March 27, 2024
By John Muir, SVP Business Development, GreenFire Energy Inc.
The “Pathways to Commercial Liftoff: Next-Generation Geothermal Power” report was just published by the U.S. Department of Energy, which highlights the enormous potential of next-generation geothermal power to transform the U.S. energy landscape. Next-generation geothermal technologies are defined as Enhanced Geothermal Systems (EGS) and Closed Loop Geothermal Systems (including GreenFire Energy’s technology). This in-depth, 67-page report describes how geothermal power technology can be a “key contributor to secure, domestic, decarbonized power generation for the U.S. as a source of clean firm power.” Here is the link to the full report.
Geothermal energy industry is being revolutionized by “next generation” technologies: Enhanced Geothermal Systems and Closed Loop Systems
Geothermal energy Is abundant yet underutilized
- There are an estimated 5.5 terawatts of geothermal energy available for next-generation geothermal development in the United States alone, enough to power the U.S. for thousands of years
- There is about 40 GW of estimated conventional geothermal resource in the U.S., but only 25 percent of that estimated resource has been located.
Next generation technologies will enable access to geothermal power
- Next-generation technologies can expand geothermal power by more than a factor of 20, providing 90 GW or more of clean firm power to the grid by 2050
- Geothermal power technology has shown compelling advances that can enable it to become a key contributor to secure, domestic, decarbonized power generation for the U.S. as a source of clean firm power
- Next-generation technologies have the potential to engineer effective geothermal resources in commonly found environments, vastly expanding resource availability and potential commercial adoption.
Energy demand in the United States is increasing rapidly above previous estimates
- Economywide decarbonization modeling suggests that the U.S. will need an additional 700-900 GW of clean firm capacity to build a decarbonized grid system capable of supporting increased demand.
- System-level decarbonization modeling suggests that the U.S. will need to quadruple the existing clean firm power supply available on the grid today, adding between 700 and 900 GW by 2050 to build a decarbonized, functioning grid system capable of supporting wind and solar buildout and increased demand.
- Simultaneously, projections of electricity demand growth have doubled. The nationwide forecast of electricity demand growth by 2028 increased from a projection of 3.8% in 2022 to 7.8% in 2023,
- These increases require utilities to plan for 17 additional GW of capacity beyond what was planned for only a year ago.
- Rapidly increasing projections of electricity demand are driving increased need for clean firm power, which already commands a price premium in some cases; PPAs today are signed between $70-$100/MWh, $20-50/MWh more than the average solar PPA in North America.
Next generation geothermal technology dramatically expands geothermal power potential
- Next-generation geothermal technologies make their own reservoirs from ubiquitous hot rock, rather than hunting for naturally occurring reservoirs in unique locations.
- Next-generation technologies can expand geothermal power by more than a factor of 20, providing 90 GW of the 700 to 900 GW of clean firm power needed for a decarbonized economy by 2050.
- Next-generation geothermal technologies expand geothermal resource potential to 5,500 GW distributed across much of the country and remove the need to search for unique geologic environments.
- Next-generation geothermal technologies use modern engineering to expand access to geothermal potential across the entire U.S.
- By shifting the main risk from resource identification to engineering—a category that can demonstrate a new track record and continual improvements—next-generation geothermal has the potential to leverage a new and massive heat resource while sidestepping issues that have traditionally held back the geothermal industry.
Next-generation geothermal technologies offer a unique and important value proposition
- These unique capabilities help enable geothermal energy to command a price premium—conventional and next-generation geothermal power purchase agreements are signed today for between $70 and $100 per MWh.
- Geothermal developments yield heat, which in it of itself is a valuable commodity. Geothermal heat can be directly used in several currently hard-to-decarbonize applications, including process heat for industrial applications.
- Process heat represents over half the emissions from the industrial sector, and geothermal energy is well-suited to help mitigate the half of those emissions caused by low- and mid-temperature applications.
- Next-generation geothermal has a unique value proposition, including minimal workforce and supply chain risk, low land use, and flexible generating capability.
Next-generation geothermal can soon be broadly cost-competitive with other energy sources
Anticipated advancements will further enhance the value of next generation geothermal technology
- The technical innovations and best practices from the oil & gas industry that underpin next-generation geothermal technologies fundamentally shift the risk profiles of geothermal developments.
- This repeatable, modular design for next-generation geothermal affords a clear path to iterative improvements in processes at each successive well within a project.
- Closed loop geothermal projects can derive analogous benefits from modularity.
- Drilling rates (the rates at which drills penetrate the subsurface) at FORGE have improved by over 500 percent since the first well was drilled in 2017.
- Capitalizing on the recent improvements to the inputs that drive EGS cost, the industry has an achievable path to further cost reductions that will allow the technology to deliver clean firm power at competitive prices in the near term.
- There is also a credible, though ambitious, path for closed loop geothermal systems to achieve cost reductions that allow the technology to deliver clean firm power at competitive prices by 2035.
Pathway to commercial scale
To reach scale by 2050, next-generation geothermal will require an additional $225-250 billion in investment, driven by a new ecosystem of developers, investors, utilities, and other offtakers, and leveraging existing workforces and supply chains. This can be achieved through a proposed plan with two phases called “Reaching Liftoff “ and Achieving Scale.”
Pathway to commercial liftoff and scale for next-generation geothermal power
- Phase 1 – Reaching liftoff
- 2-5 GW ($20-25B)
- Aims to successfully deploy next-generation geothermal power projects in five to ten different geologic settings in greenfield conditions.
- Phase 2 – Achieving scale
- 88-125 GW
- Aims to expand the developments made in Phase 1 and target an installed capacity of 88 to 125 GW.
- By validating the economic viability of next-generation geothermal during Phase 1, a larger capital pool and lower-risk financing is expected to enable $225 to $250 billions of investment for Phase 2.
