2017 Outlook: Geothermal Is Trending Upwards

Overall, the 2017 geothermal outlook is positive, based on GEA analysis.

Geothermal is posed to grow by leaps and bounds internationally in the coming years, with rapid growth in countries like Indonesia, the Philippines, and Kenya, all rich in geothermal resources. Major players involve investment banks like JICA and the IADB, who are teaming up with countries with untapped geothermal energy like Chile to diversify their national energy portfolios and meet the Paris Climate Agreement goals of significantly lowering the global output of CO2 in coming decades. Countries like Kenya and Indonesia have set frameworks in place and target goals of geothermal development to be achieved in the coming years, providing a significant portion of electricity as these countries go green.

International Market Highlights:

• Between March and September 2016, a total of 44 new geothermal power projects began development throughout 23 countries, adding 1,562.5 MW of developing capacity.
• 25.5 MW of electricity was brought online when Unit 3 of the Domo de San Pedro Geothermal field was commissioned in late April 2016. Located in the state of Nayarit, Domo de San Pedro is the first private geothermal field in Mexico.
• Croatia, Iran, and Malaysia are all currently developing their pilot geothermal projects, adding 45 MW of planned capacity to the global mix.
• Croatia’s first geothermal plant at Velika Ciglena-Bjelovar is expected to reach COD in May 2017. It is expected to have 10 MW of planned capacity.
• Iran’s 5 MW pilot geothermal plant at Meshkin Shahr is expected to reach COD in the first half of 2020.
• Apas Kiri-Tawau, Malay-sia’s first geothermal plant, is expected to reach COD by June 2018. It is expected to have 30 MW of planned capacity.
• Exploratory drilling began in August 2016 for Taiwan’s project for geothermal development at Sanxing. It will take about six months to complete.
• The Caribbean island of Dominica is accelerating its plans for development by pushing a new geothermal-specific bill through its parliament and partnering with New Zealand to construct the country’s first geothermal power plant.
• The IceLink subsea HVDC power cable, a proposed 1,000 km national grid interconnector between Iceland and Great Britain, is currently in its feasibility stages. If the cable is to be constructed, it is expected that 954 MW of new large hydrothermal and geothermal plants will be needed in Iceland by 2035 to meet new demand.
• In a new draft of official Indian geothermal energy development framework, the Indian government has set an ambitious 1,000 MW target for the coming years and up to 10,000 MW to be developed by 2030.
• China has proposed to triple its geothermal production in the next four years, targeting 530 MW from geothermal power.
• The Indonesian Government is preparing to move to a fixed-price feed-in-tariff in an effort to accelerate geothermal development. The Energy and Mineral Resources Ministry is also working on cutting down the time of geothermal permitting to a process that could only take three hours, a similar process already in place for other industries.

(From the GEA’s 2016 Geothermal Power: International Market Update)

Global Growth and Future Capacity

Between March and September 2016, a total of 44 new geothermal power projects began development throughout 23 countries, adding 1,562.5 MW of developing capacity and representing a significant spike in projects worldwide. This rate of growth in the past six months exceeds annual development over the previous two years, showing international geothermal development rates more than doubling. If this rate of growth is sustained, world geothermal power production would grow from 13.8 GW today to over 23 GW in 2021. International developing capacity of geothermal power has grown steadily over the first eight months of 2016, as depicted in Figure 1. Nearly all of these projects have only been announced in recent months and are still in the early stages of development and have the potential for more capacity to be discovered over the coming months (Source: GEA’s 2016 Geothermal Power: International Market Update.)

Geothermal in the U.S.

In the U.S., development slowed as the geothermal tax credit expired at the end of 2016 and the energy bill died in the lame duck Congressional session in at the end of 2016. This followed the unexpected win of President-Elect Trump. Many in the renewable energy sector are shaken by Trump’s promised withdrawal from the Paris Climate Agreement and axing of Obama’s Clean Power Plan.

Speaking of natural gas, many geothermal companies are also part of the fossil fuel industry, which continues to lose money thanks to plummeting oil and gas prices. In America, it takes on average 5-7 years to put a geothermal plant fully online, with 1-2 years of expensive exploration that oftentimes results in wells that fail to produce. A little-known fact is that geothermal plants on federal land pay taxes that feed back into supporting the local economy, and there is a push on the national level to do the same for solar and wind farms. Once parity can be found with other renewables — in terms of tax credits, permitting time, and royalties and taxes — state and local governments will see the advantages of geothermal development as experienced in the recent Salton Sea development. Then, geothermal power can become a significant player in the U.S. energy industry.

What remains to be seen in the new Washington political climate is whether the U.S. permitting process for geothermal plants will be able to free itself of heavy red tape and restrictions on federal lands. President-Elect Trump supports the development of coal on federal lands, and taking into account the similarities between the exploration process of the oil and gas industries and geothermal, perhaps this means Trump will ease the permitting process and loosen regulations that hinder geothermal development. That could be a real boost for geothermal projects.

The Global Geothermal Alliance and What Follows

2015 saw the fortuitous launch of the Global Geothermal Alliance under the banner of IRENA, a partnership between over thirty countries, industry leaders, and development banks to create 500 percent increase in global installed capacity for geothermal power generation and a 200 percent increase in geothermal heating by the year 2030. Internationally, many geothermally rich countries are moving swiftly, with others receiving aid to develop their resources.

Out of all countries, America still has the most installed geothermal capacity, followed closely by Kenya, Indonesia, and other countries rich in geothermal resources. Overall, 2016 saw dozens of plants being brought online and many existing plants like Kenya’s Olkaria park expanded. There is progress in the Caribbean in places like Montserrat and St. Lucia to power entire islands solely on geothermal. In British Columbia, there is a bold new movement to produce geothermal power from abandoned oil wells, mirroring American demonstrations by the likes of University of North Dakota scientist Will Gosnold that showed how oil pads could coproduce geothermal power.

As we enter 2017, the geothermal industry is entering a bold new era of international cooperation, at-home growth, new investments, and breakthrough technology. If geothermal is freed of bureaucratic red tape and can achieve parity with wind and solar for incentives, a new and brighter future is on the horizon. The success of geothermal lies not only in developer’s hands, but on the community level and before state and federal governments, too. It is a brave new world, and the future is very promising.

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