Call me Ishmael. Ok … that’s a little dramatic, but the pursuit of utility-scale, economic geothermal energy can sometimes seem like chasing a white whale. We know there’s abundant energy. We know we can extract energy. We just haven’t been able to make the math work so we can extract geothermal energy on an industrial and worldwide scale in an economic manner (yet?!). I think we have in conventional geothermal (the Geysers, Boise, Paris, Reno), but the “Geothermal Everywhere” is a bit more problematic.
There’s a lot of talk of heat pumps and ways homeowners can utilize geothermal energy to decrease their power bills (read: power usage) in ways similar to what solar panels have encouraged – mandated, actually, in some areas. And the talk has evolved into action. According to the EIA, U.S. geothermal energy generation hit 17 billion kilowatt hours in 2023, which sounds awesome, but only about 2.7 billion of that was utility-scale, meaning most of the geothermal energy in the United States is deployed at the local or district level.
Local and district level deployments are better than nothing, but for geothermal to be taken seriously on the power-generation scene, it must find a way to be profitable on an industrial scale.
The Rhyme of History, the Riddle of Cost Analysis
The petroleum industry is familiar with the tale: a lot of energy potential in the rocks, but very few options to get it out economically. More than a decade of investment and drilling has helped us claw our way to economic viability with horizontal drilling and frac’ing of shale. Still, the lessons have been hard-won, and we had the advantage of a century’s worth of experience on the vertical side, as well as infrastructure. Even with all that, shale was simply not profitable for a lot of its early existence, and there’s some concern that the price of the learning curve was too many wells drilled with too few locations of good rock left.
Geothermal has the advantage of petroleum’s drilling and completion lessons and learning curve, but not its infrastructure, though the two are more closely intertwined with geothermal because the power plants must be located on or very near the resource. While there are roughly 2,000 natural gas power plants in the United States, there are fewer than 100 geothermal power plants, and the cost/benefit ratio can vary depending on the source you seek and the way they have tortured their data. Rystad’s analysis of the cost of energy from a geothermal power plant versus a natural gas power plant indicates energy derived from natural gas is more expensive, making geothermal a clear winner, at least when it comes to enhanced geothermal systems.
According to Rystad’s analysis, the average levelized cost of electricity of the conventional geothermal projects in the United States is around $64 per megawatt-hour, while energy from combined cycle gas is around $77/MWh on average. They had nuclear coming in at an eye-popping $182/MWh, which is likely driven by the costs of regulations and required safety measures.
From that analysis, one might expect the capacity of geothermal to be a modern-day gold rush. Cheaper electricity generated without the risk (real or perceived) of increased CO2 emissions? Done. Where do we sign up?
In reality, however, much of the data indicates that multitudes of companies are not rushing to commission geothermal power plants, preferring solar and wind instead. This could suggest that either Rystad’s findings have not been widely circulated, or companies don’t quite trust those outputs.
Geothermal Companies to Watch
Still, some companies see potential. Fervo Energy is pursuing one particular avenue of potential that is most similar in tech and methodology to shale. They apply drilling and completion methods learned in oil and gas to the hot rock (around 450-degrees Fahrenheit) with some level of success. They are also commissioning their own large-scale geothermal power plant, which is scheduled to come online summer 2026, with a total of 500 megawatts of capacity scheduled to come on through 2028.
While it’s easy, especially in a tech and innovation section, to focus on the companies that are new to the geothermal scene, because they are regularly doing new and exciting projects, a more experienced and established geothermal giant to watch is Ormat Technologies. They are a global-scale geothermal company with a 1.5-gigawatt portfolio. Rather than the bursts of energy from newer companies, Ormat operates a bit more like a glacier: slow, but extremely powerful and relentlessly moving forward. Case in point: their “news” section has no news stories for this year, but a big story from them last year is that they paired with SLB to collaborate and focus on both traditional geothermal systems and enhanced geothermal systems using one of Ormat’s EGS patents.
The current efforts of most geothermal companies are focused on EGS, which makes use of relatively cool rocks that drill bits are known to be able to survive. There are different methods of attack as to the source, like drilling new wells or recommissioning old oil and gas wells. Another track is to go after hot, dry rock, which is sort of the Holy Grail of geothermal due to its ubiquity and seemingly endless supply of heat.
As I covered in a previous installment of Enspired, Fervo is also pushing the limits here, basically by drilling as hot as they can until equipment breaks.
If that nut can get cracked, then maybe Ahab can finally catch his whale. Until then, it’s worth keeping an eye on both established geothermal companies like Ormat as well as the up-and-comers like Fervo.