Frost: Geothermal Projects Take Shape in Europe

August 18, 2008 // Published as a news service by IHS

Geothermal energy is a continuous source of energy since the non-depleting heat is trapped inside the earth.

Although global energy use from geothermal sources amounts to less than 1% today, geothermal projects exist in approximately 20 countries around the world.

Analysts said high start-up costs have hampered the geothermal market. However, with the steep price increases of oil, as well as gas emission concerns, geothermal energy is generating greater interest everywhere.

This, coupled with the fact that geothermal costs are decreasing while traditional energy source prices are increasing, leads researchers to believe geothermal energy will play a greater role in the global quest for alternative energy.

Geothermal energy is produced from using the earth's burning center to generate heat and electricity.

"Geothermal energy has several advantages when compared to other renewable energy sources, as well as carbon-emitting fuels," said Frost & Sullivan analyst Gouri Nambudripad. "The sector is something to watch out for in the next few years."

In some areas, geothermal is almost competitive with conventional fuels. Analysts said another advantage is that geothermal energy does not produce any toxic waste.

The only major impediment to geothermal energy success is the high cost of setting up and drilling the hot water from under the surface of the earth. Analysts said the prices are comparable to drilling in the oil and gas industry.

However, research shows costs are dropping. The generation costs of geothermal electricity used to be €50 to €150 megawatts per hour (MWh) in 2005. This is expected to fall to €40 to €100 MWh in 2010 and €40 to €80 MWh in 2020. As geothermal energy becomes more affordable, interests continue to rise.

Already in the European Union (EU), geothermal plants are found in Iceland, Greece, Italy, Turkey, Germany and Austria. Potential areas for geothermal generation capacity are in the northwestern and central western coast of Italy, western Turkey and parts of Portugal, Spain, France and Germany.

In Iceland, 85% of all houses are heated using geothermal energy and 30% of all its electricity is geothermal energy. Italy's geothermal market is maturing with installed capacity expected to increase up to 1500 megawatt electric (MWe) by 2020.

Germany has close to 150 plants with €4 billion in the pipeline. The country is stimulating the industry by passing laws in favor of making projects financially viable. Geothermal energy grows more promising as its advantages begin to outweigh its high implementation costs. Analysts said this will be an interesting market to follow in the next few years.

Geothermal heat was recognized first by ancient cultures who enjoyed various hot springs around the world. Its capability to produce electricity came to light almost a century ago by Italian Prince Piero Ginori Conti. Since then, as technology and understanding increased, two specific methods of creating energy enabled people to generate both heat and electricity.

One method - engineered geothermal systems (EGS) - produces energy by drilling two parallel lines into the center of the earth. One line pumps water into the earth to heat it up to about 200°C, while the other line is used to pump out the hot water and steam. The steam is used to run a turbine, while the hot water heats houses or industrial units.

The second system - the organic Rankine cycle - builds wells deep into the hot reserves, separating the steam from the high pressure hot water. The steam and hot water are separated, split and used to drive turbines in power plants. Once this geothermal fluid is cooled, it goes back into the reservoir, where it reheats and is ready to be used again.

Source: Frost & Sullivan.