Geothermal energy is already close to being as economic as coal and natural gas.

A few months ago, I committed what I regarded as a cardinal sin. I’ve always been taught never to be a cynic in public-Ðespecially in front of a bunch of hard-working and well-meaning academics. But, last summer, I was talking to a group of engineers and scientists in Oxford about the financial reality of renewable energy and I said that all the talk about solar and wind power as the next great investment category was a load of hot air.
In my view, if you looked at any index that tracks clean power you could see a classic bubble pattern. Most of the shares in the companies involved traded on ridiculous valuations (30 to 100 times earnings) and the share price charts looked scarily like those of dotcom start-ups before 2001.
More importantly, although the actual technologies are the key to saving the world, they didn’t seem like viable business propositions without huge subsidies --and a willingness by investors to suspend rational judgment, Ft.com reported.
Obviously, there are some good, profitable companies out there--such as Vestas, which makes money from wind-turbine manufacture (although it has struggled). But I just didn’t believe their technologies could be as profitable and world-changing as the markets seemed to think. To really change global energy economics, I suggested that we needed oil at $200 or a proper carbon tax regime. The event organizer later told me that the assorted gaggle of scientists were horrified that anyone could be so cynical. “Who’s going to fund all this new technology if private investors don’t?“ was one refrain.
In hindsight, I’m not sure I’m right any more. Listed renewable energy companies have continued to shoot up in value and more and more funds (even exchange-traded funds) have been set up to exploit this huge new technology space. I still think most technologies will come crashing back to earth when the hard maths is done. But, for now, I’m willing to admit that there might be a couple of exceptions.
The first is wind-power projects. These can make sense if you know how to play the subsidy game.
The second is geothermal energy, which has the potential to be a huge niche in coming years. If I were a green investor looking for the next big thing (or a venture capitalist looking to develop tomorrow’s carbon-tax-subsidized, green infrastructure play), I’d be looking at the small but growing army of geothermal companies prospecting for heat along the ring of fire that spans the globe.
Geothermal energy is a beautifully simple concept. Water is pumped down an injection well into, for example, heat-producing granites about 3km or more below the surface. Heat, of up to 300¡C, is then extracted as the water flows through the fracture system, and the hot water returns to the surface via a production well. It passes into a heat exchanger, where the heat generates power. So, to get geothermal right, you need three important ingredients:
- A heat source, traditionally found in volcanically active areas (the hot research area is in granites).
- Permeable rock to drill through.
- Water to transport the heat to the surface for power generation.
In theory, this is a great (nearly) carbon-free technology that’s potentially able to supply limitless power. The best bit is that it is already close to being as economic as coal and natural gas.
Research by Australian broker Bell Potter has compared all the energy sources, assuming a standard carbon tax is introduced and used to fund renewables. It shows that, in the potentially lucrative south Australian fracture zone, geothermal energy costs just $45/MW, “which is well below other alternatives such as wind, biomass and solar“, according to the broker’s report. “Conventional coal fired plants are the cheapest at $30-40/MW and combined cycle gas and nuclear plants can also be cheaper than geothermal. However, if a notional $30 penalty per ton of CO2 is applied, it would make the geothermal option very attractive indeed“.
Unfortunately, geothermal won’t work in the UK, but in southern Europe, Iceland and the US it’s potentially a very big business. However, it requires a lot of money to drill deep wells to reach the heat. Get it wrong and you could lose more than 60 per cent of the total project cost--$10m or more. That means this is a game for companies with a lot of capital. And if you do strike lucky, you have to spend more building a special power station, requiring regulatory approval which can be slow in coming.
But once you’ve done that, you have a brilliant, cheap, long-lasting source of power, which should also be consistently profitable in a post-carbon tax world.
David Stevenson

At 20 to 25 cents per kilowatt-hour, the price tag for solar energy stands significantly higher than that of coal at 3 to 7 cents per kwh.

