Summary

Geothermal energy refers to heat derived from the ground, from depths of a few metres to multiple kilometres beneath the Earth’s surface. Heat from less than 200 metres in the subsurface is known as ground-source energy or shallow geothermal energy and is accessed via a ground source heat pump (GSHP) or a hydrothermal plant. Heat from below roughly <500 metres heated by the molten core of the Earth is known as deep geothermal energy. The heat is continuously replenished by the decay of naturally occurring radioactive elements, at a flow rate of roughly 30 terawatts, almost double all human energy consumption, a process that will continue for billions of years. It has been estimated that just 0.1% of the heat content of Earth could supply humanity’s total energy needs for 2 million years.

Viability (3)

In 2019, 27 countries generated a total of about 15.4 GW of electricity from conventional geothermal captured from a natural reservoir of pressurised hot water beneath the surface. Deep geothermal energy is enabled by enhanced geothermal systems (EGS), the process of drilling into rock, injecting water at high pressure, artificially creating a reservoir, and collecting heated water. Digging deeper with super-hot EGS enables super-hot-rock geothermal tapping into supercritical water to generate power at a levelized cost of electricity estimated to be the cheapest baseload energy. A less mature but promising approach is advanced geothermal systems (AGS) which is a closed-loop systems in which fluids circulate underground using a series of pipes and boreholes picking up heat by conduction. EGS, super-hot EGS and AGS are still unproven commercially and the engineering challenges of drilling in high temperatures, above 150°C or so, remains difficult, with equipment prone to melting. As rock becomes harder, equipment must also be hardened to additional vibrations.

Drivers (5)

Demand-side, as with all other energy technologies, the macro driver is the climate emergency and the need to decrease global carbon emissions by 45% by 2030 and to reach net zero by 2050. Supply-side, EGS is benefiting from advances from gas fracking and enhanced oil recovery technologies. A unique driver for geothermal versus alternative baseload generation is that the industry can soak up the jobs from the declining oil and gas industries. More than that the well capitalised oil and gas majors can pivot into geothermal easily as they have decades of experience of digging into the ground. If deep geothermal is pitted against electrification as different decarbonisation strategies, deep geothermal is a better fit with the existing energy supply chain but far behind in terms of cost.

Novelty (4)

Geothermal can provide always-on, baseload power; it is the only renewable resource to do so. Relative to conventional geothermal, deep geothermal can be done anywhere. Even with solar, wind and other intermittent renewables combined with Stationary Energy Storage, there will be a demand for baseload energy for the foreseeable future. For baseload, deep geothermal competes with nuclear and Small Modular Reactors (SMRs) or potentially fossil power with Carbon Capture, Utilisation & Storage. Relative to nuclear, and all other renewables, EGS and super-hot-EGS geothermal can achieve lower levelized cost of electricity which is the primary dimension of competition.

Diffusion (3)

The main restraints are the complexity and high capex of the projects. There are few companies that have the expertise and money to invest in deep geothermal, there are startups like Fervo, but the Oil & Gas majors will be needed to push the technology. Adoption will also need some specific government support, not to the same extent as a carbon price as with Carbon Capture, Utilisation & Storage, but in the early stages of scaling up. There are also going to be PR challenges as injecting fluids into the ground is negatively associated with gas fracking which has had issues with water pollution and induced seismic activity.

Impact (5) Low certainty

Deep geothermal is more of a moonshot (earth-shot?) than alternative ways to generate energy. Solar, wind, nuclear (Small Modular Reactors (SMRs)) and Stationary Energy Storage are about changing the source of energy production. They offer the some potential to generate more energy but not to the same extent as deep geothermal, Nuclear Fusion or space-based solar power. Deep geothermal is a technology of abundance not scarcity. A high impact scenario, like all energy technologies, requires uncertain political and public support. Fusion is still a scientific endeavour and decades away, whereas geothermal is an engineering problem, a problem that the O&G industry already has decades of experience.

Timing (2025-2030) Low certainty