Global Geothermal Markets Booming - Will the US Get Left Behind?

Article by: Meg Cichon, Associate Editor, RenewableEnergyWorld.com

When speaking to a geothermal advocate, it is likely that they will express a common frustration about the industry: geothermal, unlike wind and solar, is a baseload, guaranteed source of steady power, so why isn't there enough favorable policy in the U.S. to help the industry grow?

During the geothermal policy panel discussion at the Renewable Energy World North America Conference and Expo, co-located with POWER-GEN International, panelists described the scene in the U.S. government and expressed concern over the fact that if something doesn't change, the U.S. geothermal industry might get left behind.

While the wind industry is fighting for an extension of the production tax credit (PTC) set to expire at the end of this year, Karl Gawell, executive director of the Geothermal Energy Association (GEA), explained a current Senate proposal that could benefit both wind and geothermal. The proposal changes the condition of the PTC so that projects under construction by January 1, 2014 would qualify, rather than completed projects.

Gawell is confident that the provision will pass. “This stands a good chance. In Washington, no one ever tells you that something stands a good chance, but I think this right now stands a reasonably good chance, but it has to be part of the bigger deal.”

Its supporters include the American Wind Energy Association (AWEA), GEA, National Hydropower Association (NHA) and more. According to Gawell, the fiscal cliff deal will be the vehicle that pushes the PTC.

If the PTC provision passes, Gawell said he expects 2013 to be a “boom year” for the geothermal industry. Instead of companies and projects phasing out due to an expiring tax credit, the industry will be scrambling to get more projects qualified.

“What do you want people to be doing, try to minimize projects to get the under the wire, or try to get out there and start building projects?,” Gawell said. “The government wants the latter, so it has a lot of support.”

While there is hope for the PTC provision, the geothermal industry still faces numerous challenges. One major barrier discussed during the session was permitting. According to Gawell, a project typically takes 7.5 years to complete, and four of those years are bogged down with National Environmental Policy Act (NEPA) studies.

“We need people from the renewable community and people from the environmental community to come together and create a proposal to deal with this problem soon,” said Gawell. “We don’t want to end up in a corner where we are either not building these projects and having climate change come down around our ears, or we are building these projects but repealed NEPA. We need to find somewhere in the middle.”

According to Mike Long of POWER Engineering and Halley Dickey of TAS Energy, the geothermal industry is seeing huge growth globally, most notably in East Africa. In Kenya, for example, development banks have been funding renewable projects, and $18 billion will be spent on geothermal alone by 2030. Dickey expressed the need for companies to move overseas and expand globally, where it is likely most development will take place in the foreseeable future. But with companies moving overseas, many question the future viability of the U.S. geothermal market.

Long expressed the fact that geothermal isn’t taken as seriously in the U.S. as other countries because it only makes up 0.4 percent of installed capacity, unlike other countries where it may be 20 percent or more. In order for geothermal to be taken seriously and grow in the U.S., it needs stable policy that extends for consecutive years, not just one. 

Long said that during the keynote presentation for the POWER-GEN and REWNA conference, he was surprised that the speakers said they expect renewable energy capacity to double in the coming years, but wasn't surprised to see that geothermal was missing from the energy capacity chart. 

“One year we’ll come to POWER-GEN, and maybe we won’t be in the ‘other energy’ category,” said Long. “We’ll have our own little slice of the [energy capacity] pie chart.”

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