Faced with rising energy costs and growing demand, much of US industry and government are turning to renewable energy as a solution, but for many citizens it’s unclear when and how well these technologies will work.
Given the approximately $2 billion allotted to renewable energy research and development in the recently signed Energy Independence and Security Act of 2007, taxpayers may want to know what their money is going to support, UPI.com reported.
Many renewable energy technologies exist, and though different entities classify different technologies as renewable, most lists include wind, solar, geothermal, hydropower, fuelcells and biomass. In 2006 renewable resources provided 7 percent of the nation’s electricity supply, according to the Energy Information Administration, the statistical agency for the US Department of Energy.
Many of these technologies have been progressing in recent years and hold high potential to decrease U.S. consumption of fossil fuels, as well as benefit the environment because of low, or nonexistent, carbon dioxide emissions, said Gary Schmitz, spokesman for the National Renewable Energy Laboratory, directed by the Department of Energy.
“In terms of potential, (renewable energy) is virtually limitless,“ Schmitz told United Press International. “Theoretically, if you took today’s solar photovoltaic technology and employed it in a square of the Arizona desert, 100 miles on a side, you could provide the entire country with its electricity needs.“
Although NREL isn’t suggesting anyone actually do that, Schmitz said the point is there’s enough sunlight to power the nation. And enough wind. And the list goes on.
The problem, then, lies not so much in the availability of renewable resources, or the technology to harness them, but the cost of doing so. Most of these technologies cost more, currently, than using fossil fuels.
However, even at current prices, several alternative energy technologies are thriving.
“(Implementation of) all of these technologies is growing at a rate of 20 percent to 30 percent per year,“ Schmitz said. “Even solar É has found a healthy market.“
At 20 to 25 cents per kilowatt-hour, the price tag for solar energy stands significantly higher than that of coal at 3 to 7 cents per kwh.
But many companies see solar as a smart investment, nonetheless.
On Jan. 14, Schott Solar, a leading solar equipment manufacturer, announced its plan to invest $100 million in a factory that will produce equipment for solar power plants. Over the next several years Schott plans to employ 1,500 people and spend a total of $500 million on the facility, based in Albuquerque. The company sees the facility as an investment in a growing market, said Brian Lynch, spokesman for Schott.
Although increasing fossil fuel prices and concern about the environment have fueled some of this growth, experts say government actions have also inspired investment in the technologies. Schott appears to be no exception.
More than 23 states and the District of Columbia have passed Renewable Portfolio Standards, mandates that require utility companies to generate a certain amount of their electricity from renewable energy sources. In addition, the federal government provides incentives or subsidies for a variety of these technologies as well as research funding.
Without this support, many renewables will never be able to break into today’s market, said Jan van Dokkum, president of United Technologies Co., a producer of fuelcells. These function somewhat like a battery, but use hydrogen and oxygen as fuel to produce electricity.
Currently, fuelcells are mainly used to provide electricity on board space shuttles. However, they have also been implemented in some city buses and concept cars and as electricity generators in buildings.
One of the main difficulties with fuel cell cars lies in the lack of infrastructure.
There have been some exciting advancements in recent years, though, in making fuel cell technology cleaner. Currently, the hydrogen used in fuelcells cannot be produced without using fossil fuels. However, a scientist at Duquesne University in Pittsburgh has developed a way to split hydrogen from water molecules using only sunlight and a chemical catalyst. If this went to market, fuel cell technology would become completely emissions-free.
Photochemical hydrogen production, as it’s called, can be done with an efficiency of 10 percent right now, the level required by the Department of Energy for a product to go to market, but needs much more research and testing before it will ever be available for consumers, said Shahed Khan, associate professor at Duquesne. Without increased funding, that could take a long time.
Government should not be so quick to subsidize renewable technologies, though, said Ben Lieberman, a senior policy analyst for energy and the environment at The Heritage Foundation, a conservative think tank.
“The more government help something needs, then the less I think it’s probably all it’s cracked up to be,“ Lieberman said.
In fact, according to a recent Government Accountability Office report, the Department of Energy spent $3.1 billion on research and development for fossil fuels between 2002 and 2007, compared with $1.4 billion for renewable technologies. Electricity-related tax expenditures in the same time period for fossil fuels reached $13.7 billion, while renewable energy sources received $2.8 billion.

According to a new study by the Spanish Institute of Oceanography--Climate Change in the Spanish Mediterranean--the Mediterranean Sea could be on course to rise half a meter (20 inches) in the next 50 years. Sea levels have been rising since the 1970s with the rate of increase growing in recent years--between 2.5mm and 10mm (0.1 and 0.4in) per year since the 1990s.
Global warming is to blame, with water expanding as it warms and melting ice adding to the pot, Green-energy-news.com reported.
Try to visit Venice (elevation 0.0) before it finally succumbs to the waves.
China is now the third largest producer of motor vehicles in the world behind Japan and the US. In 2006 more than 7 million cars, trucks and whatever rolled off Chinese production lines. About the same were sold there. Japan and the US each saw over 11 million vehicles produced.
Are you alarmed that this new automotive powerhouse will flood the world with inexpensive cars while contributing to the flooding of low lying areas around the Mediterranean?
Maybe, but maybe you need not be. China could be en route to becoming the world’s capital of green vehicles. Think hybrids, plug-in hybrids and pure electric vehicles, but not necessarily biofuel-powered.
Though without connections to officials within the Chinese government it’s hard to determine what their thinking is regarding green vehicles, but it’s easy to imagine minimal support for ethanol or biodiesel. After all, they’ve got 1.3 billion mouths to feed all living on a patch of land the size of the US. There may not be much arable land to devote to significant biofuel production. Food comes before fuel.
Further, there’s the air pollution issue. China has some real problems in that regard. Biofueled cars and trucks are a little cleaner than petroleum-fueled but they still pollute. A high population with the potential of more vehicles than the US means that the cleanest possible vehicles must be chosen.
China is not a democracy even though their industry is more and more market-driven like the US. But they are unlike US industry, which has special interests constantly looking for handouts and favors from politicians all too willing to comply.
China can just tell its industry what to do. They must comply: no argument. A guess is that electric drive of some fashion is the eventual choice.
Already at least four Chinese carmakers are developing hybrids, plug-in hybrids or pure electric vehicles--Geely, Chery, SAIC, and BYD. All are near launching to at least Chinese markets.
Details are slim on the promised product offerings. Here are some tidbits.
SAIC Motor Corporation, China’s leading car maker by sales volume, is building a demonstration fleet of what it is calling “new energy vehicles.“
For the “new energy“ vehicles--could be hybrid or fuelcell--lithium-ion batteries are being supplied by a joint venture of Johnson Controls and Saft. The batteries will be produced in Milwaukee, Wisconsin, thus a rare export item for the US. The batteries will be installed in demonstration vehicles in early 2008.
Chery Automobile is building a hybrid to be launched in the second half of 2008. It will have nickel metal hydride (NiMH) batteries also supplied by Johnson Controls and Saft, but this time manufactured in France, developed in the US and integrated with Chinese help into vehicles in China.
BYD Auto (Build Your Dreams) is presenting its dual-mode F6 DM at the North American International Auto Show in Detroit. Dual-mode means all-electric or hybrid drive take your pick.
Finally, Geely is said to be developing a variety of hybrid cars in five years--mild, light, moderate and full hybrid-electric cars--any sauce you like.
So, China may be bringing to world markets, and for itself, much more than conventional cars. It may bring a greater offering of fuel efficient cars than is now available.