How would you define the Geoenergy that Eavor is using to power its technology?
Geothermal energy has traditionally been associated with bringing hot water to surface in any way, shape or form, but one of the challenges is finding hot aquifers as these only exist in around 5% of the places on the globe. Instead of trying to find the needle in the haystack, we are looking to use the underground heat found in 95% of the rest of the world, thus we prefer Geoenergy as the right way to define our technology and approach.
How mature is the technology at this point, and what are some pragmatic ways in which it is already being used at Geretsried?
At Geretsried, in Germany, we launched our first commercial project this summer. In a nutshell, we are constructing a giant underground radiator where two vertical wells drilled to a depth of 4,500m are connected by 12 laterals each 5,000m in length. Inside this system, we circulate drinking water with added biocide and drag reducing agents. Apart from using a small pump to initiate it, the fluid circulates naturally by thermosiphon, hence making the whole system far more efficient. In 2019, we drilled a pilot project in Alberta, which helped us prove the concept. The plant in Geretsried aims to show commercial viability. In addition to these two projects, we have a portfolio of around 200 projects in different places around the world, and in various stages of preparation, waiting for the results from the Geretsried site.
When do you expect to find out whether the technology is commercially viable or not?
In a traditional geothermal project, you not only have to define the geology and find the heat source, but you also have to locate the water source, which amounts to a development time of five to ten years. Given that we are just looking for the heat, this timeframe is considerably shorter, taking somewhere between three to five years. Additionally, we know exactly how much power we can make with this system before we start drilling, thus we are able to begin the construction of the power plant ahead of time. Considering all these elements, although we have just started drilling, we will produce power towards the second half of 2024, at which point we can deem the whole system commercially viable.
Why was Germany an attractive destination for this phase of the project?
The German government has been consistent in supporting the geothermal energy sector with a feed-in tariff of €252/MWh over the long term, and this stability underpins long-term investments. France and Spain, for example, had similar incentive, but they ultimately chose to abolish them. In addition, every major German city already has a district heating network fed by gas or coal, and as all these fossil fuel plants are being shut down, they are interested in finding new energy sources as soon as possible.
What is the investment appetite for Geoenergy systems and what tactic has proven to be the most successful when trying to raise funds?
While the commercial banks are not interested in providing debt financing for such technologies, the development banks (Export Development Canada, the European Investment Bank, the Japanese Bank of International Cooperation, etc.) specialize in supporting renewable energy projects that are ready for demonstration at commercial scale. In addition to this financial source, we are putting our own money in, but we have also raised funds from OMV, BP, and Chevron.
Besides Geretsried, what other places in the world do you think are a good fit for this type of energy?
The next project is also in Germany, specifically in Hanover, where we are negotiating a heat offtake agreement with the local utility company. Soon after, we will inaugurate a plant in the Netherlands in partnership with the government, and in 2024 we aim to expand to Romania, in partnership with OMV-Petrom. In addition, we have valuable prospects in Italy, Hungary and Bulgaria.
Given the U.S.' attractive geology in the Western states, we have a series of projects underway, the first one in Nevada, where last year we signed a $70/MWh power purchase agreement with the goal to produce 200MW to replace the power coming from the coal fired power station.
Sonoma Clean Power in California is looking to expand The Geysers field, so we are now devising a plan to work together on this, and in the wake of the Intermountain Power Plant in Utah shutting down, we have licensed some acreage to build geothermal capacity to connect to the DC line that feeds the Los Angeles market.
Over the last several years, the government of Saint Vincent and the Grenadines has drilled three dry geothermal wells, and we are interested in potentially taking them over to develop Eavor-Loop™ systems. Given their need for renewable energy, and respectively, their geothermal endowment, Australia and New Zealand, along with Japan and Kenya have shown interest in our technology as well. Ultimately, geothermal energy can also be used for cooling, so our systems could be useful in Saudi Arabia or along the banks of the Nile where they could cool the potential greenhouses we can build there.
What is your vision for Geoenergy and for Eavor moving forward?
If we are going to solve the climate crisis, we will need every single piece of renewable energy technology available. The learning curve for Eavor is at 20 percent, and once the system is commercially proven, it can be licensed to companies all around the world. At the moment, geothermal energy is a marginal source, and it is not included in the strategic plans of global governments, but along with solar and wind, it is the third leg, and in order to reach our targets, the world must embrace it.
