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August 2014 Policy Study, Number 14-3


Geothermal Energy: Important Potential in the U.S. and Iowa


Geothermal Energy Potential



Instead of solar, wind, or even hydro-energy, we should be using the most truly reliable, renewable, and unending source of energy of all:  the heat of the earth’s own core – geothermal energy.

A final category of renewable energy that receives little attention, but which can be useful in many settings, is geothermal or hydro-thermal energy.  Geothermal energy is “created when groundwater comes in contact with the interior heat of the earth.”[21] Hydro-thermal energy is similar, except it focuses on the heated water coming from under ocean vents.  It should be a darling of the environmental, global warming movement, as the earth’s interior heat temperatures and the energy it can produce are both constant and significant.  Geothermal should be attractive for many reasons: there is potential for widespread distribution of generation facilities, it is highly base load dispatchable without storage, there is a small land footprint, and there are low emissions during generation.


Unfortunately, geothermal power density – like that of wind and solar – is low.  The range in an Arizona facility is between 3 and 10 MWm2.[22]  This is better than ethanol and wind energy and comparable to solar.  Importantly, geothermal energy is highly controllable and storable, meaning it runs at a higher load factor than either wind or solar.  It is also virtually invisible after installation, as all piping is deep underground, with only control equipment above ground.  Geothermal is also an ideal source of base-load energy supply, something which will never occur with either solar or wind energy.  This fact alone should make geothermal energy more popular. 


Most commercial geothermal power plants are in places with coastlines on the “ring of fire” for volcanic and earthquake activity, where the earth’s crust is “thin” and geothermal wells are easily created and managed.  Yet new technologies such as enhanced geothermal systems are making it feasible in previously unconsidered places.  Recently a potentially significant source field was discovered in eastern West Virginia, a key location for high demand by east and central Atlantic coast residents.


According to British Petroleum (BP) company information, there were 11.7 gigawatts (GWe) of geothermal capacity in the world in 2013.  The United States has the largest capacity at about 3.4 GWe, representing almost one-third of the worldwide capacity.  About 530 MW of new geothermal power became operational worldwide in 2013, the most since 1997.  The most growth in 2013 was in Turkey and New Zealand.  Other countries with significant geothermal capacity are the Philippines, Indonesia, and Mexico.[23] Additionally, there are several very large (100 MW) plants being built in Kenya and Ethiopia, where electricity is desperately needed.[24] In comparison, the average size of a U.S. plant is about 25 MW. 


Currently, about 42,000 MW of potential new geothermal projects are being developed worldwide.  Indonesia alone expects to add over 4,000 MW of capacity in the next few years in 63 different projects.  The 2013 Geothermal Energy Association list of international power projects shows a total of 674 projects at some stage of development worldwide.  They are located in at least 70 countries with a total potential of 27.2 megawatts in power.[25]  One hundred twenty-four of those projects or almost one-third are in the United States, mostly in the Mountain West and California.


The Geothermal Energy Association states that the industry is “booming” with sustained growth of 4-5 percent per year.  As geothermal is a solid, base-load renewable energy source, it provides a critical backup to the uncontrollable, indeterminate, and temperamental wind and solar power.  In the U.S. alone about 85 MW of new capacity was added in 2013 through new or refurbished facilities in California, Nevada, New Mexico, and Utah.  There is another 1,000 MW of capacity additions planned at existing facilities and another 3,100 MW under development.[26]


The industry estimates that in California, Nevada, and Utah alone over 50 percent of potential capacity is “untapped.” Other states with recently discovered potential for commercial geothermal energy include Arkansas, Iowa, Louisiana, Kansas, Mississippi, Nebraska, New York, North Dakota, Pennsylvania, South Dakota, Texas, and West Virginia.


Especially critical to the potential expansion of geothermal energy is the use of “enhanced” geothermal systems, where additional hydraulic fracking can make an area useable for geothermal that does not have enough water to naturally make geothermal workable.


Unfortunately, there are significant difficulties in building new commercial geothermal plants, including policy barriers, permitting delays, leasing conflicts, environmental assessment costs, and transmission issues.  The Geothermal Association and affiliated research groups consider policy gridlock at the federal level, as well as unequal treatment of various energy sectors, to be key negative factors. 


Market issues such as low natural gas prices and resulting weak demand have also acted to reduce the growth.  As a result, U.S. industry growth in 2013 was down (85 MW) from 2012 when 148 MW in capacity was added.[27]  The policy and regulatory situation has the potential for change, especially in areas such as California, which has significant power supply issues because of the closing of the San Onofre nuclear energy facility, the requirement that no coal-provided electricity may be used in the state, and the current drought that is impacting hydro-electricity supply, along with increased reliance on the unreliable solar and wind energy.  Geothermal may be the solution which allows California to continue to operate and certainly should meet the environmental demands for near zero greenhouse gas emissions and no fuel costs.  Unfortunately, with a four to seven year lead time from project start to operation, Californians may be struggling to have enough electricity for the foreseeable future.


Geothermal power in ring of fire locations is mostly industrial or commercial, being resold to others by power companies.  However, it does not have to be only in those locations, near tectonic plate boundaries.  Depending on the ground temperatures, geothermal plants can be sited in a wide variety of places.  Geothermal is also useful as stand-alone supplemental heating for individual homes and businesses. 


The size, scope, and usefulness of geothermal energy is dependent on the underground temperature of the rocks and water.  The following table shows some general temperature categories and the potential use.[28]



While most high-temperature geothermal availability in the U.S. is in the Mountain West, ground temperatures of 40 to 90 degrees Fahrenheit are found not very far underground (10-20 feet) throughout the country, making geothermal, at the very least, suitable for individual home and business heat pumps.  The depth of drilling, which may have to go as far as three miles for commercial facilities, is the key factor in siting and costs of large facilities, which require temperatures above 212 degrees Fahrenheit.  Recently revised projections of earth temperatures show that with the use of enhanced geothermal technology, the potential for widespread use is significantly greater than previously thought.


