Opportunities for Increased Utilization of Geothermal Resources in the United States
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The United States (U.S.) electric grid is increasingly incorporating renewable energy resources to offset base and peak loads; renewables now account for 15% of total energy generation (EIA, Monthly Energy Review, 2017) and nearly 20% of electric generating capacity (ACORE, 2016). Geothermal energy resources are available across the U.S., and many are co-located within communities. Geo-exchange (using ground and water-source heat pumps) can be accomplished in any state in the country. Geothermal energy is optimal for projects in colder regions for several reasons: it can offset both electricity and space heating energy use, it is a consistent source that does not vary with time of day or season, it is not affected by weather, and it has the highest capacity factor of any renewable technology (EIA, Today In Energy, 2014). Increased utilization of geothermal energy resources would benefit homes and businesses, especially for regions in the northern U.S. that have high heating demands. Presented by Gretchen Schimelpfenig, P.E. of Cx Associates at the ASCE Congress on Technical Advancement - Cold Regions Engineering, in Duluth, Minnesota on September 13, 2017.
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Opportunities for Increased Utilization of Geothermal Resources in the United States
- 1. Opportunities for Increased Utilization of Geothermal Resources in the United States Gretchen Schimelpfenig, P.E. Engineer, Cx Associates Burlington, Vermont, USA Engineering a Future Where Buildings Are Better ASCE Congress on Technical Advancement Cold Regions Engineering
- 2. Why geothermal? Geothermal resources are bountiful throughout the U.S. Consistent, secure, and indigenous Job-creating technology benefiting local economies Mitigate climate change with negligible greenhouse gas emissions Low environmental, social, and life-cycle financial costs
- 4. Hydrothermal Power Generation Made in the USA Mature Reliable Base load generation High Capacity Factor
- 5. Hydrothermal Power Generation Low energy: lowest energy consumption per kWh produced Low emissions: life-cycle GHGs 4x lower than solar array Small footprint: minimal land requirements & aesthetic impact CHP optional: can produce both power and heat (district heating) Lowest levelized cost of electricity: despite high capital and O&M costs
- 6. Hydrothermal Jobs 2004: nearly 12,000 hydrothermal jobs For every 1 MW installed, 1.7 permanent jobs are created Growth has been slow Western Governors Association, 2006
- 7. Renewable Electricity Capacity in the U.S. Generating capacity of renewables being grown by wind and solar 70 gigawatts (GW) of new wind and solar capacity to be added in next five years
- 8. Renewable Electricity Generation in the U.S. Geothermal electricity generation has been growing at a much slower rate
- 9. Investment Tax Credits December 2015 H.R. 2029, Amendment #1 Included multi-year extensions for wind and solar Allowed geothermal tax credits to lapse at the end of 2016 February 2017 introduction of H.R.1090, the Technologies for Energy Security Act Modifies the ITC to extend through 2021 credits for ‘orphaned technologies’ Currently has 108 co-sponsors
- 10. Barriers to Increased Capacity Additions Geothermal electricity market is lagging Low natural gas prices Expired tax credits 500 MW of stalled projects in pipeline Financing: inconsistent & short-lived incentives Environmental & Land Permitting Transmission logistical challenges Power Purchase Agreements Other issues: No unified national policy Complex network of state regulations NEPA (federal regulations) even more stringent than those for fossil fuel plants
- 12. Supportive Policies Needed Growing our geothermal infrastructure will: Enable USA to retain our title as a geothermal world leader Create new civil & geotechnical engineering, construction and operations jobs Department of Energy’s Office of Energy Efficiency and Renewable Energy grant funding Focused on new geothermal technology advancement in Enhanced Geothermal Systems S.2012, passed in 2016 NEPA: Provides parity with oil and gas projects to reduce a sizable permitting burden on benign activities like exploratory drilling
- 14. Heating Energy Use Energy use for heating accounts for 47% of global energy use More than electricity and transportation Buildings located in the northern U.S. receive less solar radiation and have greater heating needs Thermal renewable energy sources offset heating demand Increase resiliency Not currently supported by financial incentive programs which could drive projects
- 15. GSHP Efficiencies & Savings Most efficient HVAC system available today Coefficient of performance (COP) of 3.5 - 5.3 Equivalent to EER of 18 – 30 Energy savings of 30 - 60% when replacing typical furnaces >70% when replacing electric resistance heat + standard A/C
- 16. GSHP Equipment Life and O&M Durable: ground loop service life of 50 – 75 years and heat pump service life of 25 years Low maintenance: 60% lower costs than conventional HVAC systems Substantial energy savings: offsets higher first costs
- 17. GSHP Jobs 56,000 full-time jobs in 2016 After tax credits expired, Q1 2017 GSHP sales dropped 40% Most GSHP-industry businesses have done layoffs 2017 jobs numbers TBD, but expected to mirror sales
- 18. Barriers to Adoption GHP market penetration is directly linked to financial incentives 2016 expiration of tax credits crippled the industry Other major barriers to adoption: Complexity, cost, and risk of the ground loop Longer payback period Space needs for standard ground loops Environmental regulations Lack of consumer understanding Inadequate appraisal value for GSHP systems Limited numbers of qualified and trained installers Unsatisfactory installations
- 19. Strategies for Increased Utilization of Ground-Source Heat Pump Systems
- 20. Consumer Understanding Consideration of life cycle costs Educate consumers Train personnel Inclusion in states’ Renewable Portfolio Standards Currently only 7 states’ RPS contain geothermal technologies Recognition & promotion of geothermal as a renewable technology Currently only 12 states have financial incentives for GSHPs Need for support from relevant industry groups
- 21. Financing Options Financial assistance to offset high first costs: Tax credits (state and federal) Accelerated depreciation benefits Rebates Grants Sales tax exemptions Community ground loops On-bill financing Developer-owned loops Mortgage financing Whisper Valley, Austin TX
- 22. Steps for Widespread Utilization of Geothermal By ensuring: Consumers are informed Installers are trained Financial incentives are extended More financing options are available to offset high first costs, and State and federal language is inclusive GSHPs and hydrothermal power are better positioned to attain larger market share.
