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October 2, 2011

Could geothermal power be the future of Australian energy production?

by Travis Marshall

Climate change is likely to be one of the greatest challenges facing the future of Australia, and the race is on to find solutions to avoid disaster and create a new industry of commercially viable green energy markets.  Australia, while only containing 0.3% of the world’s population produces 1.5% of the world’s carbon emissions making it one of the highest carbon emitters per capita in the world.  With an addiction to cheap energy produced mainly by high emitting coal power stations, we are in desperate need of a clean alternative.

Could the geothermal power generation industry be the panacea we are looking for?

One of the philosophies of the Grand Strategy Project is to see future challenges as opportunities for progress, and with abundant natural resources and a sophisticated labour market, Australia is uniquely positioned to become a world leader in a low carbon future.

Geodynamics is such a company that is pioneering new methods to draw energy from 3 – 5 kilometres under the ground through a process known as Enhanced Geothermal System, or EGS.  The process is conceptually quite simple, where two wells are drilled below the sedimentary layers of the earth’s crust to a layer of fractured granite that maintains temperatures of around 250 degrees Celsius.  This is unique to most other geothermal power sources around the world that draw the heat energy from magma close to the earths surface.  Cold pressurised water gets pumped down through the first well into this layer and heats up as it makes its way through the fractures.  The heated fluid makes its way back up the second pipe whereby a heat exchanger creates steam and runs a turbine producing electricity.

The most compelling feature of this process is that it produces zero carbon emissions, potentially making it one of the cleanest sources of energy at our disposal.  Another compelling feature is that it can create a constant 24 hour base load power where other renewable energies are unable.   For example, solar energy can only be produced during daylight hours, and is diminished with cloud cover.  Similarly, wind turbines are dependent on wind speed which is inherently variable.  EGS also has the added benefits of requiring only a small land footprint, and secondly, uses mainly existing drilling technology from the petroleum industry.

Geodynamics has the rights to geothermal tenements in an area known as the Cooper Basin in South Australia’s North East which is claimed to be the hottest non-volcanic area on earth at a depth of 4 kilometres.  After listing on the ASX in 2002 and drilling their first well in 2003, Geodynamics has overcome various technical hurdles to achieve proof of concept in 2009.  It is currently in the process of developing a commercial demonstration plant by 2013, and plans to complete a commercial 500MW plant by 2018 which will deliver power to the national grid.

Australia's geothermal energy resource (courtesy of the Geodynamics website)

Geodynamics claim they will be able to deliver low-cost base-load power that will rival existing sources including coal fired power stations, and with a price on carbon looming on the horizon the economics become even more compelling.  They also claim that they can provide the energy for up to 20% of Australia’s base-load requirements with their current EGS resources, which takes us a long way to meeting the Australian Governments Mandatory Renewable Energy Targets. They plan to connect the commercial plants to the national grid via Adelaide and Brisbane, and are also considering selling base-load power to BHP Billiton’s enormous Olympic Dam project.  An investor report indicates they expect only 5-8% loss of energy along the lines.

While all this sounds very promising, one cannot help but to be sceptical and ask the question why hasn’t this been done before?  According to Geodynamics, the main reason is the social and political conditions have not allowed for it.  The implementation of concepts such as EGS require significant investor funding, support from government, and the demand from consumers to produce clean power, but up until recently this has not existed.  Now with a growing global awareness of the dangers of climate change, the social conditions have changed and the demand for renewable energy has arrived.  Research and development around the world has totalled over $500 million, and Geodynamics was recently awarded a $90 million grant from the Australian Government under the Renewable Energy Demonstration Program.

But Geodynamics isn’t the only geothermal company making headway in Australia, with Petratherm drilling wells in South Australia’s Flinders Ranges, Panax Geothermal on the Limestone Coast, Hot Rocks in Victoria and several others.  The competition is fierce, especially considering all the other potential energy resources being explored such as wind, wave and solar, and many are likely to fail.  But that’s the idea of competition based market economies where only those companies who can create economically viable solutions will survive.  Now that the Australian Government is serious about linking economic viability to carbon emissions, it is likely that a range of successful zero or low emission energy providers will emerge.

This is an exciting time in the Australian energy market where significant inroads are being made, and in the view of the Grand Strategy Project, geothermal power is going to be a likely success story by the end of this decade.

Read more from Climate, Energy, Resources

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