Discovery Guides Areas


Geothermal Energy: Drilling Beneath the Surface of Our Energy Dilemma
(Released September 2009)

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  by Ethan Goffman  


Key Citations






Like most kinds of renewable electricity, Geothermal has a large up-front price; drilling a well is estimated to cost $1 to $4 million (Watson) or around "$2500 per installed kW in the U.S." (US DOE Geothermal). Cost does vary greatly, depending on geological and other conditions. Once installed, geothermal provides extremely inexpensive power over a long timeframe. As no fossil fuels are extracted or transported, geothermal operation and maintenance costs only $.01 to $.03 per Kilowatt Hour (kWh) (US DOE Geothermal). While the up front cost of a geothermal plant is higher than a natural gas plant, over time the costs are similar.

steamy landscape
The Earth's heat escapes as steam at a hot springs in Nevada.
Indeed, "natural gas construction costs account for only one third of the total price of the facility, while the cost of the fuel at a natural gas facility represents two thirds of the cost" (Geothermal 101). The U.S. Department of energy provides an extremely low estimate for a plant built with today's technology: about 5 cents per kWh (US DOE Geothermal). Another estimate puts the price far lower: 3.6 cents per kWh, compared to 5.5 for coal and 5.2 for natural gas (Mims). This particular study, however factors in the savings due to tax incentives, about 1.9 cents for geothermal energy (Ibid). Technology and experience continue to bring down costs. Indeed, since 1980 costs have fallen faster than coal, while the cost of natural gas has increased (Geothermal 101). Along with wind, geothermal is one of the few alternative energies that can compete with fossil fuels without subsidies, and geothermal is more dependable than wind.

One factor unique to geothermal is the potential to partner with conventional fossil fuels, specifically the oil industry, known as co-production. Drilling for oil wells often results in striking pockets of hot water, traditionally a nuisance for the oil industry (Dorreen). With geothermal technology, this heat can be put to good use. Currently, the U.S. Department of Energy has "two geothermal co-production demonstrations . . . at the Rocky Mountain Oil Test Center in Wyoming and the Jay oil field in Florida" (Geothermal 101).

U.S. Picture

The United States is, and has long been, the foremost producer of geothermal electricity, generating "approximately 30 percent of the world total" 14,885 gigawatt-hours (GWh) in 2007, enough to power about 2.4 million California households (Geothermal 101). Geothermal energy accounts for some 4% of U.S. renewable electricity, still a small number. The U.S. Department of Energy places geothermal energy "third among renewables, following hydroelectricity and biomass, and ahead of solar and wind" (Blair). Future potential is great, however; a 2006 National Renewable Energy Laboratory (NREL) report estimates "that by 2025 more than 100,000 MW of geothermal power could be in production, with direct use and heat pumps adding another 70,000 MW of thermal energy" (Geothermal 101). For electrical generation, this power is mostly available in Western states. In March 2008, geothermal electric power generation was limited to eight states: Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Utah and Wyoming (Slack).

U.S. map
Interactive Geothermal Projects & Resources Map

As with other forms of renewable energy, geothermal has historically been dependent upon government policy due to the need to compete with established energy. Growth was tremendous from 1978 to 1992 under the Public Utility Regulatory Policies Act (PURPA), explains Karl Gawell, Executive Director of the Geothermal Energy Association. That federal law requires use of renewable energy from independent sources where it is competitive, but lost much of its effect following 1993 changes, leading to a stagnant period for geothermal. In more recent years, Renewable Portfolio Standards (RPS) at the state level, notably in California, have influenced renewable energy far more. However, while PURPA basically pitted renewables against conventional energy, RPS initiatives lead renewables to compete with each other, according to Gawell. A credit for wind power in the late 1990s led to a boom in that resource. In 2004 and 2005 RPS legislation was extended to other renewables, boosting geothermal. "The growth curve over the last two years has gone back up," explains Gawell, who foresees "a return to the boom era of the 1980s, in the range of 20 to 30% annual growth." An additional advantage for geothermal is that many resources are located near existing power lines, unlike wind and solar thermal (Gawell).

Geothermal also provides local jobs, in the U.S. employing approximately 25,000 people in 2008 (Geothermal 101). While this is a relatively small number, future potential is far greater. The Western Governors Association (WGA) estimates that near-term development "of 5,600 MW of geothermal energy would result in the creation of almost 100,000 jobs" (Geothermal 101). Another advantage is that "most producible geothermal resources are located in rural areas, which tend to suffer from economic depression and high unemployment" (Geothermal 101). If technology advances and geothermal continues to expand, eventual job creation could be far greater.

Global Picture

Karl Gawell believes that geothermal growth potential is tremendous, that "the geothermal industry is a lot like the oil industry of the 19th century." Around 1917, many believed that the world had run out of oil, but new techniques allowed the discovery of enormous new reserves. Gawell believes the same will happen with geothermal.

On a global level, hard numbers for geothermal resources are difficult to come by, as recent studies are lacking (Geothermal 101). According to a 1999 report, "geothermal resources using existing technology have the potential to support between 35,448 and 72,392 MW of worldwide electrical generation capacity." With enhanced technology the potential is for "as much as 1,089 billion kWh of electricity annually" (Geothermal 101). So far, however, only a few countries are generating any geothermal electricity whatsoever. As of 2000, 24 countries produced geothermal power, with as many as 46 estimated to do so by 2010 (Gawell & Greenberg).

Go To Conclusion: Comparative Renewables

Special thanks to the Geothermal Energy Association for their help with this Discovery Guide

© 2009, ProQuest LLC. All rights reserved.

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