From: Haitham Haddadin, Reuters
Published September 6, 2007 12:55 PM

U.S. Geothermal Energy Sector Promising

NEW YORK (Reuters) - Geothermal energy could fill a sizable chunk of United States electricity requirements if legislative, technological and other challenges are met, a senior U.S. Department of Energy official said.


"Geothermal is going and blowing, there isn't a big hold-up to it," Alexander Karsner, assistant secretary for energy efficiency and renewable energy, said at an energy conference Wednesday.


"The potential of the resource could potentially be up in the double digits of our total national generating capacity. That means 10, 15 to 20 percent, of U.S. generating capacity."


As oil prices have risen, so has interest in renewable energy such as wind, biofuels and geothermal energy, which is generated from drilling wells that let steam power turbines.


Karsner said the upper end of that forecast could take up to 50 years to fully realize. And to put things in perspective, total current U.S. geothermal energy output capacity is equal to the production capacity of two nuclear or coal-fired power generation plants, he added on the sidelines of the conference.


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Still, the sector has witnessed big growth in recent years and was set to continue with the right technologies and policies in place, he said. For one, the industry's future growth is closely tied to continuation of production tax credits set by the government in the early 1990s, he added.


The U.S. geothermal output capacity stands at around 3,500 megawatts -- enough to power about 3 million homes -- with a similar amount in development, Karsner said.


The bulk of existing generating capacity, about 2,492 MW, lies in California, with the rest in Western states like Nevada, Utah and Hawaii, Karsner said.


To help extend usage of geothermal beyond the Western states with an abundance of heat sources like geysers, he said the department's focus is moving beyond conventional geothermal -- finding a hot spot on which to build a facility -- into enhanced geothermal systems, or engineering geothermal reservoirs.


"That's where we think the future really lies. All of the earth underneath the United States has some thermal capacity," he said. "The question is how to access that heat and get it to generate turbines."


POLICY IS MAJOR HURDLE


The fortunes of geothermal usage are also closely tied to the actions of Congress on the tax credits, he said. Congress will likely extend them when they expire at the end of 2008 but what is more important is to provide a predictable policy environment by approving longer extensions, Karsner added.


Up to now the credits have been "renewed in such a way that everybody is holding their breath every 24 months ... it is very difficult to induce the domestic industry with a long-term plan when you have an erratic short-term tax policy driving it ... Policy is the major restraint," Karsner said.


"If you assume that they do get a constant production tax credit, you can easily imagine doubling, tripling or quadrupling of this industry within a decade," he added.


Other barriers, he said, include lack of sufficient trained manpower and a dearth of sufficient domestic geothermal equipment production capacity. Cost was a factor as projects are typically capital-intensive in early stages, he added.


But once a resource is tapped, "the fuel is free, clean, domestic, secure and base-load (available year round)."


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