Low-carbon tech: is geothermal close to a breakthrough?

Three years ago, we called out next-generation geothermal as a dark horse in the race to decarbonise. I asked our sub-surface experts, Dr Andrew Latham and Kate Adie, and Energy Transition analyst Prakash Sharma why they think a technological breakthrough that could catapult today’s tiny, exclusively hot-spot energy source into a global industry may now be near at hand.

Why is conventional geothermal not the answer?

It’s restricted by geology. Conventional geothermal tends to work only in a few locations around the world with a high thermal gradient, tapping into shallow, high-heat resources. Wells are drilled into highly permeable reservoirs, drawing the hot fluids to surface where they generate the power and heat in the geothermal plant. Just 0.6% of the 45,000 oil and gas reservoirs in our database have these qualities.

What are new technologies trying to do that’s different?

Take geothermal global and realise the aspiration of geothermal anywhere. The holy grail is wells that can work in locations with an average thermal gradient. Two technologies are targeting low permeability rocks. Enhanced geothermal systems (EGS) use fracking to stimulate the flow of hot fluids through the rocks; advanced geothermal systems (AGS) are testing closed-loop designs where water or other fluids are circulated through the hot rock without leaving the wellbore. Separately, a range of new drilling technologies are hoping to cut well costs, which account for up to 90% of geothermal project capital expenditure.

Non-drilling projects include more effective heat exchangers to maximise output from lower temperature resources and co-location of geothermal with hydrogen production, direct air capture, underground thermal energy storage and critical mineral extraction to maximise the value of the geothermal resource.

Who’s investing and where?

Oil and gas companies are natural investors given their subsurface, drilling and engineering expertise. Shell has investments in conventional geothermal projects, while BP, Chevron and Equinor have partnerships with next-generation projects spanning AGS, EGS and critical minerals.

Most of the pilot projects are in Europe and the US where there are subsidies available. The level of spend on the pilot projects is currently tiny, amounting to just a few hundred million dollars. But if geothermal goes global, we estimate that cumulative investment through 2050 could be US$1 trillion.

Which projects could signal the breakthrough?

Both EGS and AGS technologies are being tested at commercial scale and could be moving towards widespread, location-agnostic deployment. Eavor’s AGS project at Geretsreid in Germany is one to watch. Its Eavorloop multilateral closed-loop well design is targeting 60 MWth of heat capacity and 8.2 MW of power by 2026 from a reservoir at 4.5 kilometres depth with a normal geothermal gradient. Success could see five similar installations following in short order.

Another is Fervo Energy’s Project Red in Nevada which came onstream in 2023 and has already demonstrated EGS technologies at commercial scale. Its much larger Project Cape in Utah began drilling 29 wells in 2023 and aims to produce 400 MW from EGS by 2028. Both harness the much higher-than-average geothermal gradients in these locations.

GA Drilling and Quaise Energy are developing plasma bits and gyrotron-powered millimeter wave-drilling technologies to disintegrate hard rock, unlocking deeper, hotter geothermal resources.

Are costs a challenge?

Yes. Geothermal’s current levelised cost of electricity is well out of the money at about US$200/MWh. Should the pilot projects prove the concept, the hope is that scaling up lowers the LCOE by two-thirds to US$75/MWh by 2050. That would be broadly competitive with nuclear and hydrogen.

Why is Big Oil interested?

Three reasons. First, it’s diversification for net zero. Second, they can leverage skill sets in subsurface and drilling – if geothermal is to grow from 50 GW today to over 250 GW by 2050, some 35,000 new wells will have to be drilled.

Lastly, like hydrogen and CCUS, it’s another sustainable discipline that will help attract new generations of geoscientists into the industry as the sun starts to set on oil and gas production.

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