The Future of Geothermal Part 1: Technology Development

heat exchangers and cools down the geothermal fluid. So you can go back into the it's the ground, and here is the sound of steam coming out of a recently drilled well. Here at the foot of a mountain in Iceland, on the site of the Hello Tidy plant. We've turned it down for you, but it's roaring like a jet engine. This single well will produce more than ten megawatts, are enough to power more than a thousand homes. Geothermal is a small industry, with just about fourteen get a wat's online,

but where it matters, it matters a lot. And the thing you notice about geothermal at the plant level is that it's really powerful stuff. From the wells to the turbine hall to the cooling. Would you just heard so conventional geothermal where developers drill down to tap an existing hot water or steam reservoir to run a turbine. And I know I'm simplifying, here is a key energy source for several tectonically active locations. Basically anywhere there's a volcano.

I think volcanic islands where the alternative power sources shipped in diesel, along the East African Rift, the Pacific Rim or even Italy. In those places it can be not just the cleanest form of power but also the cheapest. But geothermal development is hard going out drilling wells with oil and gas risk, but with utility returns, that risk

profile is stunted the growth of geothermal. But there are several out there today working hard on technologies to d risk geothermal development, squeeze additional value out of the hot water coming out of the wells, and in some cases throwing out the concept of convention no geo thermal entirely and starting fresh. We're gonna do the show in two parts. Today. In part one, we're going to talk about these new technologies and the different ways of thinking about what geother

all means and what it can do. In Part two, we'll talk about some market dynamics and policy changes that have created some very real and immediate demand for geothermal capacity in the US. Our guest today is hit A Thorsteinsen,

Managing director for Research and Innovation at RECULC Energy. As always being if to not provide investment or strategy advice, and you can hear the full disclaimer at the end of the show, I'm Mark Taylor coming to you from a force of nature and engineering at the base of a mountain in Iceland and you're listening to switch on the BENF podcast. Hit A, Hi, Hi, Where are we? We are at har which is a concert hall and a conference hall here in the downtown Regulic built just

after the crash. It was a big decision to actually go ahead and finish the building, but it is so beautiful and such a centerpiece in the middle of Reckevic. It really is. The first time I was here back in geez oh nine, it was not here. It was just the the boats on the waterfront here, which are beautiful. They are beautiful. We have this beautiful architecture designed by

Oliver Elison. It's built around assault columns and you can change the lights in and the light is always different depending on the weather, and then you have this beautiful view over the port. It really is. It's just breathtaking. Why are we here. We're here because over the past three days we just had the largest Geothermore congress in the world. We had over eleven participants here in Recovic and then nine participants online, and so this was the

world geother one Congress. We've been planning this thing for eight years now. We had to postpone because of COVID, but we finally made it. Everyone here and it was so great to get together. It really was. And I came up for it and I had to say it was. It was a huge success. Yeah, there's people everywhere, learned a ton, got a great update on the industry, and it was great to see people. Yeah, it truly was.

If I may say, you did a great job. You and your group organized the whole thing and it was really fantastic. Thank you. We really enjoyed it and it was great to be able to get people here in showcase what Iceland has been doing in the industry for so long, but also how we're involving and innovating. We can do a lot through virtual and we have over the past two years. But getting together, that's where the magic happens in the connections, and it was wonderful, awesome.

Let's set the scene a little bit and then we'll get into the industry. Can you tell us really quick where you work and what do you do there? I work at Recovic Energy. It's a parent company of a bunch of energy companies. Basically, we have made the utilities, which is the utilities for all of Recovic and several other towns in Iceland. We serve over seventy of the nation with geothermal district eating, cold water, sewage services, electrical distribution.

