Geothermal Energy: A recession-proof resource?
While the natural heating and cooling from the earth’s core is the oldest source of energy in history, the use of geothermal energy has been experiencing significant global growth within recent years. According to a report by the Geothermal Energy Association (GEA), the overall growth was 20 percent from 2005 to 2010. Another 70 nations have geothermal projects currently in the works, which is a 52 percent growth over the last three years.
Geothermal energy is one of the best existing natural resources for energy. One of the many benefits to using geothermal heat for power is that there is little to no harmful impact on the environment. Geothermal emits less carbon dioxide (CO2), sulphur and nitric oxide than other fossil fuel power sources. Since energy is developed from the earth, the supply is unlimited. Additionally, no power storage is required and geothermal is one of the cheapest forms of energy that exists.
GLOBAL GEOTHERMAL GROWTH
Despite the economic recession impacting the world in recent years, geothermal energy continues to grow. The Obama administration has recently announced plans to aggressively increase geothermal development in the U.S. “We have a choice. We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy,” said President Obama. “We can hand over the jobs of the future to our competitors, or we can confront what they have already recognized as the great opportunity of our time: the nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.”
Energy Secretary Steven Chu added, "We have an ambitious agenda to put millions of people to work by investing in clean energy technology like solar and geothermal energy. These technologies represent two pieces of a broad energy portfolio that will help us aggressively fight climate change and renew our position as a global leader in clean energy jobs.”
In addition to geothermal expansion in the U.S., the potential to tap into the geothermal energy resource is huge worldwide. According to Karl Gawell, the executive director of GEA, “The colossal growth of the international market is only a small fraction of the geothermal power potential we could be utilizing. Even if we assume the lowest possible projections for geothermal potential, the vast majority of countries don’t fully use their geothermal resource. In 1999 we identified 39 nations that could provide 100% of their electrical needs from geothermal, fully powering their countries with a clean, renewable and domestic source, but only nine of them have geothermal power online. The development potential here is very obviously tremendous.”
Iceland is an excellent example of a country that utilizes geothermal energy, with five geothermal plants accounting for roughly 24 percent of the country’s power. In addition, 87 percent of all buildings in Iceland are heated from geothermal energy. Iceland is attempting to move toward being a 100 percent fossil-free nation.
Ormat Technologies, a U.S.-based company that operates over 520 MW in owned geothermal power plants, and over 1300 MW around the world, reported a first quarter 2010 total revenue of $82.7 million. Though this is a 6.5 percent decrease from total revenues from the first quarter of last year, the outcome for the remainder of the year looks positive. Dita Bronicki, Chief Executive Officer stated, "We continue to expect 2010 Electricity Segment revenues of $275 million to $285 million. We also expect an additional $9 million of revenues from our share of electricity revenue generated by a subsidiary, which is accounted for under the equity method. 2010 Product Segment revenues are expected to be between $75 million and $85 million."
Within the next two years the Germany-based companies Hörmann Energie und Umwelt and Geysir Europe are going to invest more than €70 million in a geothermal project. More than €8 million has been invested in the project so far, amongst others for the construction of the drill pad at the “Hofgut Breitenbach” near Gelting. Drilling will start in June 2010.
Africa is a prime location for generating geothermal energy. “For a long time, Kenya was dependent on hydro energy,” stated James Kiiru, Commercial Attaché, Embassy of the Republic of Kenya. “The challenge is if there is no rain, the supply can’t be guaranteed, so the government is looking into alternative sources of power.” Kenya was the first African country to really expand on its geothermal resources. With three plants, built by the Kenya Electricity Generating Company (KenGen), further expansion at all locations are in the works. Kenya received a $293 million loan from Japan and a $94 billion loan from China for plant expansion.
Octopus Renewables buys Eclipse Power
The deal, which was completed with funds managed by Octopus, furthers Octopus’ involvement in the electricity distribution sector, having worked with Eclipse since 2018. It will allow Eclipse to continue the expansion of its team, while also investing in its systems, technology, and pipeline, with the ambition of making it one of UK’s leading IDNOs.
Eclipse has secured a portfolio of more than 10,000 connections across residential, industrial, commercial, battery storage and electric vehicle charging customers. Given the focus on electrification of heat, transport and industry in the UK, Eclipse is expected to play an important role in facilitating the UK’s energy transition.
Octopus Renewables is the largest investor of utility scale solar power in Europe, as well as a leading investor in onshore wind and biomass, managing a global portfolio valued at more than £3.5 billion. Institutional investor Nest partnered with the company in March.
Peter Dias, Investment Director, Octopus Renewables, said: “Having worked with Eclipse since 2018 and seeing their exciting growth, we’re thrilled to be able to make this acquisition and support the team to maintain this momentum.
“The acquisition of Eclipse is part of our strategy to identify and back great management teams that are supporting the energy transition. With ongoing support and investment, our investee businesses will have access to the expertise, business networks and financing to be able to scale faster and help contribute towards the UK’s net-zero goals.
“High-quality management of the distribution networks is going to be critical for the UK, and we are very pleased to be directly supporting the decarbonisation of heat, transport, and industry through this acquisition of Eclipse.”
Gary Gay, Managing Director, Eclipse, added Octopus shares a clear understanding of the important role that electricity distribution networks will play in the UK’s drive towards net-zero, and importance of a customer-focussed approach for building future smart distribution networks.
“With that, we are excited to now be part of the Octopus Group, with this investment helping us to reach the next stage of our growth journey and contribute to a greener, more efficient electricity network in the UK.”
Global renewables updates
ReNew Power recently won a 200MW/ac Interstate Transmission System (ISTS) solar generation project in an auction conducted by the Maharashtra State Electricity Distribution Company. ReNew Power expects to sign a 25-Year Power Purchase Agreement with the utility by the third fiscal quarter of 2022 to supply clean energy to Maharashtra at a tariff of Rs 2.43/ kWh (~US$0.033).
Natel Energy, a supplier of sustainable hydropower solutions, has announced a $20M funding round led by Breakthrough Energy Ventures and supported by Chevron Technology Ventures.
The company will use the funding to deploy its Restoration Hydro Turbine (RHT), which enables cost-effective production of distributed reliable renewable energy.
Duke Energy Florida plans to invest an estimated $1 billion in 10 new solar power plants across Florida, including the construction of four new sites, which will begin in early 2022 and will take approximately 9 to 12 months to complete. Construction of all 10 sites is projected to be finished by late 2024.
LG Electronics has made public its commitment to transition completely to renewable energy by 2050 as a key component of its sustainability strategy.