The 2009 geothermal resource map from the National Renewable Energy Laboratory shows a large area of Southeastern Iowa may have significant potential for commercial geothermal energy production with the use of the newest enhanced geothermal technology. This area reaches from Clinton/Davenport in the east-central part of the state, over past Iowa City towards Brooklyn, and down through Mount Pleasant to Lee County and the Missouri border.[29]  This is a significant finding and one which should drive geothermal policy towards quicker development and operation of new facilities in Iowa.


One of the problems with industrial geothermal is the long lead time (four to eight years) and high capital costs associated with building a plant, as well as appropriate siting.  Most plants in the U.S. are in the Southeast and Mountain West, where a billion dollars of new projects have been started or completed since 2005.[30] California has the most capacity, at 2,615 MW, over half of the U.S. total.   The first commercial plant, The Geysers, started in California in 1960.


The geothermal industry estimates that there are 170 permanent, full-time jobs created per 100 MW of power provided.  There are about 640 jobs created during the construction process for every 100 MW built.[31]  If the siting and permitting process time in Iowa could be reduced, and even if the facilities were in the small 25 MW size, geothermal energy could bring many new jobs and economic development to an important area of our state.


In residential or individual commercial installations, most geothermal is installed during the construction phase of new buildings.  Retrofitting is more expensive, with higher interest rates on the money borrowed to build it.  Because tax credits are not issued immediately, the financial benefit offered by the government is often not useful for retrofitting, as all the money must be borrowed or paid up-front.  According to an e-mail from Ron Marr, Executive Director of the Iowa Geothermal Association, lower interest rates (3-4 percent) on new construction make installation more attractive.[32] 


Marr stated that fortunately, geothermal is not considered “a novelty” any more – it’s just another option and almost all heating and air conditioning contractors in Iowa offer a geothermal system option.  The association does not even exhibit at the Iowa State Fair anymore because fairgoers all already know about it.


He further characterized the Iowa Department of Natural Resources regulations as being “pretty straightforward, common sense, and easy to work with.”  Geothermal is regulated under the private well standards.  Local government support for geothermal ranges from easy to very difficult to work with, according to Marr.  Further, he indicated that most ground in Iowa is “pretty much very favorable” for geothermal, though drilling through rock does increase costs.  By some estimates a geothermal system can save a typical homeowner about 50 percent in heating and cooling costs and be especially useful in hot water heating.  In 2012 there were over 100,000 individual geothermal heat/cooling pumps being installed annually, with over 1 million total in use in the U.S.[33]


In residential/individual commercial geothermal systems, you can use either a vertical loop, horizontal system, or pond/lake configuration. A vertical loop is where the holes are drilled up and down with the coolant lines running down to pick up or deposit heat and then up into a compressor unit in the building.  Depending on the ground and rock characteristics, these lines may be several hundred feet deep. You may also have a horizontal system, with the lines running in trenches back and forth just eight to ten feet underground.  A horizontal system may also use looped coils, which allows for more lines to be run in a smaller space.  Finally, geothermal may be installed in a pond or lake configuration, with the loops under water.


In summer the heat from the earth is actually cooler than the above-ground air and acts as an air conditioner.  Most people have been in caves in the summer-time, where a sweater is often required for comfort while the land temperatures are in the 90s.  In winter, the ground is hotter and the coolant transfers heat up to the surface where the condenser changes the heat into electricity.


Iowa’s harsh winter weather means that geothermal energy offers the unique advantage of being protected from the environment.  It is buried underground, out of the wind, snow, and rain.  As a result the loop system can be expected to last for 50 years or more with no maintenance.  In contrast, most other energy sources’ equipment needs continual maintenance to remain functional. 


Geothermal is also considered “negawatt,” meaning that existing heat or energy is just transferred and managed, not actually made.  Unfortunately, the energy density remains the same – again lower than that of natural gas, coal, or nuclear fuel.  But the energy source does not get “used up” in the process. 


The new Iowa Utilities Board and Office of Consumer Advocate building uses a geothermal heating system with the “longest horizontal loops in the United States” at 645 feet.  The system has resulted in a savings of about 39 percent on other energy use and is the biggest source of energy cost savings in the building.[34]  While the photovoltaic solar panel system is providing about 25 percent of the electricity needs, it does not contribute as much to the energy use savings.  Another negative about photovoltaic solar panel use is that the panels require consistent, ongoing maintenance and repair.  An underground, closed geothermal loop does not.  You put it in and basically forget it.


As part of the American Recovery and Reinvestment Act, the U.S. Department of Energy now provides geothermal heat pump tax incentives of 30 percent credit for residential and 10 percent for commercial installations.[35]  When the Iowa-specific tax incentives are added, geothermal begins to appear as an attractive alternative for many facilities.  And, importantly, you don’t have to look at it.  Geothermal installations can be covered by grass, parking lots, or football fields.


Several Iowa energy cooperatives also offer rebates on geothermal units. For example, the Prairie Energy Cooperative in Clarion, Iowa, offers a $300 per ton rebate for up to a 20-ton unit and a $200 wiring allowance.  A 10-year heat pump has a $150 per ton rebate and members receive a $50 per unit bonus for de-super heaters.[36]  With a size limit of up to 20 tons, this rebate can apply to many commercial and small industrial systems as well.  Prairie Energy also offers reduced interest rate loans on geothermal heating and air conditioning systems for retrofitting. 



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