US bets on geothermal to become renewable powerhouse

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Though geothermal represents only a tiny fraction of current U.S. energy production, several businesses and President Joe Biden's administration are betting on technological advances to make it a backbone of the green transition.

"If we can capture that heat beneath our feet, it can be the clean, reliable, baseload-scalable power for everybody from industries to households," Energy Secretary Jennifer Granholm told the CERAWeek conference in Houston this past week.

Her department estimates that geothermal energy could overtake hydroelectric and solar power in the country by 2050.

Geothermal, which draws on naturally high temperatures underground and is used mainly to produce electricity and heat buildings, amounted to only 1.6 percent of U.S. energy consumption in 2022.

To ramp up production, the U.S. government has invested more than $200 million since 2018 in an experimental site in Utah involving the drilling of exceptionally deep wells - an approach different from the traditional, near-surface geothermal energy.

Scientists at the site have been testing, in real-world conditions, a technology known as Enhanced Geothermal Systems (EGS), similar but different from hydraulic fracturing techniques, also known as fracking, which is used to extract oil and natural gas.

The approach involves injecting water into naturally very hot rocks - often deeper than two miles (3 kilometers), which does not require a nearby hot spring or underground reservoir.

"In theory, you could make geothermal anywhere," said Francesco d'Avack, an analyst with S&P Global Commodity Insights.

"It also reduces the upfront risk," he said - that is, the risk of drilling and finding nothing, which has been a deterrent for some investors in the past.

Granholm, in her speech to the CERAWeek energy conference, underscored another advantage: the U.S. government is allowing companies to convert permits for oil or gas exploration into geothermal licenses - reducing paperwork and delays.

In a report this past week, the Energy Department said EGS use fewer chemical additives than classic fracking, a system deplored by environmentalists.

It added that geothermal drilling does not release hydrocarbons, as fracking does.

And unlike solar or wind power, geothermal provides a steady flow of energy regardless of weather or time of day.

As for cost, the U.S. government estimates it will drop from a current range of $70 to $100 per megawatt hour (MWh) to $45 by 2035.

The use of existing drilling technology makes geothermal both quicker and cheaper to develop.

"We took the oil and gas operation models, we changed the drill bits a little bit and... we demonstrated a completely new application," said Jigar Shah of the Energy Department's loan office. "That's a big unlock" - a big leap forward.