We also have on Power it's a geothermal power producer and operator and they sell power from two co generation geothermal power plants. And then we have a fiber optic network and then car Fix our newest and youngest member, which mineralizes CEO two in the ground, which is awesome, really cool. And you do the research and innovation group right, Yes, yes, I have the research innovation group in the parent company and we serve all of the subsidiary so we get

to be involved with everything, which is very fun. I was talking to a lot of people over the few days about new tech, and it turned out that basically everybody either worked for or works for you, So there at one point anybody doing cool stuff is in your in your team. Yeah, we have a we have a great team, lots of cool scientists, engineers. There's just so much there's so much activity, enthusiasm and all our projects. There's so many projects that are really really progressing. It

just gives hope for the future. So going back to the event, right, so this is the first event in geothermal or first thing I've in geothermal I've done since I'd say, when I moderated a panel geez at Geo Lack in Costa Rica. What has changed in the geothermal

industry since that time? So just to set the scene back when I was doing that, what I was interested in at the time was fracking existing geothermal wells to get more production out of them, hybrid geothermal and solar, you know, to get more production out of the plant and use the land more efficiently, I guess, and drilling risk funds to sort of spread the risk of drilling geo wells. Are those still hot topics or what's changed?

I think we've done all those and we're moving on and and we're expanding into what can we hybrid with other technologies like hydrogen production. We can use geothermal to produce hydrogen. Because geothermal is mostly a baseload power, you can have it flexible and we've been working with that as well, which is an exciting subject. But we can also use hydrogen to make it flexible, so we producing hydrogen at night, solving during the day to the market.

We've been working with technologies of taking the small emissions we have from geothermal, but actually taking the CEO two out of those and mineralizing them with carb fixed and that has been a fantastic journey that happened within my company, started as at Tiny R and D Project and is now his own company and doing great things. The other new story is back then, we weren't talking about direct use. We weren't talking about heating and cooling what we've done

here in Iceland for so long. The first district heating system, Reculix, started in n If we're going to change the world, we're gonna move into a carbon free or carbon neutral world, we need to find ways to heat and cooler buildings with something else than fossil fuels and geothermal is a great option and it's underutilized. There's so many things we can do with that as a part of the circular economy.

I think that's the solution that now Europe is recognizing, the United States is recognizing, we're seeing that people weren't talking about that. And then the third thing is maybe oil and gas is coming back in with a strong interest and push that we're moving the whole world into a new era, new energy era. Oil and gas is realizing they have a lot of competencies in subserve fist technologies which we use in geothermal, and we can work together. I think we're gonna come back to each one of

those in turn. And we're not going to spend a whole ton of time on the CEO two mineralization today. We're gonna do a whole other episode on that with card Fix. But I do want to spend more time on the second to so the district heating and coming back of let's say, well in gas on the district heating. So I was at the man, forgive my pronunciation, I was at a geothermal plant yesterday. I'd call it hell a scity, but it's called headless saving. Oh my goodness,

thank you. If you ever in Iceland, it's a beautiful place. They have a fantastic visitors center. You can even see the turbine hall where the where the turbines are spinning and producing the power, and you can see the pipes running all over the field. It's really great. Just have

a visit. But one part of the tour that was really cool was that they showed this giant cross section of a pipe that takes the fluid once it's cooled down a bit, and pipes it all the way to Recock And I think it said it takes what thirty hours for the fluid to get there or something like that, and then it is used for what's called district heating. Is that right? Can you tell us a bit more about that? Yea, So district heating system and Recular is

actually served by a few resource areas. Some are low temperature and low temperatures around a hundred degrees celsius and below. We have actually wells within the city. We're sitting on a geotimal resource and so we use that and have used that since nineteen and then later on when we needed more resources, we developed the high temperature fields, both for power and discertaining, and so that we take cold groundwater actually and heat it up with the high temperature

resource and then transport into town. It's about thirty kilometers. The water loses about one to two degrees of heat in that thirty hours, so that's it, and we delivered to houses and recommenc in the capital area at around eighty degrees celsius and that's what heat our homes. That's also the hot potable water in the sinks. I noticed

it in my hotel room Iceland. I'd always heard about it that in the winter everybody here, you know, has their heating on but the windows open, And that was how it was in my hotel room right when I walked in. It's very cool. It is cool, but as we progress as a as a world, we can't do that forever. Even here in Iceland, we have plenty of resource, but we're learning that we need to take care of

