The president of Iceland and the CEOs of several geothermal energy companies also said a slow permitting process, limited project financing and a lack of skilled personnel to meet the international demand for geothermal services were key challenges the industry must tackle if it's to expand successfully.
Geothermal Energy Association Executive Director Karl Gawell estimated that $2 billion to $3 billion is currently invested in 188 geothermal energy projects in the U.S., with an additional $7 billion of investment expected by 2013. However, that growth is only part of the industry's rapid expansion. Billions of additional dollars are being generated from increased demand for geothermal energy technology, such as drilling rigs, production rigs and other energy production equipment used around the world.
Iceland, which produces 100% of its electricity via clean energy, and the U.S., which is currently the world's top producer of geothermal power, have advantages in positioning themselves to benefit from the coming growth. Their success with the new technology make them best able to assist other countries in developing their capacity to produce geothermal energy by providing technology, equipment and consulting services worth billions.
"There is indeed already a race for access to experts, engineering companies and those with technical know-how," said Icelandic President Olafur Ragnar Grimsson during the forum. "It is of utmost importance for the U.S. to be in the forefront of that race, to maintain a position of leadership -- not just for the benefit of the American economy but also in order to demonstrate excellence in a century which will see clean energy as a key to a successful global future."
Geothermal Energy Generation Will Double By 2015
The U.S. is expected to double or triple its domestic use of geothermal energy in the next few years, but leaders at the meeting said the real opportunity is in capturing more of the global market. Leaders at the forum said the U.S. should collaborate more with other nations on developing and building geothermal energy projects, expanding geothermal capacity in other countries, training foreign geothermal professionals and expanding exporting opportunities.
Geothermal energy projects generally involve drilling deep wells and pumping hot water or steam to the surface to produce electricity. However, other business uses for geothermal energy include home heating, greenhouse agriculture projects, snow melting services and tourism business opportunities. The U.S. earns its No. 1 ranking in geothermal power generation by producing about 3,100 megawatts of power capacity. That's followed by the Philippines (1,970 MW), Indonesia (1,197 MW) and Mexico (958 MW). Every 1,000 megawatts of energy produces about enough electricity to supply 1 million people.
The World Geothermal Congress estimates that the world's overall geothermal power capacity is 10,700 MW. Currently, 24 countries are generating energy from geothermal resources, and another 11 are developing the capacity to do so. Existing projects suggest that world geothermal energy capacity will nearly double by 2015, demonstrating the lucrative opportunities available in this rapidly expanding market.
Obstacles to Growth
Dita Bronicki, CEO of Ormat Technologies (ORA) said the biggest obstacle to geothermal expansion is the permitting process, which many say adds years to the time from project conception to energy production. She claimed that the permit approval processes for oil and gas companies were much easier than the process for geothermal energy.
"It can take two to four years to get projects approved," said Bronicki, noting that this causes most geothermal projects to take seven years to come to fruition.
Gawell pointed to another bottleneck for geothermal projects: a lack of skilled professionals available to undertake them. "There is a fear that demand for U.S. and Icelandic companies to work on projects around the world is greater than they are able to meet right now," he said.
Will Investors Be Patient Enough?
The capital-intensive nature of developing geothermal energy also poses challenges. A great deal of the money pouring into the industry has come from tax incentives and stimulus funding from President Obama's American Recovery and Reinvestment Act. With stimulus funding winding down and federal tax credits expiring at the end of 2013, more financing will have to come from private sources, and there's no telling what the risk appetite for projects that take seven years to deliver will be like.
In the end, investors' willingness to wait patiently for returns will play a key part in determining just how quickly the geothermal energy industry expands.