When it comes to harnessing geothermal power, the go-to place on the planet right now is the Republic of Iceland. Yes, Iceland. It is a large island at high latitude, composed mostly of dense basalt lava flows. Iceland straddles the Mid-Atlantic Ridge, which provides that country with an almost direct link to the primordial heat energy within the mantle of our planet. And that is one all-but-immeasurable store of energy.
Thus, Iceland is the world’s leading nation in terms of exploiting its local geothermal power resources. In Iceland, the insiders refer to the process of extracting geothermal energy as “heat-mining,” and they are getting rich from the effort.
Recently, the president of Iceland, Olafur Grimsson, visited the U.S. to speak at a number of events and testify before the U.S. Senate Committee on Energy and Natural Resources.
In a speech delivered at Harvard on Sept. 26, President Grimsson emphasized the importance of geothermal power to the economy and society of Iceland. He stated that Iceland has undergone a “radical transformation” from dependence on coal and oil in the past 30 years. As recently as the 1970s, Iceland was among the poorest countries within what was then known as the European Common Market (now called the European Union). That is, by most measures of gross domestic product and other economic output, Iceland was an economic laggard.
But then Iceland made a conscious, strategic commitment to develop its domestic geothermal power resources. From large industrial projects down to the level of family housing, Iceland focused its public and private energy investment on making a geothermal energy vision into an energy reality. Now, according to what President Grimsson told his Harvard audience, Iceland is one of the most affluent nations in the world. Fully 100% of Iceland’s electricity now comes from renewable sources, geothermal and hydroelectric, and almost all buildings in Iceland are heated with geothermal energy. On the whole, about 72% of Iceland’s total energy usage is tied to geothermal power sources, which eliminates essentially all carbon emissions and dramatically reduces reliance on imported fossil fuels of any type.
According to President Grimsson, Iceland has “turned this [geothermal power production] into an extremely profitable business.” For example, electricity is so inexpensive in Iceland that there is a booming business on the island that imports bauxite from the Caribbean area for the purposes of refining aluminum, a highly energy-intensive process.
In comments after his prepared speech at Harvard, President Grimsson expressed his “astonishment” at the utter paucity of geothermal power generation in the U.S., merely 0.3% of all electricity generated across 50 states. And much of that power comes from one location in California, called the Geysers. President Grimsson noted that the U.S. sits atop “the second largest geothermal resources in the world, following only Indonesia.”
President Grimsson concluded that by harnessing the “fireball on which we sit,” mankind could revolutionize energy production across the globe.
President Grimsson then took his geothermal power views from Cambridge, Mass., to Washington, D.C., where he spoke to members of the U.S. Senate. The Senate is considering the National Geothermal Initiative Act of 2007, which is legislation aimed at promoting the development of geothermal energy resources within the U.S. The Senate bill sets a national goal to achieve 20% of total national electrical output from geothermal resources by 2030, about a 64-fold increase from the current base line.
In his remarks to the Senate, President Grimsson restated many of the comments and observations he delivered earlier in the day at Harvard, adding more perspective. “Our task,” he said “is to find the technology to harness the fire inside the planet.” Also, “The companies doing business in Iceland have found that geothermal energy is over 30% more profitable than any other form of clean energy today.” President Grimsson noted that 25 years ago, Iceland “had to beg for corporate investment.” But now companies are lining up to gain access to Iceland’s low-cost, clean energy opportunities.
In response to a question from Alaska’s Sen. Lisa Murkowski, President Grimsson stated that the geothermal energy resources of Alaska could serve as an “investment magnet” for that one state alone, if developed properly.
Alaska is one of the most seismically active regions in the world, with many geologically controlled areas of significant geothermal potential. President Grimsson said that geothermal power development could be extraordinarily important for Alaska and provide “alternatives to oil and gas” that help smaller communities build their economies and improve the lives of their residents.
President Grimsson’s comments dovetail entirely with comments made last year to the same U.S. Senate committee by Walter Snyder, director of the Intermountain West Geothermal Consortium. In 2006, Mr. Snyder focused on the geothermal potential for the Western parts of the U.S. The energy potential is so vast, he claimed, that no one really knows its full extent. Some geologists who work in the field believe that just the state of Nevada alone, already a national leader in geothermal energy production, could become the world leader. This is particularly true due to Nevada’s proximity to power- hungry California, where environmental regulations prevent much in the way of traditional energy development. Mr. Snyder said that known but untapped sites in Western states could be developed within a reasonable time to produce 13,000 megawatts of geothermal energy, or the equivalent of about 15 nuclear power plants or 30 coal-fired plants. Mr. Snyder noted that the potential of the Western U.S. “may actually be two or three times greater” than that figure.
The outcome of these Senate hearings may well be a major change in U.S. national energy policy distinctly favoring geothermal energy production. By itself, just the idea of mandating an increase of total national electricity production from the current 0.3% geothermal to 20% by 2030 would be the energy equivalent of President Kennedy declaring in 1962 that “We choose to go to the moon.” But then again, hey, we took the policy goal and actually went to the moon. All we have to do with geothermal is go to Nevada or Alaska, or to a hot spot near you.
So what is currently a very small sector of the U.S. energy business is on the verge of seeing immense growth, if not just plain spectacular expansion, over the next two decades. That kind of arena is exactly where we want to be with our investments. With policy changes like what we are seeing for geothermal power, this is another moonshot primed to happen.
for The Daily Reckoning Australia