every drop. And I just had that conversation with an old aunt of mine because she heard me saying that this exact thing on the radio and she's like, but hit a, what about what about like moisture? And we have to we have to let it out. We have to get fresh air. Was like, yes, but you can turn down your radio. If you do that, you don't have to have both blasting. But that's the culture and that's what we have to change. I think all over

the world. Okay, yeah, energy efficiency and not wasting anywhere. Yeah. I think a thing that we come across a lot when talking about Iceland is yeah, but can we talk about that for just a second. So like, yeah, this works in Iceland, it works in Recovic, but this district heating does it work elsewhere? It most certainly does. We've shown that, for instance, in China. We had icelanders consultants

go to China. I can't remember ten years ago, fifteen years ago, worked with the Chinese government, worked with Cinepec, large energy company and geothermal district heating is now heating I think two million homes in China and they're actually utilizing temperatures way below what we're using, about fifty degrees celsius. Yeah. What they're doing is they have better efficiency in their houses.

They're better than us. They don't open their windows, and it really expanding fast and the government is is pushing hard and so the next actually world Geothermal Congress will be in China, and I think that just reflects the enthusiasm there. We have district heating networks all over Europe and they've been using other sources of energy for a very long time and changing over to a new energy

so is always complicated. It was complicated here. It was a political matter in nineteen thirty and it was a political matter in nineteen forty three just before the World War Two when we decided to expand. But what way they were selling then is what we're still selling now with the green transition. It was cleaner homes, cleaner skies because we were heating our homes with fuel oil, with coal, with pete. We have clouds of dark, cold smoke over the city. You don't see that today, but it's a

very cold day. By the way, it's beautiful here today. It's amazing. Yeah. Yeah, the forecast was rain all week and I came prepped for it, but it's just blue sky and wonderful. That's the thing with Iceland. You just have to wait fifteen minutes and then weather changes. There

you go. It's kind of like London way. So let's go back to point to So what I'm hearing so far is that you know, doo thermals changing or has a lot of potential to change, rather than you know, just being a drill well really deep, hope and pray you have a resource and pull up the fluid or the steam. There's a lot of uses for the heat whatever great it might be down below. Now, back when I was a analyst looking more closely at this industry, I worked a lot with the oil and gas companies.

About ten years ago. They were taking a good hard look at this industry and a lot of them just kind of passed said, you know what, now is not the time you've mentioned their back again. Can you describe a bit more of what they're doing and why. I was talking to, for instance, Baker Hughes at the conference, and they were saying that they've been serving geo thermal

the whole time, but in different different departments. Now they brought the whole team together and they're focusing on what they can do because they've realized they won't be doing oil and gas forever. That's not the future. So where are we going next? And geothermal is an obvious one road for them, and they have the competencies, they have people they want to do something that is good for the planet. It's that's the same for I think for

people everywhere. You want to have that higher purpose and geothermal gives you that because it's using the heat from the earth to power the power our homes, and I

think that's what we're feeling. So we're seeing companies, big companies like that, coming back in sponsoring conferences, taking part in the research, taking some of the methods that they've been using in oil and gas, and sort of how how can we adopt them to geothermal, So listening to the geothermal community but also coming in with their expertise. And a couple have invested in it. But let's come

back to that in a minute. What I would want to get to is that, Okay, So so Baker, Hughes and others that you mentioned, they're not doing this at a charity or you know, the goodness of their hearts. So there must be at least the glimmer of a of a future growth market here, and I'm wondering kind of what that might be. So just to put some context around that, So the BENF New Energy Outlook or

NEO our outlook for energy. We've got wind and solar and hydro well, actually wind and solar making up about of capacity now, but about fifty for wind and solar and for hydro about under one scenario. And then there's a thirty percent, you know, sort of gap of other stuff. Batteries, it could be ccs, you know, fossil fuels with ccs, it could be nuclear, it could be a lot of things. What role does geothermal play in that other Can it take a big part of that pie or what what

can do there? I think it really can, And especially in the heating and cooling capacity. I think that's our lowest hanging fruit. It's the most spread out throughout the world. There's so many countries that can actually utilize. Of countries coming into directly used like the Netherlands. We never thought of the Netherlands as a geothermal powerhouse, but they've been really expanding their direct use for greenhouses. We have dict heating around Paris, France, Munich, Germany is working on it.

