Geothermal power moves ahead as reliable source of renewable energy

by Mathew Carr and Gavin Evans

Homes in Unterhaching, a town south of Munich, will be warmed by hot water piped from 3,300 meters, or 10,800 feet, underground starting in May. The town of 22,000 people is at the leading edge of a shift toward geothermal power generation that may swell Germany's capacity 1,000-fold within a decade.
"All the experts told us this was not possible," said Christian Schoenwiesner-Bozkurt, manager of the community-owned project. Clean-energy subsidies introduced in 2004 made geothermal a cost-effective alternative to coal and gas, he said.

Tighter emissions controls and rising fuel costs are spurring demand for renewable energy, prompting utilities around the world to tap underground resources previously considered too costly to develop. Global geothermal capacity will rise as much as 10 % a year through 2010, three times the pace of the past decade, the International Geothermal Association forecasts.
Geothermal plants, which use energy from hot springs or underground steam fields to produce power, are not affected by oil prices, which doubled in the past three years, and they face no emission penalties. Unlike wind- or solar-powered plants, they are not weather-dependent and can run 24 hours a day.
"We like geothermal," said Stuart Hemphill, director of renewable and alternative energy at Southern California Edison, the biggest US retailer of renewable energy in 2005. "It's a very consistent, reliable source of renewable energy."

More than half the renewable energy that Southern California Edison used in 2005 came from geothermal plants, Hemphill said. Twenty-one US states now require utilities to get some minimum percentage of their power from renewable sources, which also include wind, solar and hydroelectric power, and energy derived from burning wood waste.
Geothermal plants still account for just 9,300 MW of generation capacity worldwide -- a tiny fraction of the 4,100-GW total, most of which is fuelled with coal and natural gas. Geothermal also trails other renewables. Hydroelectric generators have 816 GW of capacity and wind farms account for 59 GW, according to the Paris-based Renewable Energy Policy Network.

Harnessing geothermal energy involves higher initial investments, sometimes requiring years of drilling to map underground heat sources. But the potential for growth is attracting investment. In June, the $ 685 mm renewable energy fund managed by the buyout firms Carlyle Group and Riverstone Holdings invested in the start-up of the Bottle Rock geothermal power station in California after 16 years of inactivity.
More efficient technologies for channelling underground heat are helping extend geothermal power's reach beyond the so-called "ring of fire" -- a zone of active volcanoes around the Pacific -- to places like Germany, said John Lund, president of the International Geothermal Association, which is based in Reykjavik.

New turbines can draw power from underground water that is not hot enough to create high-pressure steam. InJuly, a 200-kW generator in Alaska started making electricity from water at 74 degrees Celsius, or 165 degrees Fahrenheit, the lowest temperature on record.
Companies that make turbines and generators for geothermal plants stand to benefit. Ormat Industries, one of the largest operators of geothermal plants in the United States, and its partners won a $ 600 mm contract in July to develop 340 MW of energy in Indonesia, the largest steam-power order ever awarded. Shares of Ormat, based in Yavne, Israel, rose 41 % last year.

Ormat received its first order for a German plant in July. It expects to install about 100 MW of new capacity a year in the United States as state renewable-energy laws kick in, said its chief executive, Dita Bronicki.
In Unterhaching, geothermal energy will produce electricity as well as heat. Power from a 3.4-MW generator being installed by Siemens will be sold to distributors for three times Germany's average 2005 electricity cost. That price is guaranteed for 20 years by the country's 2004 renewable energy law, said Schoenwiesner-Bozkurt, manager of the project.

Germany may have more than 200 MW of geothermal power-generating capacity by 2016, according to government forecasts. Today, the country's sole working plant produces just 0.2 MW. The Unterhaching plant and two others due to come on line in 2007 will add almost 7 MW.
In New Zealand, a 90-MW plant now under construction will be the largest geothermal project built since 1989. The Kawerau plant, which will cost NZ$ 275 mm, or $ 194 mm, will boost the country's geothermal capacity by 25 %, producing more power than all the country’s wind farms combined.
"Environmental concerns are a very big issue right now," said Takahiro Moriyama, general manager of energy projects at Sumitomo, which is installing the turbine at Kawerau. "With the increasing cost of oil, gas and coal, geothermal has become a very economical option."

The plant is the first of six planned for the region, said Doug Heffernan, chief executive of Mighty River Power, one of New Zealand's largest power retailers, which is building Kawerau.
"Geothermal is going into a renaissance age," he said. "It's the only reliable renewable."