Page 23 - bne IntelliNews magazine February 2025

bne February 2025 Companies & Markets I 23
option is a “closed loop” geothermal well, where a pipe is sunk and a series of horizonal pipes are drilled to a second pipe that can lift superheated water back to the surface – similar to an upside-down radiator.
“Advances in technology are opening new horizons for geothermal, promising to make it an attractive option
for countries and companies all around the world. These techniques include horizontal drilling and hydraulic fracturing honed through oil and gas developments in North America. If geothermal can follow in the footsteps of innovation success stories such as solar PV, wind, EVs and batteries, it can become a cornerstone of tomorrow’s electricity and heat systems as a dispatchable and clean source of energy,” the report says.
However, experts say this idea remains on the drawing board and no one has yet attempted to build a closed loop system, although a lot of money is being invested into the research.
The IEA report proposes 7,000m deep wells, but industry professionals bne IntelliNews talked to said much shallower wells are as attractive, which lift heated water at between 100C and 130C. Half of the gas burnt in the Netherlands goes to heating houses and heat brought to the surface can be used for simple tasks like heating greenhouses in the winter, cutting the demand for other fuels like gas.
Lower temperatures can be used to power turbines if the water is replaced by alcohol with lower boiling temperatures that can also drive turbines. But of course superheated water from the deeper wells will produce far more energy if the goal is to provide the baseload power for the national grid.
Falling costs
“The EU is the home of geothermal technology and the first commercial geothermal project in the world,” Brent Wanner,
Market opportunities for next-generation geothermal energy could attract investment totalling $1 trillion by 2025
Cumulative investments in next-generation geothermal energy
Source: International Energy Agency
head of the IEA’s power sector unit, said during the press conference. “Now we can drill deeper it is possible to increase the output and meet rising demand many times over. There is a huge and open opportunity in Europe.”
The world’s first commercial geothermal power plant was developed in Larderello, Tuscany, Italy, in 1904, by scientist Prince Piero Ginori Conti. Natural steam from a hot spring was used to power a small generator that eventually powered local industries. Today the Larderello geothermal field is a major contributor to Italy’s energy mix, producing 800 MW of power a year, enough to light 1mn homes.
“We are expecting to see costs of producing geothermal to fall by three quarters in the coming years thanks to the spillover effects from the oil technology”
The EU also been a global leader in promoting decarbonisation with its Green Deal that is supposed to see carbon-zero by 2050, and it is technologically advanced.
Currently, thanks to the drilling costs, producing geothermal power is expensive: just under $250 per kilowatt hour. But Birol says that geothermal power should follow the same path as solar power, where the costs have fallen dramatically in the last years as countries around the world have scaled up their solar power generation; solar power has become the cheapest source of power at $50 per kWh, leading to an acceleration in the roll out of new capacity, led by China, the global green energy champion. The IEA forecasts that geothermal costs will also fall to $50 per kWh by 2035 if governments and investors around the world throw themselves into the business – a fall of 80%.
“We are expecting to see costs of producing geothermal to fall by three quarters in the coming years thanks to the spillover effects from the oil technology,” says Birol.
But there are still many hurdles to overcome. Birol began his presentation by calling on governments to expediate issuing permits, which currently can take over a decade to obtain. One industry professional told bne IntelliNews that the Netherlands has recently tried to simplify the permitting process, but all that happened was each part of a project now requires a separate permit so they have to submit applications for two, whereas before both parts of the project were covered by a single permit, and this change has introduced delays of eight months to the process.
“It means you have to take a portfolio approach; the uncertainties this sort of thing introduces means that a project can be derailed or delayed and that causes problems with funding. So you need multiple projects in case one goes wrong,” the expert said.
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