Wednesday, November 21, 2012

Why is geothermal still lacking popularity among investors?

Geothermal energy is still far from achieving the global popularity of solar and wind energy, in fact it is currently being harnessed for generating electricity in only 24 countries of the world. There are many countries with good geothermal energy potential that are still reluctant to enter the global geothermal energy market mostly because of the high upfront costs.

In order to make a viable geothermal energy project, developers first need to find the site with adequate resources which requires lots of exploration and drilling, and therefore lots of money.

The global financial uncertainty makes things even harder for new geothermal energy projects because many investors are not willing to cover big upfront costs in these uncertain economic times.

Investors prefer investments that give fast returns and this currently isn't the case with geothermal energy projects. New geothermal energy projects usually take more than five years (sometimes up to ten years) to get up and running, and this is the major reason why solar and wind attract the lion share of total renewable energy investments .

The only thing that can make geothermal energy appeal more attractive to investors is the adequate legislation accompanied by various incentives and tax benefits. There simple needs to be more legislation like a recent House bill under which a permitting process for geothermal exploration on federal land in cases where developers already own a lease will become lot shorter. There has been also plenty of talk about establishing a revolving loan fund for exploratory geothermal drilling and also to allow the companies that are leasing federal land for oil and gas exploration to produce geothermal power as well.

The U.S. has excellent geothermal energy potential and could theoretically produce more than 3 trillion gigawatt-hours per year (compared to current average of little more than 100,000). 

Geothermal energy is not only used to generate electricity but also for heating and cooling purposes, in fact geothermal heating systems are becoming increasingly popular in many developed countries.

Geothermal energy is clean and renewable source of energy that would help reduce our greenhouse gas emissions. It is also very reliable source of energy that is available 24-7, and doesn't suffer from intermittency like solar and wind do.

In areas with good geothermal energy potential geothermal heating systems can cut 30 to 50 percent on fuel costs.

The developed geothermal energy sector would create thousands of new jobs that would give boost to our economy. It would also improve our energy independence and future energy security.