Geothermal for energy storage: From hot rocks to power stocks

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  Quantumrun Foresight
• May 6, 2024

Insight summary

Exploring the depths of the Earth, geothermal energy has evolved with technologies like Enhanced Geothermal Systems (EGS), extending its reach and efficiency beyond natural hot springs. EGS allows for capturing Earth's subsurface heat anywhere, offering a reliable power source that complements the intermittency of solar and wind energy. This advancement promises not only to make renewable energy more accessible and sustainable but also to drive significant environmental and economic benefits.

Geothermal for energy storage context

Geothermal energy, harnessing the Earth's subsurface heat, has been a power source for over a century, providing warmth and electricity from naturally occurring hot springs and underground reservoirs. The technology behind geothermal energy involves drilling into the Earth to access steam and hot water, which then drive turbines to generate electricity. This method has been particularly effective in tectonically active regions, such as Iceland, New Zealand, Kenya, and the Philippines, where it significantly contributes to the electricity supply by tapping into hydrothermal reservoirs.

Recent advancements have introduced Enhanced Geothermal Systems (EGS), extending geothermal energy's potential beyond natural hydrothermal sites. EGS technology drills deeper to create artificial reservoirs in areas lacking natural subsurface fluid and permeability, broadening the scope of geothermal energy to virtually any location with subsurface heat. This method involves injecting water into hot rock formations to produce steam, which can then be used to generate electricity. Such systems not only increase the geographical availability of geothermal energy but also promise to complement the fluctuation of other renewable sources like wind and solar by providing a stable power supply.

Research conducted by Princeton University and Fervo Energy demonstrates that advanced geothermal reservoirs can store excess renewable energy in hot water or steam, which can be converted back into electricity during periods of low solar or wind activity. This approach to energy storage offers the potential to store electricity for extended periods with high efficiency, comparable to lithium-ion batteries, but with minimal additional cost. The US Department of Energy's Enhanced Geothermal Shot initiative aims to reduce the cost of EGS by 90 percent by 2035.

Disruptive impact

As renewable energy sources like solar and wind become more prevalent, the ability of EGS to provide a stable, reliable power source regardless of weather conditions addresses one of the main challenges of renewable energy: its variability. This stability can lead to a decrease in reliance on fossil fuels for baseline power, reducing greenhouse gas emissions and helping countries meet their environmental targets. Furthermore, by making geothermal energy viable in more locations, EGS expands the renewable energy map beyond traditional solar and wind farm locations, enabling a more distributed and localized energy generation approach.

For companies, particularly those in the energy sector, investing in EGS and geothermal storage technologies presents an opportunity to diversify energy portfolios and reduce risk. As the cost of EGS technology decreases and efficiency increases, energy companies can leverage this trend to offer consumers more sustainable and cost-effective power solutions. This shift not only helps companies align with increasing consumer demand for green energy but also positions them favorably within markets that are increasingly regulated for environmental impact. Moreover, storing and releasing energy on demand enhances grid stability and reliability, offering energy companies a competitive edge in markets where energy supply can be unpredictable.

Governments play a crucial role in facilitating the transition to renewable energy technologies such as EGS through policy, funding, and research support. By prioritizing investments in geothermal research and development, governments can accelerate the commercial viability of EGS, making it a more attractive option for private-sector investment. Regulatory frameworks can also be adapted to encourage the integration of geothermal energy into national grids, ensuring that infrastructure developments keep pace with technological advances. 

Implications of geothermal for energy storage

Wider implications of geothermal for energy storage may include: 

• The creation of new job opportunities in drilling, engineering, and maintenance as the EGS sector expands.
• The stimulation of rural economies through the development of geothermal plants in less populated areas, bringing infrastructure and investment.
• A shift in political priorities towards more sustainable energy policies, driven by the successful deployment of EGS technologies.
• The development of new educational and training programs to equip the workforce with the skills needed for jobs in the geothermal sector.
• Increased research and development in geothermal technology, leading to further technological advancements and efficiency improvements.
• Changes in land use and environmental concerns over drilling practices, requiring careful management and regulatory oversight.

Questions to consider

• How might the shift toward geothermal energy influence global politics and economic relationships between energy-importing and energy-exporting countries?
• If you live in an earthquake-prone country, is your government exploring building EGS?