The World's #1 Renewable Energy Network for News, Information, and Companies.

Geothermal 2014 Outlook: As US Market Slows, A Global Focus Grows

Following another year of modest growth, the geothermal industry will continue to fight the good fight in 2014 by focusing on key issues that have hindered its massive global potential.

While the U.S. geothermal market still seems to be in a slump, the global market is expected to bring close to 1,000 megawatts (MW) of geothermal capacity online each year for the next six to seven years, according to Karl Gawell of the Geothermal Energy Association. Some of these regions, such as the Caribbean, are breaking ground on their first geothermal projects.

“Years ago we were seeing people just beginning to look for geothermal resources in these areas. Now we are seeing people drill and move forward with projects,” said Gawell. “So we can look forward and see projects that are in progress — they are no longer what we call prospects.”

Although the international market is still heating up, and only getting hotter, industry experts caution that it holds some major roadblocks that may prevent major growth for the forseeable future.

U.S. Market: Same Old Story

“I’m almost getting tired of having to describe Washington as ‘stuck in gridlock,’” said Gawell. 

Indeed, U.S. Congress has failed to create major waves in the energy sector for some time, and mostly focused on short-term tax incentive extensions. Geothermal experts see this approach as a band aid on an industry longing for a long-term plan. “What we need is meaningful, long-term legislation with definitive price structures,” said Halley Dickey of TAS Energy.

Rather than waiting on the federal government to come to its rescue, Gawell advises the industry to focus on the state level. “I think what is important is to realize that what drives renewables are the states — that is where you get contracts,” he said.

Geothermal should focus on state renewable portfolio standards, transmission planning and procurement policy in order to score development contracts. Several key areas to watch in 2014 include the NV Energy consolidation — part of the merger is moving forward with renewables solicitation.

California is another hot state to track as they try to figure out how to move forward with long-term renewable energy procurement. “[California has] high enough levels of intermittent resources that they are beginning to recognize the values of flexible and baseload resources,” said Gawell, “but they are not sure how they are going to be translated into project bid evaluation.”

In order to find a role in these long-term plans, the geothermal industry needs to continue to emphasize its baseload and dispatchable capabilities, explained Gawell. Geothermal’s value is also undermined internationally, according to Philippe Dumas of the European Geothermal Energy Council (EGEC). When asked to explain the biggest challenge facing the geothermal industry, Dumas stated a simple lack of knowledge about the technology’s benefits.  

“There is a big lack of awareness about its advantages and its potential, and so the appropriate support measures are not established,” said Dumas. “This is currently the biggest challenge in order to be considered in the energy scenario 2020-2030 and 2050.”

No matter how you slice it, “the first half of 2014 is going to be slow domestically,” explained Dickey. “There is not much going on." 

Dickey said that there may be a few projects that break down – many of which had benefited from tax incentives. Most of these projects are in the western states, and projects being contemplated in Nevada, Idaho and Washington just might “have legs enough to actually move forward,” said Dickey.

The International Allure

“The big news for the geothermal industry continues to be the global market,” said Gawell.

Countering the stagnant growth potential in the U.S., the international market seems to be gaining new players every day. According to Gawell, top players in 2014 include East Africa, Central America, and Indonesia. They seem to be very strong, headwind going, projects in construction phase you will see move forward.

Dickey emphasized that Turkey has a very strong geothermal market after announcing a promising feed-in tariff. “Turkey is probably the strongest and fastest growth market in geothermal in the world right now.”

In the last year several financing agencies have announced initiatives to help spur geothermal growth, including the World Bank’s $500 million geothermal fund and Ex-Im Bank facilitating project deals worldwide. International initiatives such as Power Africa and the Geothermal East Africa Initiative help spread technology and education to developing nations. Though funding, support and interest is abundant, these areas still hold major roadblocks to development.

“The will and the resource is there, but you've got risk elements,” said Craig O’Connor of Ex-Im Bank. The African government, for example, does not like to give financial guarantees – even though banks need this assurance to move forward. Many of these regions also lack the legal knowledge and resources to pull a project together and get it started, noted Gawell. 

“Just as much as we need to send over education and technology, we need to communicate business best practices, thoughts and ideals about how to go to market and do business,” explained Dickey. “They are proud and excited and have a great resource, but they don't understand the way everyone does business — so there is a bit of a disconnect.”

Despite these challenges, many U.S. companies are still trying their luck overseas as their home market remains quiet. According to Gawell, projects are moving forward and many companies in the U.S. market are looking overseas because it is better economically. However Gawell still holds out hope for the U.S. market in 2014.

“Were hoping that as states move forward to meet a renewable portfolio standard or climate goal that there is no question the need for firming power for filling the gaps is going to be huge,” he said. “That raises the profile for geothermal that we can at least partially fill the goals of keeping the grid reliable — and that allows for greater concentrations of wind and solar by supporting grid integration.”

Lead image: Geothermal plant via Shutterstock

RELATED ARTICLES

Pope Francis

A 9-Minute Guide To Pope Francis’ Encyclical on Climate Change

Jim Lane, Biofuels Digest Pope Francis issued Laudato si’ (Praise Be to You) On the care for our common home, his second encyclical, concerning Catholic doctrine with respect to climate change, consumerism, and development.
US Capitol

Republicans and Democrats Back Bill to Level the Playing Field for Renewable Energy

Vince Font, Contributing Editor U.S. Senators Chris Coons and Jerry Moran are leading a bipartisan effort to reintroduce tax code legislation aimed at leveling the playing field for renewable energy investment. The Master Limited Partnerships Parity Act w...
Pope Francis

The Common Goals of the Pope and Clean Energy

Paul Stinson, EDF Pope Francis turned a keen eye toward the environment and the problem of climate change with his encyclical,“Laudato Si” (“Praised Be”). As a clean energy advocate, I’m heartened that Pope Francis recognizes the need t...
money pile

Deeper Capital Markets for Renewable Energy

Tomas Gardfors and Ann Vesely, Norton Rose Fulbright Following the global financial crisis, a more diversified funding market is developing in Europe. Institutional investors are helping to fill the funding gap left by the contraction in bank lending in the wake of the crisis...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

SAP for Utilities

The SAP for Utilities conference is the most comprehensive SAP for Utili...

GRC Fieldtrip - McGinness Hills Geothermal Plant

The 13.4 MW Salt Wells Geothermal Plant is owned by Enel North America a...

GRC Fieldtrip - Steamboat Geothermal Plant Complex

Ormat’s Steamboat Geothermal Power Plant Complex located...

COMPANY BLOGS

Net Zero Energy Efficient Buildings and Geothermal Heat Pumps

As the U.S. market for green building design and construction evolves, ...

Geothermal Earth Day Visual: Shaping Environmental Solutions

Earth day 2015 is an important point in history for the environment. Mem...

Environmentally friendly solutions for projects

geoAMPS joins the celebration of the worldwide observance of Earth Day o...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS