Geothermal energy poised for boom, as U.S. looks to follow Iceland’s lead

The small island nation of Iceland is known among environmentalists for its low greenhouse emissions — per capita, roughly one-third of those of the United States — thanks in part to its reliance on clean, geothermal energy derived from the more than 30 active volcanic systems that also power its famous hot springs.

Yet, in terms of total geothermal energy output, the U.S. is actually the world’s single biggest generator of geothermal energy — and some experts believe further development of that sector, including digging deep into the Earth, could reduce American emissions and help avert catastrophic climate change.

“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,” Kelly Blake, president of the board of directors at Geothermal Rising, a geothermal-focused trade association, told Politico earlier this week.

“We’re kind of on the cusp of moving into the cost-effective range [for geothermal], just like we did with solar, over the next 20 years,” Roland Horne, a professor of earth sciences at Stanford University, told Yahoo News.

At present, geothermal energy, which is derived by using steam heat from underground to generate power, accounts for less than 1% of the U.S. electricity portfolio. Unlike wind and solar energy, which do not produce as much energy in certain conditions, geothermal energy is much more constant. Yet the cost of tapping it can be expensive in places that require extensive digging. In 2021, a megawatt hour of electricity generated by geothermal cost an average of $3,991 in G20 countries, compared to $857 for utility-scale solar power and $1,325 for on-shore wind.

Recent technological advances, such as “enhanced geothermal systems,” also known as EGS in the industry jargon, may solve that problem, however. Traditionally, geothermal has only been economical in places like Iceland, where heat and water are close to the Earth’s surface. In an EGS, much as in a fracking well, fluid is injected deep underground, causing fractures to open in the rock, which allows hot fluid to rise from far below.

That’s why in June, the U.S. Department of Energy (DOE) announced a $165 million investment in geothermal energy research and deployment, and the 2021 bipartisan infrastructure law included $84 million for research into enhanced geothermal demonstration projects.

The private sector is also taking tentative steps into geothermal energy. A slew of geothermal energy startups have each raised millions of dollars in capital. Last month, the oil and gas giant Chevron partnered its Chevron New Energies with Sweden’s Baseload Capital to develop geothermal projects in the United States. In 2021, Chevron and BP invested $40 million in Eavor Technologies, a Canadian geothermal energy company. In November of that year, Hawaiian Electric, the Aloha State’s energy utility, unveiled a plan to increase its geothermal generation capacity to help meet its goal of a 70% reduction in greenhouse gas emissions by 2030.

“It’s like solar: If you look at solar 20 years ago, nobody’s interested in solar because it costs too much. But as solar has grown, the cost has come down as it’s improved in scale,” Horne said.

“It’s unbelievable how geothermal has gone under the radar,” Iceland’s environment minister, Gudlaugur Thór Thórdarson, told Yahoo News. Iceland’s use of geothermal for heating and a mix of geothermal and hydropower for electricity has given it uninterrupted access to affordable heat and power, insulating its economy from the natural gas price shocks being felt by the rest of Europe since Russia’s invasion of Ukraine.

“Now, when you see the bills [in] electricity and the gas prices go up everywhere — at least, around us — it doesn’t affect us,” he said.

“This can be done all around the world,” Thórdarson added. “You don't need to be the most active volcanic island in the world to use geothermal.”

In January 2022, a Danish company signed an agreement to develop the largest geothermal heating plant in the European Union, and Icelandic companies are currently developing geothermal heating and energy projects in other countries. Under a partnership between Iceland’s Orka Energy Holding Ehf and China’s state oil and gas company Sinopec, the 390,000-person Chinese county of Xiong is being converted to rely solely on geothermal for residential heating.

Wells roughly 1,500 to 1,900 meters (4,900 to 6,200 feet) deep bring up water at 70 degrees Celsius (158 degrees Fahrenheit) that is used to heat homes. In an area where families previously burned coal for heat, the result has been a dramatic cut in carbon emissions and conventional air pollutants like smog. Orka and the Icelandic firm Mannvit are also building power plants that will produce electricity from geothermal in countries including Slovenia and Hungary.

“And we can do it in a lot of other places,” Thórdarson said. “It’s not very complicated. It’s just drilling for hot water.”

Geothermal accounts for 6% of the electricity produced in California and 10% in Nevada. Hawaii, Utah, Oregon and Idaho have geothermal plants as well. Like Iceland, where 27% of the electricity and heating in 90% of homes comes from geothermal, these western states have volcanic activity that brings heat close to the Earth’s surface. That makes geothermal more economically viable than in the eastern half of the U.S., where heat tends to be buried deeper underground.

