What DOE initiatives could help accelerate geothermal growth in U.S.?
Drilling rig on site of 30 MW Bald Mountain geothermal project (source: Oski Energy)
Alexander Richter
15 Feb 2012
The call for increased DOE initiatives to fuel geothermal growth in the U.S. is good, but we need combined private and public efforts to address the burning issue of drilling and the lack of finance for it to really accelerate geothermal growth in the U.S. and North America in general.
An article in January posted on Renewable Energy World, discusses the point that “little help from the government” (namely DOE), the geothermal energy market could accelerate growth and “take a much larger share of the renewable energy market in the U.S.”
The article includes statements from various people in the industry, including Karl Gawell of GEA, Tom Williams from NREL and Doug Hollett of the DOE Geothermal Technologies Program.
While it is pointed out correctly that things have developed in the industry, namely in the number of projects, international activities of U.S. players and the continued hope in EGS power generation, it does not look at the current main obstacle in bringing large scale geothermal power generation capacity online.
While there is a large number of projects ongoing in the U.S., a large majority of those is in the “pre-drilling phase”, desperately on the hunt for raising money to be able to drill. Neither program of DOE or any other programs is looking to solve this looming problem. Without financing a lot of those projects won´t be able to cross this main hurdle in bringing MWs online.
While the stimulus package in the U.S. has clearly helped in some issues in technology development for geothermal, some other elements continue to hold it back and DOE initiatives are in general helping the industry, but won´t be able to really accelerate the growth we all wish for.
The constant insecurity about the extension of the Production Tax Credits and the corresponding reluctance of investors to engage is again a topic as the current PTCs are about to run out. Another crucial element is that the loan guarantee program also won´t be available for geothermal projects going forward, due to deadlines and lack of funding. The ongoing discussion on a specific solar company and a given loan guarantee, which clearly doesn’t apply to U.S. based geothermal development, is not helpful either.
With the current economic situation in the U.S. and elsewhere it is tough to call for government support or at least it won´t be easy to get it. The private market, and in particular banks and investors, are also holding back due to risk appetite and available funds. So what we need are combined private and public efforts to address the burning issue and this is to provide for some kind of drilling support. Only this will help companies to move ahead with their projects and deliver on promises on bringing reliable, sustainable, base-load geothermal power to fuel existing Portfolio Standard programs in the U.S.
There are clever and working examples on drilling funds and programs, namely in Germany, but as well through private players (MunichRE in Germany and hopefully in North America). There was a fantastic discussion and presentation in the 2011 Annual Meeting of GRC in San Diego that looked into a self-financing drilling fund approach, clearly this would be a great option for the U.S. and it could even limit the funds needed from the currently cash-low government. DOE could play a role in developing such a fund or tool and get private players involved to pay for parts of it.
Discussion based on this article: Thurston, C.W., “Accelerating geothermal growth through DOE initiatives”, published on Renewable Energy World, January 26, 2012
