As oil crashes, ‘America’s untapped energy giant’ – geothermal – could rise
Geothermal energy is expensive even compared to renewables, but are the economics about to change? Maybe not, as the Russians and Saudis seem to have called off their oil production war, so sudden availability of lots of experienced but out-of-work shale drillers may not happen, although the virus factor continues. Also subsidy rates are biased towards intermittent wind and solar, compared to more reliable geothermal power sources.
The coronavirus oil crash could be good news for this renewable energy underdog, says Grist.
Disruptions to supply chains and slowdowns in permitting and construction have delayed solar and wind projects, endangering their eligibility for the soon-to-expire investment tax credits they rely on.
There’s another form of renewable energy, however, that might see a benefit from the recent global economic upheaval and emerge in a better position to help the United States decarbonize its electricity system: geothermal.
Geothermal energy comes from heat beneath the earth’s surface that we can tap into to generate electricity and to heat and cool our buildings. In a report released last year detailing the growth potential of geothermal energy, the Department of Energy called it “America’s untapped energy giant.”
Unlike wind and the sun, subsurface heat is available 24/7, perpetually replenished by the radioactive decay of minerals deeper down.
But compared to wind and solar farms, geothermal power plants are expensive to build. The cost can range from $2,000 to $5,000 per installed kilowatt, and even the least expensive geothermal plant in the U.S. costs more than double that of a utility-scale solar farm.
Engineers have to drill thousands of feet into the ground to reach reservoirs of water and rock hotter than 300 degrees F in order for the plants to be economical. Plants generate electricity by pumping steam or hot water up from those reservoirs to spin a turbine which powers a generator.
Experts told Grist that drilling can account for anywhere between 25 to 70 percent of the cost of a project, depending on where it is, the method of drilling, and the equipment required. But now, the companies that supply the machinery and services for drilling are starting to slash rates.
That’s because they are the same suppliers the oil industry uses, but oil companies are idling drilling rigs and cutting contracts left and right. They’re getting pummeled by the largest oil price crash in decades, the result of plunging demand due to the pandemic and a glut in supply because of a price war between Saudi Arabia and Russia.
On Tuesday, the U.S. Energy Information Administration revised its short-term outlook for crude oil production, predicting a steep decline through 2021. All of the suppliers who are normally digging for oil are now eager for new business.
Full article here.