There's a project up in Denmark. So those countries and those regions that are focusing that have clear climate targets, they will use geothermal direct use and many will use electricity production as well. Yeah, those are not the places that you would think of when you think geothermal, you think volcanoes, right, Like, do you think anywhere with a volcano is And that's why I used to tell people, you know, geothermals anywhere that that's got a volcano basically,

But that's yeah, I guess not true anymore. There are no volcanoes in Denmark or the Netherlands right right. So the question is can geothermal power as we know it play a role in the future energy mix? I think it definitely can. We can see it in California, for instance, there's RFPs specifically for geothermal. Yeah, what's an r request for proposals for power? And they're looking for geothermal specifically or a base load power that can be up of

the time that's renewable. And there's not many technologies that fit into that, but geothermal definitely does. And so in those regions where we have the high temperature resource or around hundred degrees, we will reproducing power with the resource, there's no question. And it can play an important role in those regions like it does here is of the electricity production in Iceland. It will be in California and Nevada, other countries around the world, Kenya big on geothermal, and Indonesia,

Philippines of course, all of those big countries. I would to say geo thermal can be summed up by that old song nice work if you can get it, you know, if you have the resources, great, it's a it's a really fantastic addition to your to your energy mix, and

it seems like we'll see more of that. But it's also well we'll have Paul Thompson from ormat On on the show talking about this as well, that it's a cold potensially be really good for geothermal to promote its benefit it as a baseload power right in the future, we of course need all the solar and when we can get but it is intermittent, we'll go into energy storage. But when we have a resource right there that's baseload in the ground just waiting to be tapped, and it's economical,

it's common sense, we're going to use it. Okay. So the question is can geo thermal scale and then why? But also we're getting at what it can be used for. Some other things that came to mind though are okay, so maybe even bitcoin mining or getting creative here, maybe it could be hydrogen production. You mentioned hydrogen production briefly the top can you can you talk about some of the other uses that could be used for so definitely hydrogen, either as to make it more flexible or just straight

on more flexible use and twenty four hour production. We are doing bitcoin mining in Iceland to a thermal power, so that's one of the yeah, yes we can do that and first rounded power all kinds of things, and then direct the air capture. That's one of our customers. They often need heat for their technologies. You're capturing CEO two from the air, you might need to heat up the medium or whatever you're doing to capture that. Direct

use is perfect for that. All kinds of industries, like I know in New Zealand, milk powder production is a big industry and there's drying involved with that. They're using geothermal any kind of food production. We're producing algae up at had to say they with our geothermal resource. They use the energy, the hot water and the electricity. In some cases you can use the CEO two from the

resource if it's pure enough. So all of these food production, hydrogen production, bitcoin mining, and especially when you combine the benefit of electricity and heat. So basically you're saying anything that can use will either electricity or a low grade industrial agricultural heat. Right, So it's not going to be your your blast furnace, you know, but it will be your your other process heat. Very interesting. Let's go back

to the oil and gas interest. So back in February, Chevron Technology Ventures and BP Ventures put it, along with ten A seconds some other investors, forty million into a new technology being, you know, driven by a company called Eva, which is called closed loop to your Thermal. So to me, you know, I thought that was pretty cool. Can we just talk about a little bit about what closed loop to you? A thermal is kind of the concept. It's

a nazing idea, but it's exciting. Everywhere in the in the world we have heat in the ground just depends on how deep you go. So when we talk about only high temperatures only where well canoes is, it's because the heat is so high and we have fractured ground. But closed loop is about drilling down, pumping the water through the heated ground without sort of making your own reservoir with In a closed loop though, so you you're pumping it down one in one well and taking it

