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California's Geothermal Market In Flux, Part 1

Led by efforts in the 1920s, the first modern geothermal well in the U.S., Magma No. 1 was drilled in 1955 at The Geysers, in the Mayacamas Mountains of northern California – a site that today comprises about 45 square miles and is the largest geothermal field in the world.

California is, in many ways, the world’s greatest geothermal success story.  Now as efforts build to go green, increase renewable energy use in the U.S., and mitigate greenhouse gasses, California’s leaders are learning how to keep the state at the forefront of geothermal energy development. 

Geothermal energy provides a significant share of California’s power supply, with about 42 percent of commercial in-state renewable electricity generation in 2010 – and the state has more geothermal installed capacity than any other state at 2,600 MW.  If it were its own country, California would take first prize as the largest producer of geothermal energy in the world.

Now that California’s energy portfolio is changing, key decisions ahead could have an enormous impact on the future market as decision makers hone in on addressing barriers to development.  With substantial potential for additional resource capacity, it is important that California leaders ensure geothermal is included in the state’s first cap-and-trade auction in November of this year.

At the same time, officials are scrambling to make up for the loss of power from retiring plants and from the San Onofre nuclear plant, which has been down since January 31.  The loss has affected not only 1.4 million homes, but also voltage support to the transmission system, causing some experts to question the stability of Southern Californian infrastructure, meaning that the brownout frequency could get worse.

Approaching Familiar Issues in New Ways

Rather than focus on changing perceptions, as educators of wind and biomass have had to in the past, the geothermal industry has had the basic challenge of resource recognition in the public dialogue. 

Unlike other renewable energy resources, geothermal energy is not well known among policy makers and the public, and many decision makers don’t realize how much potential for development exists.  For example, a feature on geothermal on NPR in 2010 questioned whether geothermal plants in California are running out of steam.

They aren’t. The USGS has identified over 5400 MW of known geothermal resource capacity, as well as estimated an additional 11,000 MW of undiscovered resource capacity in California. 

As Karl Gawell, the executive director of the geothermal industry group GEA put it: “It’s important to get the facts straight, because making right policy decisions today is vital to making the industry stronger in the future.”

Another challenge of geothermal is proving the resource and its potential capacity due to the difficulty in measuring the amount of energy potential in a geothermal reservoir.  Drilling an exploratory well is expensive, so everything that can be done to better characterize the resource prior to drilling will bring down project costs — and ultimately delivered retail cost. 

With these issues in mind, the California Geothermal Energy Collaborative at UC Davis (CGEC), along with the UC Davis Geology Department and University of Nevada Reno, are working with the National Science Foundation’s Industry/University Cooperative Research Center (I/UCRC) program toward gaining industry involvement to support a cross-campus Center for Geothermal Research. 

The Center will address these very issues, serving as a research branch for the geothermal industry to focus on exploration, reservoir management and extraction, resource identification, and systems processes. 

By addressing these topic areas and improving resource characterization, the margin of error in estimating capacity and location will be reduced.  This will reduce risk, and in turn, allow for more opportunities for geothermal project financing.  The proposed I/UCRC for Center for Geothermal Research would also serve as a training platform for future workers in geothermal energy.

The CGEC is also working on integration studies of solar, wind, biomass, and geothermal in the Los Angeles Basin; engaging commissioners and legislators to bring this outstanding resource to light; and supporting student research to better characterize resources in economically depressed  Known Geothermal Resource Areas (KGRAs). 

The efforts at UC Davis, University of Nevada Reno, and Stanford, coupled with geothermal development in Nevada and California, highlight the Western states as a continuing role model in U.S. and international geothermal discussions.

Global Pioneers’ Path

California’s geothermal resources are far from tapped.  Further development will require further innovation from geothermal companies and state and federal agencies that perform regulation services.

“California is the global pioneer for geothermal energy,” said Gawell, “yet there is still a lot of misunderstanding in the state regarding geothermal potential and its positive attributes, including minimal land use and environmental quality benefits.”  

The Geysers represents almost one-half of the state’s geothermal output.  Additional major geothermal power production in California occurs at power plants located around Coso and the Imperial Valley, with enough installed capacity to meet the needs of more than 1 million households. 

California has substantial identified undeveloped conventional geothermal resources.  On the low end, there are about 3,000 MW waiting to be developed in state, and another 1,300 MW in nearby Nevada, according to Public Interest Energy Research (PIER) studies.  In the past, DOE-funded studies by Sandia National Laboratory indicated that with advanced technologies included, there could be as much as 24,750 MW of additional capacity.  More recently, the 2008 USGS assessment reported undiscovered resources at 11,340 MW, and potential for Enhanced Geothermal Systems in the state as high as 48,000 MW.

California remains a pioneer in technological innovation, a great example of which is in the extraction of minerals from geothermal brines.  Geothermal brines in the Salton Sea region of Southern California are rich in lithium, as well as other critical minerals including manganese and zinc, and uniquely positioned to competitively, sustainably, and reliably help meet the world’s need for high performance battery materials for years to come.  Just one 50-MW geothermal power plant in the Salton Sea region can yield sufficient lithium for about 1.6 million plug-in hybrid electric vehicles per year, Simbol Materials told GEA.

Simbol Materials is commercializing the extraction technology at EnergySource’s Hudson Ranch I site, creating a bridge between geothermal operations and the emerging electric vehicle industry.  The bolt-on technology also utilizes CO2, wastewater, company representatives noted, as well as excess steam from the power plant, adding to site sustainability.  In addition, royalties from mineral extraction improve the competitiveness of geothermal energy. 

Assembly Bill 2205, now moving through the state legislature, would clarify that byproducts of geothermal power production that are used to extract beneficial minerals and substances receive the same regulations and exemptions that apply to the geothermal plants.  The clarification would remove potential roadblocks to the adoption of this clean energy multiplier, helping advance geothermal energy generation and energy storage — both vital to our clean energy future.

In a letter to California Independent System Operator (CAISO) officials, GEA encouraged exploration of developing critical resources via piggybacking on geothermal developments as a fundamentally different way from traditional methods, and less invasive.  CAISO has recognized imported gas resources as a firm and flexible resource to help meet issues raised by the planned retirement of aging and once-through cooling (OTC) plants, but geothermal resources can also meet those needs.

The need to replace retiring power plants extends to coal generators as well.  Survey data from the Energy Information Administration showed capacity from 175 U.S. coal-fired power generators will be retired between 2012 and 2016, over four times greater than retirements over the previous 5 years, or about 27 GW. 

In an April report from California’s Energy Future Committee of the California Council on Science and Technology, the authors said, “We are moving from a world where supply is controlled to follow demand, to one where demand must follow and increasingly uncontrollable supply . . . The need for advances in load balancing technology is one of the largest gaps in the energy technology portfolio.” 

Geothermal energy is a baseload power and is constantly available, meaning it can replace retiring baseload power, such as that from nuclear or coal plants.  “Geothermal energy will likely prove to be an excellent and acceptable choice,” note the authors.

But how can the industry move forward? Check back tomorrow for Part 2, where key policy decisions will be outlined. 

Lead Image: California sign via Shutterstock

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