When Will Geothermal's Slump End?

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"In theory, there should be more than enough energy below our feet to power our world, and it should be cost-competitive."

All About Energy, Dana Blankenhorn

Of all the energy-harvesting technologies out there, geothermal remains the most maddening.

In theory, there should be more than enough energy below our feet to power our world, and it should be cost-competitive for a fraction of the investment needed in wind or solar.

Right now, the extraction of geothermal energy in the U.S. remains tied to Nevada and California, where the heat is close enough to the surface and in stable enough formations that a drill can reach it without the heat dissipating quickly.

In some ways, geothermal today is pretty boring: Push water down one well, pull it up hot in another, run it through a turbine, extract the heat. Simple.

Turns out geothermal is really two industries.

The business of drilling into the Earth and extracting heat is waiting for technologies to prove themselves.

Many companies seem dependent on the same hydraulic fracturing techniques being pushed for natural gas, oil, and oil shale, which have become a red flag to environmentalists for the damage they can do to the water supply.

It would be nice to report that there's a clear investment opportunity here, either in a publicly-traded geothermal company like Ormat, in an EGS play, or in a co-generation device like that of Langson. But it remains unclear which solutions will win.

What seems clear is that something will. Co-generation is going to go into every factory producing heat, as costs for extracting it keep going down, and the value of heat keeps going up. Oil companies are going to remain interested in geothermal technologies that approximate what they are doing now. Places with the largest supplies of easily-tapped Earth heat, like Japan, are ripe for investment.

How or when remains a mystery.

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