Geothermal: Clean, Green, Reliable Power

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I’ve said it over and over: Geothermal is a clean and green way of generating electrical power. It has worked for over 100 years. OK, there’s still more new technology to invent. You can always tweak and improve everything. But the basics are there with geothermal. It’s not rocket science. The world could do just fine by adopting the existing geothermal technology base on a large scale. Really, there are few secrets left to break in the realm of drilling geothermal wells. (Just remember, the rocks tend to be harder and hotter than in oil wells.) And there is not that much new inventing that has to occur in the realm of spinning turbines to generate power.

You surely know that windmills don’t turn when the wind doesn’t blow. And solar does not generate electrons in bad weather or at night. But geothermal runs 24 hours per day, in essence “mining” heat from the bowels of the earth. (That is, the fuel is “free.”) Thus, geothermal offers reliable baseload power. And geothermal emits near-ZERO carbon dioxide (trace amounts at worst), so it completely trumps any and all fossil fuels for a clean power source. There are no long-term waste or storage issues, like with nuclear. There are many locations within the U.S. – and around the world – that are completely suitable for geothermal. Geothermal is a technology whose time ought to be here.

Yes, the time for geothermal ought to be here. So why isn’t the geothermal business exploding? First, geothermal power is competing against a worldwide installed base of existing power systems and economics. When most people think of electricity, they don’t naturally conjure up images of steam wells turning turbines. Few schools anywhere teach future geologists how to “do geothermal.”

Second, the pure-play geothermal companies are small firms subject to the same credit crunch as everything else that has gotten hosed in the past year. (Note, however, that the largest geothermal power player in the world is Chevron.) At the same time, all five of the ESI geothermal companies are following their business plans. There is no bad news from any of them. Each of the geothermal companies is on target and budget. They are generally doing well, with sufficient cash to fund their current business plans. Yet the stock prices of the ESI players are trading flat or down. All I can say is that we should consider it our opportunity to buy a few more shares at low prices and to wait to profit in the future.

Rick Rule has a great way of putting it all in perspective. And I had a long talk with Rick about the geothermal players. Here is some of what he told me.

“Geothermal is easy to understand,” said Rick. “You drill a hole. You lower pipe. You get steam up the pipe from the heat of the earth. You use the steam to spin a turbine. You make electricity. You sell the electricity down the wires. But for as easy as it is to understand, it takes special expertise to put it all together. And the world does not have a vast army of people with that geothermal expertise, as you have with the oil industry. So geothermal is still in a developmental stage. That’s what we have to realize. It takes patience.”

Rick continued: “The good news is that the political and economic climate for geothermal is improving almost every month. Every time the U.S. government, the European Union or the United Nations passes some new regulation about saving the environment, we are one step closer to the geothermal power revolution. Everything that the regulators are doing seems to be making the world tougher for burning carbon and easier for industries that don’t emit CO2. That means that they’re paving the way to a geothermal power build out.”

Rick and I discussed how already, Nicaragua-based Polaris Geothermal is selling CO2 credits to German buyers. “Hey,” said Rick, “if the Germans want to give me euros for my CO2 credits at Polaris, I’ll take their money. Meanwhile, Polaris is operating and selling power to people who want electrical power down in Nicaragua. Eventually, the stock market will figure this out. I’m patient.”

Until next we meet,

Byron King
for The Daily Reckoning Australia

P.S. So the future for geothermal is bright. The worst I can say is that the geothermal future is coming slower than I anticipated a year or two back. But it’s coming, of that I’m certain.

In fact, there are three government mandates that could just about guarantee geothermal’s future…and one of these mandates could happen soon…very soon.

Byron King
Byron King currently serves as an attorney in Pittsburgh, Pennsylvania. He received his Juris Doctor from the University of Pittsburgh School of Law in 1981 and is a cum laude graduate of Harvard University. Byron is also co-editor of Outstanding Investments.
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    Bill Foord
    April 3, 2009
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  2. I will quote from the movie “The Castle”. You’re dreaming son – lots of luck with them mirrors.

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  3. Is geothermal sustainable? You bleed enough energy from the earth’s molten core over a long enough period of time, and w’out the molten core there goes the earth’s protective magnetic field, and we’re stuffed – like Mars.

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  4. Is geothermal sustainable?
    The earth is full of energy
    You make alcohol out of rotten apples (cider), grapes (wine), vegetable oil and animal fat (for diesel engines for fuel)
    I saw on top gear UK show how Honda built a car that fills on hydrogen instead of LPG gas and it powers an electric engine
    Any way
    Geo will last it is political reason e.g. coal for power stations for electrical supply for general populous (house, apartments, factories)
    In one of the countries(maybe swiss) I saw a documentary on it and it will supply electricity for mining purposes (if it goes ahead)
    Governments don’t like change, if GEO was used it would not be the main stream power for now
    For all I know hydrogen can replace all power source, now where would that leave governments?
    That’s my 1c worth

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  5. GaryB’s comment is correct, but only in a basic sense. Like any system – technological, physical, economic, political, financial – it needs to be well managed.

