early innings still for enhanced geothermal projects. Hopefully many of them start coming in on time and on budget, which can’t always be said of other clean firm sources, like nuclear. To be sure, the costs of developing deep well for geothermal can be significant. As wells get deeper and more complex, efforts to contain and harness heat and pressure become more complex and cost-intensive, too.
Beyond what the track record of enhanced geothermal projects will look like in coming years, another question is whether geothermal can offer a flexible stream of energy, too. Fervo Energy, one of the best-funded companies in the geothermal industry, has been conducting experiments to prove whether their systems can not just generate energy, but also store it.
Most companies sign deals with Fervo to provide a relatively constant source of electricity. But more flexible offerings could help geothermal play nicely with other resources, like solar and wind. If that seems like a contortion to accommodate wind and solar versus just building more geothermal, keep in mind that building wind and solar is cheaper and easier than drilling deep into the Earth (for now), especially in a higher interest rate environment.
Geothermal’s time to shine is here. There are hints of fatigue with wind and solar, whether because turbine manufacturers are hemorrhaging money, balancing variable generation with demand is hard, or because renewable energy generation in places like Germany has left something to be desired.
The same goes for other clean, firm power sources, like nuclear. The debate between pro and anti-nuke people alone is enough to drive most folks out of the discussion. And even as the U.S. saw its first new reactor split atoms this week in many years, as we noted earlier, new reactors often come online only after significant delays and cost overruns.
If geothermal developers can execute well in coming months and years, the industry is in a perfect position to fill a void and become a robust and necessary complement to solar, wind, and the energy transition in general. It’s time to frack and drill! … just not for gas and oil.