up another so it's it's a closed loop. Closed loop to you a thermal. All of those ideas are really exciting because they expand another expansion of the industry into new frontiers and expands the geography of where it can

be done and reduces the risk. Potentially it could because there's one aspect for enhanced shield thermal systems, which is also very exciting research going on, especially in the US and other places, and enhanced gieldrmal resources can be you're going deeper, you're going into magma, or you're creating your own system somewhere where we don't have that fractured rock

and so you're you're fracturing the rock with pressures. But with closed loop in theory, you could basically drill your loop and so instead of fracturing and relying on pressures, you're drilling the whole way. It's an interesting and exciting concept. Cool. Okay, I really look forward to seeing what happens there. Okay, so we talked a lot about the potential. Let's talk about some of the challenges, right, So let's be very blunt.

Cost is still a challenge in geothermal, so wind solar, you know, bargain basement cost geothermal hasn't changed a whole lot since at least been started tracking costs back in two thousand nine, So can you comment on the cost of geo thermal and what some of the challenges are there here? Nicely, we've gotten the costs well down because we know our resources, and I think that's upfront risk is often the hardest to overcome, and the capex at the start of the project because we need to do

the drilling before we get to the resource. Before we do the drilling, we need to know what's down there and we have to use indirect methods for that, and we still have risk there. With risk comes cost, and I think that's where, for instance, the oil and gas they've done a lot to overcome that risk in their industry. They have different geologies, but many other technologies can be transferred, and that's what we've been working on in the past

few years and that's what's going to be continued. So I think that cost is still there, but I see definite potential of getting that down, both in drilling expiration and then in just in higher efficiencies in the network, in the technology and as you cascade the usage of a resource. If you're not, just, for instance, producing power, but getting other revenue streams, you're upping the upside as well. Yeah, okay, So Paul Thompson yesterday said, you know, when they sell power,

they've got three things. They're selling the power, the renewable energy credits, and the capacity. So the uh the payment for just the utility to be able to call on the power at any given time. That's very true. The uptime for geother plants is very high up here, and I had to say that for instance, initiament it we're on twenty four hours a day, seven days a week. We have about a week of maintenance a week a year or two. But but it's it's a baseload, the

powers at hand at all times. So if I'm Google or Microsoft, you know, and I'm really interested in building a data center in Iceland, and I come to you and I say, I really want to do this, but you know what, the price for geothermal is a bit too high, So I'm gonna go build somewhere else. What

do you say before I go? Before you go, the prices aren't that high in Icelands, definitely make it makes sense, but anywhere in the world I think, yes, you can build on wind and solar, but you always have to have some backup. Then you have to have story. Data centers are running twenty four hours a day, so you need to have some sort of baseload or energy storage or something in your system. And geothermal is a real good option, even though it might have a premium minsum areas,

that's what you're paying for. You're paying for that energy security that you need for your data system, specifically on data centers. Is it a bad assumption to assume that you could use the fluid for cooling as well? Okay, No, it's it's a very very astute assumption. I would say, and and and and the data centers we have out here and recans are doing similar things out there because they're using power from recanism, using power from head to say.

Then and then there's the districtating system in the area that's helping. And then talking about circular economy. Then once you cool, you can actually use the heat from the data centers back into heating more water to put into the distantating system. Okay, and a lot of keen listeners might be familiar with the term, well with that plant, why do they know it's it's a geothermal power plat and and the Blue Lagoon see coming from Iceland, I

just take that for granted, exactly exactly. It's my kid's favorite place in the world, absolutely, no question. So. But we know the geothermal industry has been kind of kept small globally, right like wind and solar have exploded. Geothermal is again nice work if you can get it. It's it's good in the places where it's good. What do you see as the biggest roadblock to geothermal growth or proliferation.

