Geothermal Power
World Geothermal Power Generation Nearing Eruption

By Jonathan G. Dorn
Earth Policy Institute
August 19, 2008

With fossil fuel prices escalating and countries searching for ways
to reduce oil dependence and greenhouse gas emissions, capturing the
earth’s heat for power generation is garnering new attention. First
begun in Larderello, Italy, in 1904, electricity generation using
geothermal energy is now taking place in 24 countries, 5 of which
use it to produce 15 percent or more of their total electricity. In
the first half of 2008, total world installed geothermal power
capacity passed 10,000 megawatts and now produces enough electricity
to meet the needs of 60 million people, roughly the population of
the United Kingdom. In 2010, capacity could increase to 13,500
megawatts across 46 countries—equivalent to 27 coal-fired power plants.

Originating from the earth’s core and from the decay of naturally
occurring isotopes such as those of uranium, thorium, and potassium,
the heat energy in the uppermost six miles of the planet’s crust is
vast—50,000 times greater than the energy content of all oil and
natural gas resources. Chile, Peru, Mexico, the United States,
Canada, Russia, China, Japan, the Philippines, Indonesia, and other
countries along the Ring of Fire (an area of high volcanic activity
encircling the basin of the Pacific Ocean) are rich in geothermal
energy. Another geothermal hot spot is the Great Rift Valley of
Africa, which includes such countries as Kenya and Ethiopia.
Worldwide, 39 countries with a cumulative population of over 750
million people have geothermal resources sufficient to meet all
their electricity needs. (See data.)

Typically, power generation using the earth’s heat required
underground pockets of high-temperature water or steam to drive a
steam turbine. Now, new technologies that use liquids with low
boiling points in closed-loop heat exchange systems allow
electricity to be generated at much lower temperatures. This
breakthrough is making geothermal power generation viable in
countries such as Germany that are not known for their geothermal
resources and is one reason why the number of countries using the
earth’s heat to generate electricity could almost double by 2010.

One advantage of geothermal power plants, beyond the benefit of
producing electricity from a low-carbon, indigenous energy source
with no fuel costs, is that they provide baseload power 24 hours a
day. Storage or backup-power is not required.

The United States leads the world in generating electricity from the
earth’s heat. As of August 2008, geothermal capacity in the United
States totaled nearly 2,960 megawatts across seven states—Alaska,
California, Hawaii, Idaho, Nevada, New Mexico, and Utah. California,
with 2,555 megawatts of installed capacity—more than any country in
the world—produces almost 5 percent of its electricity from
geothermal energy. Most of this capacity is installed in an area
called the Geysers, a geologically active region north of San Francisco.

Thanks to the Energy Policy Act of 2005, which made geothermal power
generation eligible to receive the federal renewable energy
production tax credit, electricity generated from geothermal
resources now costs the same as fossil-fuel-based electricity in
many markets in the western United States. With favorable economics,
the geothermal industry is experiencing a surge in activity. As of
August 2008, some 97 confirmed new geothermal power projects with up
to 4,000 megawatts of capacity were under development in 13 states,
with some 550 megawatts of this already in the construction phase.
Expected to create 7,000 permanent full-time jobs, the new capacity
will include numerous large-scale projects such as the 350-megawatt
and 245-megawatt projects by Vulcan Power near Salt Wells and
Aurora, Nevada; the 155-megawatt project by CalEnergy near the
Salton Sea in southern California; and the 120-megawatt project by
Davenport Power near the Newberry Volcano in Oregon.

Current development is only scratching the surface of what is
possible. The U.S. Department of Energy estimates that with emerging
low-temperature technologies, at least 260,000 megawatts of U.S.
geothermal resources could be developed. A study led by the
Massachusetts Institute of Technology indicates that an investment
of roughly $1 billion in geothermal research and development over 15
years (roughly the cost of a single new coal-fired power plant)
could lead to commercial deployment of 100,000 megawatts by 2050.

In Europe, the top countries in geothermal energy development are
Italy with 810 megawatts and Iceland with 420 megawatts. Italy is
expected to nearly double its installed capacity by 2020. Iceland,
with 27 percent of its electricity needs met by harnessing the
earth’s heat, is number one in the world in the share of its
electricity generated from geothermal energy. Germany, with only 8
megawatts of installed capacity, lags behind but is beginning to see
the effects of a feed-in tariff of €0.15 (US $0.23) per
kilowatt-hour that was implemented in 2004. Almost 150 plants are
now in the pipeline in Germany, with most of the activity centered in Bavaria.

Ten of the top 15 countries producing geothermal electricity are in
the developing world. The Philippines, which generates 23 percent of
its electricity from geothermal energy, is the world’s second
biggest producer behind the United States. The Philippines aims to
increase its installed geothermal capacity by 2013 by more than 60
percent, to 3,130 megawatts. Indonesia, the world’s third largest
producer, has even bigger plans, calling for 6,870 megawatts of new
geothermal capacity to be developed over the next 10 years—equal to
nearly 30 percent of its current electricity-generating capacity
from all sources. Pertamina, the Indonesian state petroleum company,
anticipates building most of this new capacity—adding its name to
the list of conventional energy companies that are beginning to
diversify into the renewable energy market.

The geothermal development potential of the Great Rift Valley in
Africa is enormous. Kenya is the frontrunner in the effort to tap
this potential. In late June 2008, President Mwai Kibaki announced a
plan to install some 1,700 megawatts of new geothermal capacity
within 10 years—13 times greater than the current capacity and
one-and-a-half times greater than the country’s total electricity
generating capacity from all sources. Djibouti, aided by Reykjavik
Energy Invest’s commitment to provide $150 million for geothermal
energy projects in Africa, aims to tap the earth’s heat to produce
nearly all of its electricity within the next few years. Further
stimulating development is the African Rift Geothermal Development
Facility (ARGeo), an international organization partly funded by the
World Bank that seeks to increase the use of geothermal energy in
the Great Rift Valley by protecting investors from losses during
early stages of development.

Industry, which accounts for more than 30 percent of world energy
consumption, is also starting to turn to reliable, low-cost
geothermal energy. In Papua New Guinea, a 56-megawatt geothermal
power station owned by Lihir Gold Limited, a leading global gold
company, meets 75 percent of corporate power demand at a notably
lower cost than oil-fired power generation. In Iceland, five
geothermal power plants planned near Reykjavik, which are slated to
have a total capacity of 225 megawatts when completed in 2012, will
provide electricity to new aluminum refineries.

Despite development potential measured in the hundreds of thousands
of megawatts, tapping this renewable source of power is still in its
infancy. But as more and more national leaders begin to see
renewable energy as a cost-effective, low-carbon alternative to
price-volatile, carbon-intensive fossil fuels, geothermal power
generation is expected to move rapidly from marginal to mainstream.


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