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Whether it stems from the burning of fossil fuels or the decay of radioactive rocks, heat is what drives most modern base-load electricity generation. Most of the ways we humans have of generating enough heat to power our factories, offices, and homes have unintended side-effects: pollution, greenhouse gases, nuclear wastes, not to mention the tremendous cost of exploring and extracting fuel sources from the earth. All these effects occur because we generate the heat ourselves, tossing millions of tons of coal into furnaces; if we were able to find an external, natural, continuous heat source, however, we might be able to evade such problems. Our planet offers us a solution from deep beneath its crust. The same heat that melts rock into the magma that spews out of volcanoes can be harnessed to spin turbines and generate clean, continuous electricity with few, if any, side-effects. What's more, once the generators that tap this energy are built, there is no more need for costly exploration and mining to obtain fuel, as is necessary with current base-load sources. Traditional geothermal energy requires "geothermal resources" - underground reserves of water that is hotter than 300º F. Not every part of the planet has such reserves; usually, they can be found in regions where there is volcanic activity, or where two tectonic plates meet. This is why places like Indonesia and the Philippines, which are situated on the Pacific "Ring of Fire", or California, with its myriad fault lines and hot springs, are such strong markets for geothermal technology.
[edit] Who Wins from Increased Geothermal Demand
[edit] Who Loses from Increased Geothermal Demand
and you are like totally weird [edit] Economics of GeothermalAs the price of oil, coal and natural gas continues to rise, power sources without the need for commodity fuels look more and more attractive. Geothermal uses hot water from the earth, which is free and is reinjected into the ground to be sustainable, and maintenance costs only run $0.01 - $0.03 per kWh[1]. With coal, the traditional source of base-load power in the U.S., costing $0.02 - $0.03 per kWh[2] and rising, the ongoing cost of geothermal energy is increasingly appealing.  Startup costs are one of two issues that hold geothermal energy back in the marketplace: your average geothermal plant costs $2500 per kilowatt installed[3], versus $1200 - $1600 per kilowatt installed for a natural gas plant[4]. Geothermal is similar to such capital-intensive alternative energies as nuclear energy, which can average up to $3000 per kilowatt installed, and solar power, which averages $8,000 per kilowatt installed[5]. Despite the fact that geothermal exceeds a traditional natural gas or coal plant's installation costs by $1000 per kilowatt hour, it is one of the cheaper forms of renewable energy. The second problem with geothermal as a major source of power is that it is limited in scope. Currently, most geothermal technologies require the use of underground water, which cannot be found everywhere. Though some "direct-use" technologies exist which allow the earth's heat to generate electricity, thereby expanding the regional functionality of geothermal almost limitlessly, these technologies have not been fully adopted yet because of cost limitations. Furthermore, the previously stated installation costs don't take into account the preliminary cost of geologic exploration and drilling for underground resources - costs which vary based on the current market for oilfield services. In an environment with high oil prices, increased demand for drilling pushes dayrates up for drilling companies like Nabors Industries (NBR), increasing the overall cost of installation. As long as the technology for geothermal energy requires liquid geothermal resources, it will require costly exploration and be limited to geologically active regions like the Pacific "Ring of Fire" and the Western United States. [edit] Drivers of Geothermal[edit] Renewable Energy DemandShifts in energy demand are a major driver for the geothermal market; increasing demand for alternatives to oil, coal, natural gas, and other fossil fuels have the potential to cause a paradigm shift for the renewable energy industry as a whole, and geothermal has strong potential to ride the wave. Two major drivers of this shift, climate change and peak oil, are becoming increasingly important in the eye of the public. [edit] Climate ChangeWith Al Gore and the IPCC winning the Nobel Peace Prize in 2007 for their work spreading awareness about climate change, more people than ever are aware of global warming and its potential effects, and fear of the repercussions of a carbon-based energy scheme is driving consumer demand for alternatives like geothermal, which releases little to no greenhouse gas. [edit] Peak Oil and Energy IndependenceOil prices are at record highs and it is becoming more and more difficult to find reserves; at the same time, emerging markets are driving increased energy demand, driving up the price of traditionally cheap and abundant fuels like coal. Many suspect that we have reached or will soon reach peak oil, a condition that will drive energy prices through the roof. Furthermore, a large part of the world oil supply can be found in politically turbulent countries that are rife with terrorism; with OPEC dominating the world oil supply (and, therefore, prices), many countries desire energy alternatives in order to break dependence on geopolitically unstable nations. Rising oil prices are a double-edged sword for geothermal energy. Since higher oil prices lead to increased drilling demand by oil and gas companies, dayrates for land drilling companies go through the roof, causing initial costs for geothermal energy to greatly increase as well. These increasing costs partially offset the increased demand for geothermal caused by more expensive fuels. [edit] Government IncentivesThus far, governments have been major drivers of the geothermal industry. There has been much legislation recently passed that supports the development of geothermal resources:
For the foreseeable future, government intervention looks likely to increase, with the more Renewable Portfolio Standards and some form of carbon trading system or carbon tax in the U.S. Both should favor geothermal energy. Furthermore, since installation is where most of the cost of geothermal lays, once geothermal plants have been installed (due to government requirements and/or financial support), geothermal companies will continue to be competitive - even when legislative support runs out. [edit] Water is a Limited ResourceAs water scarcity becomes a more prevalent issue, geothermal plants, which harness underground reservoirs of clean water, will see pressure in the form of environmental opposition of nationalization of water resources. Many geothermal plants, however, have (more expensive) closed cycle systems that reinject water back into the earth, allowing for water conservation. In the future, this technology, as well as "direct-use" technology that uses the earth's heat directly (instead of hot water), will become more important to develop, in order to keep geothermal competitive. [edit] New Direct-Use Technologies are EmergingThere are some exciting direct use technologies emerging particularly in the Air Conditioning Industry. A company called Earth To Air Systems has developed the worlds first Deep Well Direct Exchange geothermal, which has eliminated the heat exchange step required through water - it is a water-less platform. This technology has also overcome the installation challenges normally associated with geothermal and in particular cost. DWDX Technology is patented, was originally developed in the US is now in Australia and Asia. It is relatively new and very exciting. The catch, ETA DWDX geothermal technology is currenlty only in application as an air conditioning system - heating and cooling for commercial and residential buildings. However the capacity and technology therefore exists to apply direct use on a larger scale. Air conditioning is an area of geothermal that has wide application prospects, and significant environmental benefits - geothermal is the greener, cleaner energy choice.
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