I think getting the capital into the industry, and I think for us to do that in some places, we need to become more systematic. And I think geothermal resources each one is unique in a way. You have different geologic formations, water, steam, different things. But we need to get better at standardizing how we do things and having a sort of standard way for investors to come in and say that they can compare portfolio of projects in the same way. And I think that's where we're headed.

It's sometimes system changes and industry changes are are harder than the actual technological changes because they can be done in one corner. This has to be an industry wide effort, but I think I think we're on the way. And and the International Geothermal Association both with its recollect Declaration and the Geothermal Sustainability Assessment Protocol, it's moving in that direction and is pushing the industry and the industry wants to so I think we are changing in that direction.

And on standardization, I mean, that's a that's a thing

everywhere in every sector. And I was talking to several people yesterday, both on the panel that that I was on when we were talking about CO two storage with car fix, is that you know, there's a lot of things that are over engineered, and there's a sense that you know, in some cases you just need to kind of get on with it, not treated as a science project, but a business in some cases, getting that business perspective in keeping it simple but still something that's in depth

enough that you can trust. So that's that balance. Don't go too far, don't over engineer because that will add to the cost, but make sure that you can compare different options. I think you know the answer to this, But what is the one thing you're most excited about right now in this sector? Direct use? I was right, okay, and uh and and and being from Iceland. When I was little, I thought all houses were heated with geothermal.

That's what I grew up with. And you just turn on your radiator or the tap, and the hot water that's coming into your house is coming from the ground somewhere below you. Right, that's what it likes, what it's like everywhere in the world. And then I moved abroad and I grew up, and I always obviously realized that that's not the case. But the comfort of that and the energy security, that's one of the biggest reasons Iceland went into it. It's a local resource. We're not getting

gas from another country somewhere far away. We don't have fluctuating prices for our homeheating, very stable, low prices. It's been great for our economy, and I want that for other countries in other regions. Well, actually, okay, we can. We can dig into that for just a second. When

you moved abroad. We met in two thousand seven in you when you were at m I T. So you moved abroad to Massachusetts all places, right, okay, So, and I was working in d C for the for the Geothermal Energy Association back then, so I don't remember the exact year. But a company called Dandelion do you know it, Yes, I've heard about it. They started doing ground source geothermal in Massa Usett exactly. Yeah. And that's a that's a really expanding industry because and that can be done anywhere.

You're just using the heat difference and using and using the stable temperatures of the ground. And it's really big in Sweden, it's really big in many parts of the US, all over Europe. It's a fantastic technology. It's an energy efficiency geothermal technology that is hard to explain, and that's why sometimes it's a hard sell because what is the heat difference thing? I would say, don't worry about it, trust the engineers and do it because it's gonna save

you money and it's good for the environment. That's all you need. That's all you need. We did a show on that a long time ago about all this choice people have in their electricity bill, you know, their provider. And the conclusion kind of from our analysts that you know, people don't really really really care. Some you know, dig into it, but most just want to pay less and know that the energy they're getting is okay, you know. And I'm definitely in that camp. I really they don't

want to think about it. But anyway, one final question, so I asked this yesterday in the panel. We just had the World Geothermal Congress yesterday, the next one in China. So let's say ten years from now, you know, in two more of these, what are we going to be talking about. We are going to be talking about the great expansion and direct use, because if Europe is gonna meet its green goals, if other regions and countries are going to meet the green goals, we need that direct use.

And it's easy to do. The barriers are systematic and policy. Those can be overcome with the push that's going on, and so I think we will do that. We'll be talking about how geothermal has pushed into regions where solar and wind are big right now, and geothermal came in as the baseload supplier that really helped secure that grid. And we're going to talk about the new technologies. Card

fixed will no longer just be a geothermal thing. It's already working with aluminum smelters to capture and mineralize there so too, it will be everywhere and other mineralization technologies and of cascade use. The future is bright. The future does look indeed. Pride for Geothermal hit A thank you so much, really much my pleasure. Today's episode of Switched On was edited by Rex Warner of gray Stoke Media. Bloomberg an EAP is a service provided by Bloomberg Finance

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