“The reason we have [geothermal] in the western states, and the reason they have it in Iceland, is basically geological advantage,” Horne said. “If you go to New York state, you don’t find that sort of recent volcanic activity, so to get to higher temperatures, you’ve got to drill a lot deeper, and that, of course, is expensive.”

Skeptics of geothermal’s potential note the technological challenges to drilling deeper.

“You have to remove all the rock you’ve cut from the hole, which gets harder and harder as the hole gets deeper,” writes Alice Friedemann, author of “Life After Fossil Fuels: A Reality Check on Alternative Energy,” on her website, Energy Skeptic. “The deeper you go, the hotter it gets, and the more expensive the drilling equipment gets, using special metallurgy.”

Some energy companies hope to facilitate deeper drilling through EGS, which offers the possibility of a geothermal boom similar to the way fracking has transformed oil and gas extraction. The Department of Energy’s Geothermal Technologies Office, which supports EGS research and demonstration projects, calls EGS “the next frontier for renewable energy deployment.”

“There have been more than 40 projects worldwide of so-called ‘enhanced geothermal systems,’” Horne said. “There’s even been some commercial ones in Germany and France, but at the moment, the cost is higher than other resources, which is what’s held it back.”

Horne expects that over the next decade or so, increased research and development in EGS will bring the cost down enough to make geothermal energy economically competitive.

“[Geothermal] is sort of the unwanted stepchild of renewable energy,” Geoffrey Garrison, vice president and senior geochemist at AltaRock Energy, a geothermal energy company, told Yahoo News. “The marginal cost of electricity from geothermal is more than solar and wind. Solar’s gotten so cheap, and wind has gotten so cheap, that when the power utilities look to renewables, those are the ones they go to.”

Since wind and solar are intermittent power sources, they need to be complemented with “peaker plants,” which burn coal or gas to even out the ups and downs in solar or wind production. Geothermal doesn’t have that problem.

Garrison is working on making geothermal energy cost-competitive by finding cheaper ways of drilling deeper, where the heat is greater and would deliver more electricity production. Altarock is building a demonstration project at the Newberry Volcano in Oregon, to bring up water of more than 400 degrees Centigrade from 14,000 feet below ground. At 374 degrees Centigrade, water reaches a state known as “supercritical,” at which it flows with the ease of gas but carries the energy density of a liquid, so it would provide far more bang for the buck when piped to the surface.

“You couple that with the fact that, at the surface, power plants work much more efficiently at higher temperatures,” Garrison said. “So a power plant using an input of 400C is going to be twice as efficient as 200C water.”

Bringing up water that hot in states like New York would require going 20,000 to 30,000 feet below ground. So, with support from DOE, AltaRock is currently working in a laboratory with a company called Quaise Energy on using millimeter wave technology — essentially a heat ray — to vaporize rock.

Whether anything that futuristic pans out, experts and industry observers say the U.S. geothermal energy industry may be on the cusp of its own, fracking-like boom.

Still, even enhanced geothermal could be limited in scope. The DOE estimates that there is potentially 40 times as much economically viable geothermal capacity as is currently generated in the continental U.S. But if that were all developed, it would still represent only 10% of current U.S. electricity capacity.

Skeptics point out that enhanced geothermal systems will have plenty of technical obstacles. Friedemann’s list includes, among other things, water escaping into the rock cracks, the need for materials that can withstand incredibly high temperatures, and the fact that new techniques that work in one area may not apply everywhere, given the variability in geology around the country.

Then there are the potential political and economic roadblocks, such as objections of nearby residents who — like those who have sometimes blocked fracked gas wells — may worry about chemical exposure and earthquakes that could be triggered by injecting liquid into the Earth. There are also steep costs that utilities would have to bear, such as bringing transmission lines to the sites of future geothermal power plants and the fact that a water-intensive process may not be feasible in areas with water scarcity.

“The depth to be drilled down to is so deep that it is likely this technology will always be too expensive and use more energy to drill than obtained,” Friedemann concludes.

Nonetheless, oil and gas companies are increasingly interested. “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,” Politico recently reported.

It makes sense, geothermal industry leaders say, because oil and gas companies have the technology and know-how to drill deep below the ground.

“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 geothermal energy company that has raised over $177 million, told Politico. “All of this technology has evolved and grown, and that can be directly applied to geothermal power.”

That’s what Secretary of Energy Jennifer Granholm was thinking when she implored oil executives at a December meeting of the National Petroleum Council to pivot to geothermal energy.

“Think: You drill holes, too,” Granholm said. “You go beneath the surface, you know where things are. And fracking really opens up a huge opportunity for enhanced geothermal.”

As Granholm told Yahoo News in November 2021, “The Holy Grail is to identify clean baseload power.” The search for that Holy Grail is on.