(EnergyAsia, July 6 2010, Tuesday) — The following article was written by Jim Driscoll, a geothermal expert with Victoria, Australia-based Hot Dry Rocks Pty Ltd. He was responding to EnergyAsia’s question on how Asia can exploit its enormous geothermal potential to produce this free and clean source of energy.

“Geothermal energy has long been utilised in Asia, from the oldest known spa dated to the 3rd Century BC in China and the ubiquitous hot springs in Japan, through to more recent large-scale electricity generation plants in the Philippines and Indonesia.

Nearly all current geothermal operations are located within volcanic areas of the Earth where naturally occurring water and rock porosity (reservoirs) occur proximal to high temperatures. Indeed, the Philippines and Indonesia are the world’s number 2 and 3 (after the US) for installed geothermal electricity capacity with 1,902 megawatts (MW) and 1,196 MW respectively (2010 figures).

Recent communications from both these Asian governments indicate a new push to develop geothermal resources.

Indonesia’s President Susilo Bambang Yudhoyono proudly proclaimed at the opening ceremony of the World Geothermal Congress in Bali in April that Indonesia would, by 2025, have 9,500 MW of installed geothermal capacity, thus surpassing the US by focussing on new conventional geothermal power stations.

The Renewable Energy Law, referred to as the RE Act of 2008, and its Implementing Rules and Regulation were approved by the Philippine government in 2009, and sets a goal for renewable energy-based capacity to be increased by 100% by 2013. A specific geothermal goal is to rapidly increase installed geothermal electricity capacity to 3,131 MW, thus surpassing the US as the number one producer of geothermal energy in the world by 2013.

This, along with the high prices for electricity within the Philippines, are the main drivers for the release of ten new geothermal permits earlier this year. HDR is extremely pleased to be the lead technical consultant for two of these permits.

Countries throughout the Asia-Pacific region, and around the world, are in the process of increasing their uptake of renewable energy. The main driving forces for these are threefold. Firstly, countries are scrambling to reduce their carbon emissions in light of the threat of climate change. The outcomes from Copenhagen are extremely disappointing in this regard.

Secondly, there is a push by nations to diversify their energy sources and to increase their indigenous supplies of electricity. For example, in the past few years there have been ongoing tensions between Russia and Ukraine over natural gas supplies. The most recent escalation occurred in January 2009 when Russia cut all gas supplies to Ukraine.

As Ukraine acts as a major transit corridor for Russian gas supplies to Europe—with approximately 80% of Russia’s gas passing through—18 European countries reported major deficiencies or cut-offs in their gas supplies during a particularly harsh European winter.

Germany’s emergence in recent years as a bastion of renewable energy generation owes in part to the ongoing energy security issues between Russia and Ukraine.

Finally, governments (and consumers) are all too aware of the volatility of the oil price and oil supplies, and the spectre of ‘peak oil’ is always in the background.

Negative spin surrounding the cost of renewable energy is frequently brought up by those with vested interests. Whilst it is certainly correct that most renewable energy sources such as wind and solar are currently more expensive than fossil fuels, this will not necessarily be the case once a realistic price is put on carbon emissions.

Conventional geothermal plants are already cost competitive with fossil fuels, and only renewable energy resource capable of providing baseload power.

In Australia, we are seeing an increasing number of energy utility and petroleum companies become cornerstone investors in geothermal companies. In some cases, geothermal companies have been acquired outright, as in the case of US-based geothermal consultancy GeoThermex, being acquired by the world’s largest petroleum services company, Schlumberger.

The investment community is certainly keeping a close watch on the geothermal industry, especially in Australia and Canada whose stock exchanges have historically focussed on natural resource commodities. HDR frequently briefs investment banks and groups on the latest news and status of the industry in Australia.

Even in locations with no conventional geothermal reservoirs, but high temperatures, Engineered Geothermal Systems (EGS) technology can be utilised to extract heat. An independent report to estimate costs of geothermal-sourced electricity generation in the Australian context by 2020 was commissioned by the Australian Geothermal Energy Association in 2008.

The report by McLennan Magasanik Associates Pty Ltd concluded that the cost will be approximately A$80 per MWh for large-scale EGS and Hot Sedimentary Aquifer plants (>300 MW). This price is predicted to be the lowest cost of all the alternative energy sources, and compares favourably with fossil fuels when a price on carbon is adopted. (US$1=A$1.2).

So, in conclusion, the future of geothermal energy in Asia looks bright. Governments are signalling a series intention to set supportive policy, and there are many commercial companies willing to develop the potential. The opening of two EGS power plants in Europe has demonstrated its technical and commercial viability given the right government policy settings, and we can expect the cost-curve of EGS to decline rapidly with the development of further plants.

There are currently two EGS electricity power plants operating in Germany (Landau) and France (Soultz-sous-Fôrets), whilst a number of sites in Australia are in the development phase (the most advanced located in South Australia includes Geodynamics’ Innamincka project and Petratherm’s Paralana project).

EGS and conventional geothermal are not mutually exclusive, since EGS principles can also be applied to non-productive parts of a conventional geothermal system.

Background

Engineered Geothermal Systems (EGS) was originally conceived as a new technological-driven process for electricity generation during the 1970s at Los Alamos Laboratories in the US. An artificial reservoir is created by injecting high pressure water into the hot rock beneath the surface of the Earth. This process, termed hydrofracturing, expands natural fractures and joints within the rock, thus increasing permeability and allowing fluid to circulate within the system.

The circulating fluid captures heat and is brought to the surface via a production well where it is used to produce electricity using a steam turbine. The fluid is then returned to the underground reservoir via an injection well to close the loop. A number of governments around the world pursued the EGS principle during the 1980s to 1990s with the UK, Japan, Sweden and France all initiating research studies, and a number of technological barriers were broken.

In 2001 the focus switched to Australia when the first exploration permits were released in the northern districts of South Australia. Australia is frequently regarded as a test-bed for EGS technology since it possesses ideal geological conditions. The industry has been growing rapidly in Australia, where in excess of 50 companies are currently exploring for geothermal energy in a variety of geological and geographical areas.