    Technologically speaking and depending on site conditions, thermal power technology (turbines, condensers, piping, etc) would effectively wear out before a geothermal resource becomes exhausted. Even then, you may reach capacity limits for heat extraction (based on sustainability/extraction criteria – Hotelling’s Rule is a good one), but this is akin to the transmission system’s capacity for carrying electricity anyway. You back it off, and/or supplement, and/or complement, or use efficiency on the demand side.

    While referring to geothermal energy (“Everything that the regulators are doing seems to be making the world tougher for burning carbon and easier for industries that don’t emit CO2”), Rick Rule may as well state that we’re ‘paving the way’ for a renewable energy future.

    Geothermal energy provides the environmentally sustainable solution for the ‘baseload’ (which is a myth anyway) aspects of our energy system which other renewable energy forms have not yet been able to. As storage technology further evolves – which it is and will continue to do, per Bill Foord’s comment regarding Ausra – other renewable energy forms will begin fulfilling the ‘baseload’ criteria.

    As part of a society’s energy system portfolio, geothermal energy definitely looks set to play a large role in future.

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  6. “It’s not rocket science.” I love it with lawyers dabble in technology…like they would know anything about rocket science anyway :) Yes Byron, the development of technology is easy, you just give things a tweak…oh my…you scare me.

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  7. Bond Thanks that was good!
    There are also problems with radioactive elements encountered but most are not water soluble and pale beside coal which releases colossal radioactivity when burned. The possibility of earth movements exists but in the long term, releasing them is better for stability, even in Australia. We need more, smaller earthquakes.
    The chemical contamination is a worry as there will be arsenides and such and pumping them back into the ground seems irresponsible, so extraction may have to pay for itself.
    The real problem is that a small explosion risk exists and siting is easiest far from cities. Few Australian cities are suitable sites as they are on the coast and generally “cooler”. Victoria should be good. Compared to the distances for transmitting coal fuelled electricity it is probably similar. Probably won’t compete with brown coal tho?

    Pat Donnelly
    April 4, 2009
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  8. The big question is why aren’t governments throwing money at sustainable renewable energy like this? The amount of money that has been thrown in as bail-outs and wars would make the sum quite insignificant.
    I’d really like to know.

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  9. Some governments are throwing money at alternative/renewable energy. Here in Japan one of the key areas the government wants to direct economic stimulus money at is towards the development of alternative energy technology including the next generation of nuclear reactors.

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  10. Generating baseload from Solar power is easy.
    To manage demand for Natural Gas there are great expanding steel reservoirs all around the World. It is easily conceivable that these could be replicated for the purposes of holding hydrogen.
    As was seen when the Hindeburg went down, Hydrogen burns.
    When it is burnt it combines with Oxygen in the air to produce water vapour.
    It is not beyond the realms of either possibility or imagination to use Solar power to divide water into Hydrogen and Oxygen to then produce power when demand outstrips Solar base load supply.
    What is lacking is the will to invest in such a long term project which can not compete with burning brown coal since the full cost of brown coal is never charged to the providers and the consumers.

    Reply
  11. Geothermal I thought used recycled super heated water to steam power turbines. Given the closed system the pollution risk is minimal and the source of heat virtually unlimited since no fuel other than magma radiated heat is consumed. Can someone verify this for me please?

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  12. Joe:
    “It is not beyond the realms of either possibility or imagination to use Solar power to divide water into Hydrogen and Oxygen to then produce power when demand outstrips Solar base load supply.”

    I too thought this. Then I did some research on the ‘hydrogen’ topic. Hydrogen is excellent. You are right, it burns and produces water. In fact, it is excellent in nearly every aspect…except for availability in its pure form (obviously there is an almost unlimited amount in the world where hydrogen is attached to other elements, eg water).

    Getting hydrogen from water, etc, takes a LOT of energy – lots more than the hydrogren produces when it is combusted. So much more in fact, that this method is like spending 10litres of petrol to make 1litre of the hydrogen equivalent petrol (thats for illustration purposes only).

    However…there is technology being worked on to make this more efficient. And you know whoever solves this one will make billions (or squillions after inflation).

    The problem really is a basic chemistry one – hydrogen takes a lot of energy to remove it’s bond from other molecules. It seems it is quite like the smallest and simplest block you could use in Lego – the very popular one that gets joined to everything else (and frequently found in the vaccuum cleaner bag).

    Whilst hydrogen would seem like the cure for everything (zero emissions, high energy and low weight fuel, portability, availability), without the development of some dream-like technology to make it viable, it is a long way off mainstream usage.

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  13. Bill Foord: Whilst Ausra seems great (I really think it does), it seems to me that it would be majorly flawed aswell. It could only be constructed in areas with high solar temperatures (the desert would be good), but not in areas where there is often cloud cover (eg, northern europe and many coastal areas).

    Imagine if you had two very overcast and cold days? I bet they can’t keep the heat stored for very long.

    I think one of the best applications for this technology would be for air-conditioning. You only need aircon when it’s hot, and your solar thermal system only works when it’s hot. What a great partnership.

    No wonder they are based on sunny California… (although I think putting a quote from Arnie on their page is pathetic – what does he know besides how to kill masses of bad guys with guns and swords)

    Reply
  14. Pete, you are forgetting Arnie was also a secret agent on Mars, I am guessing they were using plenty of alternative sources of energy up there :)

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  15. Haha Greg – some weird alien civilisation’s power source would be pretty handy right now.

    Reply

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