Another Look at Geothermal Energy


". . .most feel energy prices are going to rise again soon."

The key to growth in the geothermal, or any alternative energy for that matter, relies on a couple of key factors:
  1. Political will. This means commitment of enticements (tax credits) or legislation requiring a switch (such as renewable portfolio standards).
  2. Private capital
#1 is happening. The Obama administration had shown that they are not going to let the financial situation stop them from plowing through their agenda. This can be both good and bad, but politics aside, it's good for alternative energy.

#2 is also happening: One of the main concerns about this is that lower traditional energy prices (oil and gas specifically) will cause private capital to lose focus on alternative energy because of higher costs. This hasn't totally happened, which is good. The reflation trade is starting to gain traction, too, and most feel energy prices are going to rise again soon.

I found an interview with U.S. Geothermal CEO Daniel Kunz for some more insight on this. Kunz mentions a couple of the key factors:
  1. Geothermal is base-load power. This means that it can provide a continuous amount of power that utilities need to provide to its customers. Wind and solar are intermittent depending on conditions and, thus, can't provide this.
  2. With geothermal, you are basically paying for your power up-front. The infrastructure to build a plant is very expensive, but cheap once it's going. That's why it's difficult to secure private capital for geothermal (the payback can be many years, which can be forever on Wall Street).
Here are the expected costs of geothermal vs. other energy types (in 2030, which is an expected date for these technologies to mature):
Geothermal energy is expected to cost about 7.3 cents per kilowatt hour by 2030 compared to 8.1 cents per kilowatt for wind, 12.5 cents per kilowatt hour for concentrating solar thermal and about 22.9 cents per kilowatt hour for solar photovoltaic, according to the Energy Department.

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