Geothermal outlook 2015: International market ripe with opportunity as US market withers

Massachusetts, USA -- While it is difficult to discuss the geothermal industry in just one-year increments, it seems as though 2015 is set to have some notable developments.  In 2014, the global market didn’t quite hit 1,000 megawatts (MW) of new capacity as predicted a year prior, but it did ring in a respectable 600 MW, a number that should hold steady or rise for the next three to four years, according to Ben Matek, analyst at the Geothermal Energy Association (GEA). 

A 2014 prediction that did live up to expectations was the sluggish U.S. market — it only represented a mere three to four megawatts of capacity last year, and Matek doesn’t see an uptick any time soon without some serious policy changes. In stark contrast, several international markets are really starting to pick up speed, most notably in East Africa, Turkey, Central America and the Asia-Pacific. 

“In short,” said GEA Executive Director Karl Gawell, “the geothermal industry is relying on the global market for the years immediately ahead, and the U.S. market will rebound as policy straightens out.”

Geothermal nameplate, in-development, and announced capacity in major markets worldwide. Credit: Geothermal Energy Association. 

US Policy Woes Lead to New Applications

As has been the trend for a few years now, U.S. geothermal growth has been slow going. This lag can be blamed on several factors, including regional power gluts, resource uncertainty that leads to weary financing, and high upfront costs. While these are certainly big barriers the industry has dealt with for some time, Gawell says a major reason for stalled growth is unfavorable policy. State renewable portfolios standards simply do not consider the true value of geothermal as a firm, flexible resource — however, decision makers may start to change their tune in the near future.

California has been directed to better determine the true integration costs of energy technologies. For example, while solar and wind may have cheaper upfront costs, they are intermittent resources that strain the grid and may require costly storage technologies as more capacity goes online. These true-cost methods may come in handy since the Governor of California recently proposed using 50 percent renewable energy by 2030. “This will help push integration costs as part of procurement requirement,” said Gawell, adding, “California may serve as a model for other states.”

The Environmental Protection Agency’s (EPA) carbon plan proposal, which calls to reduce carbon 30 percent by 2030 over 2005 levels, may also open more doors for geothermal energy. “If the EPA rules go through it could create new opportunities in geothermal in greenfield states such as Colorado, Utah and Wyoming,” said Matek. “States will start to see energy diversity as a value for grid health and overall cost. Geothermal won’t displace wind and solar, but it will create a stronger niche.”

It’s not all bad news and frustration for the U.S. market, however. The Salton Sea Initiative in California is “one of the only bright spots” for U.S. geothermal, according to Mike Long of Galena Advisors. The project aims to restore and protect the ever-shrinking body of water located in the Imperial Valley. The area could unlock nearly 3 gigawatts (GW) of geothermal capacity, all while preserving and protecting the environment. 

The project inched closer to reality when Simbol Materials announced that it would start construction on a lithium extraction plant in the region. Simbol’s technology filters geothermal brine to collect lithium that can then be used for batteries, which are becoming a hot commodity these days, especially with the upcoming Tesla gigafactory in nearby Nevada. If all goes well, lithium plants may very well be the last piece to convince legislators to approve geothermal energy plants. 

“It’s a big environmental win,” said Matek. “If you can extract lithium from brine then you don’t need mines anymore. This creates a whole new section of industry that doesn’t have the same policy barriers as co-production. A lot of new companies, like miners, are getting into the geothermal space.”

In fact, Matek and Gawell suggest keeping an eye out for all sorts of evolving geothermal applications in the U.S. market, such as hybrid plants, improved efficiency for flash and binary plants, co-production and smaller plants. “There is a constant evolution of technology available for geothermal,” said Gawell.  Enhanced geothermal system (EGS) technology will also continue to move forward in the coming years. Gawell said to expect a big year for EGS in 2018, when the AltaRock Newberry demonstration project in Oregon is finished, which will greatly determine the future viability of the technology.

http://www.renewableenergyworld.com/rea/news/article/2015/02/geothermal-outlook-2015-international-market-ripe-with-opportunity-as-us-market-withers