Geothermal generating little heat in energy sector

Site C critics see energy from Earth's core as hydro alternative but finding suitable sources in B.C. can cost a fortune

If you are looking for proven renewable energy technology that is clean, firm and cost-competitive, geothermal power looks hard to beat – at first blush.

Unlike wind or solar, which are intermittent, geothermal power plants provide electricity around the clock, and the energy source is free: the heat from the Earth.

It’s mature technology that has been used in Italy for more than a century.

Geothermal power plants are comparatively cheap to build, and they have a much smaller environmental footprint than hydroelectric dams.

Situated as it is within the Pacific Ring of Fire, B.C. has some of the best potential geothermal assets in Canada and is home to Alterra Power Corp. (TSX:AXY), which owns and operates two geothermal power plants in Iceland and one in Nevada.

“When it’s built, it’s baseload, and it’s the best renewable energy there is,” said Alterra CEO John Carson.

So why isn’t Alterra jumping into geothermal power in B.C. with both feet? And why, when BC Hydro looked at alternatives to the $7.9 billion Site C hydroelectric dam, did it gloss over geothermal energy?

The omission was noted by the Joint Review Panel, which concluded Site C was the most cost-competitive source of new power generation in part because “policy constraints” meant other alternatives could not compete.

“There are alternative sources of power available at similar or somewhat higher costs, notably geothermal power,” the panel concluded.

Hudson’s Hope, which is opposed to Site C, and Green Party MLA Andrew Weaver recently seized on that opinion to suggest geothermal could provide some, if not all, of the power that Site C would provide, at comparable costs. But even clean-energy developers like Alterra say the economics of geothermal just don’t add up in B.C.

Alterra co-owns a wind farm and run-of-river power plant in B.C. but has no geothermal power plants here and no plans to build one any time soon.

The biggest problem is the upfront capital costs of proving a geothermal source.

It costs $4 million to $10 million to drill a single well, Carson said, and it can be a hit-and-miss process, as Western GeoPower Corp. discovered after it spent $30 million drilling several wells for the South Meager Creek power project only to conclude that they were not commercially viable.

The Meager Creek project also would have faced capital costs associated with construction of a transmission line to tie a geothermal power plant into the grid.

“Geothermal risks are uniquely front-ended,” Carson said. “On the back end – once you’ve found the resource by those front-end, big-money drill holes – after that, it’s very competitive.”

In 2011, Alterra was awarded geothermal concessions for the Upper Lillooet area, but it has no plans to move ahead any time soon. The company is focused on developing new geothermal projects in Chile, Italy, Peru and Iceland. Whether a particular kind of energy generation is viable in a given region has a lot to do with what other energy sources are available and whether there are government subsidies.

“We’re really in a unique spot in B.C., with so many available fuels,” said Paul Kariya, executive director for Clean Energy BC.

“But why don’t we have any commercial operation of solar or geothermal or tidal, when these are proven technologies elsewhere in the world? It’s probably because we’re not a subsidized industry.”

Geothermal power prospecting is a bit like mining – a high-risk, capital-intensive venture in which one or two good strikes may be all that it takes to attract investors.

Calgary-based Borealis GeoPower Inc. is hoping to be the developer to make that strike here in B.C. The company plans to use a proprietary approach to geothermal exploration that would reduce unnecessary drilling.

Last year, it received $2.4 million from Sustainable Development Technology Canada. In March, it signed a partnership agreement with the Kitselas First Nation and Enbridge Inc. (TSX:ENB) to prospect for geothermal in the Lakelse Lake area just south of Terrace – an area known for its hot springs.

Borealis CEO Tim Thompson said one of the obstacles to developing geothermal power in B.C. is that there’s only one customer – BC Hydro, which is focused on large-scale hydroelectric power.

“BC Hydro has no interest in geothermal,” Thompson said. “And that was clearly highlighted as part of the recent hearings on Site C.”

Craig Aspinall, who was Western GeoPower’s public affairs officer before it merged with Ram Power Corp., understands why.

“Geothermal is a great resource … but it’s expensive, it can be technically difficult. We’re so blessed with hydro, why would you bother?”

Electricity from geothermal energy is generated by tapping hot underwater aquifers where the Earth’s magma is relatively close to the surface – typically in fault zones and areas with high volcanic activity or hot springs.

Steam from the water is used to drive turbines to generate electricity, and the water is pumped back underground to maintain a consistent pressure in the wells.

To be commercially viable, a geothermal source needs to have both high temperatures and good flow.

Wells drilled by Western GeoPower at the South Meager Creek project near Pemberton proved the water had temperatures of 260 degrees Celsius, but the rock lacked the permeability needed for good water flows, and it was considered not commercially viable.