- 23. Gretchen Schimelpfenig, P.E. gretchen@cx-assoc.com 802-861-2715 x16 https://buildingenergy.cx-associates.com/ Follow me on Twitter @BuildGreenUS and @CxAssociates Engineering a Future Where Buildings Are Better
Editor's Notes
- Welcome, and thank you for attending my presentation. I live in the cold region of Burlington, Vermont, where I work for Cx Associates, a mechanical engineering consultant firm specializing in building commissioning and energy efficiency programs. I have my PE in Civil Engineering – Construction, and received my Master’s degree in Civil Engineering – Sustainable Design & Construction with an Energy emphasis from Stanford University in 2014. I am also a graduate of the University of Wyoming, where I received my BS in Architectural Engineering – Structural in 2012. I am excited to talk to you all today about one of my biggest passions, geothermal energy infrastructure. There is a lot of information in this presentation and I am happy to share it with you afterwards. So, please listen to me and I can always go back to prior slides if you have questions or did not get to take down all of the info from the slide.
- The two major types of geothermal technology I will speak about are hydrothermal and geo-exchange. Hydrothermal reservoirs, shown in the diagram on the left, occur deep in the ground. A hydrothermal power plant uses 10,000-ft deep boreholes to access the super-heated water or steam from the reservoir to generate electricity. Geo-exchange, also known as ‘geothermal heat pumps’ or ‘ground source heat pumps’ use the moderate ambient temperature of the earth (~55 F) to pre-heat or pre-cool spaces in a building. Shallow boreholes of 100 – 150 ft (with deeper wells reaching 1,500 ft) are used to pump refrigerant fluid through loops in the ground or vertical wells to supply heat pumps which then cool or heat air depending on the season. Throughout my presentation, I am using the black and white icons at the bottom left and right of the slides to indicate which technology I am referring to at that time.
- In the first part of my talk, I will speak about hydrothermal power generation. The United States leads the pack in installed geothermal capacity, with 3.7 GW installed and 1.27 GW planned. All the plants are in the western U.S., near the greatest heat flow. California’s Geysers geothermal complex – 1517 MW of capacity – is the largest geothermal field in the world, and accounts for much of the United States’ installed capacity. Our geothermal plants provide indigenous power that supports local economies. The technologies that these plants use are proven and low-risk, and the power they generate is not affected by climate, weather conditions, or time of day, so these plants can produce power night and day. Capacity factor = actual energy produced / rated energy output. So, a 1 MW hydrothermal plant would produce 722 GW on average, while a 1 MW solar plant would produce only 200 – 300 GW, a 1 MW wind installation would produce 300 – 400 MW, and a 1 MW hydro plant would produce 300 – 500 GW. Despite high capital and O&M costs, the levelized cost of electricity for geothermal was $201542.3/MWh in 2016, lower than any other generation technology
- It takes energy to make energy, and hydrothermal plants consume the lowest kWh per kWh produced. Life-cycle greenhouse gas emissions for a modern closed-loop power plant are four times lower than a photovoltaic system. Overall, gaseous emissions from hydrothermal power production are benign in comparison to those of coal, oil, and gas-fired plants. Geothermal plants have small footprints; a plant may take up only 1-2 acres, with wells occupying 100-200 acres. Land used by wells and piping networks can still be used for agriculture, conservation, or forestry. Despite high capital and O&M costs, the levelized cost of electricity for geothermal was $201542.3/MWh in 2016, lower than any other generation technology.
- Renewables now account for 15% of total energy generation and nearly 20% of electric generating capacity. Continued growth in wind and solar due to declining capital costs & extension of tax credits.
- Geothermal electricity generation is not expected to grow enough to surpass other renewable technologies.
- Politics has adversely impacted the geothermal industry. If tax credits are to be continued, there ought to be a level playing field.
- Planned projects are being stalled due to permitting delays, logistical issues, financing complications, and a lack of policy support. Potential projects must complete complex National Environmental Policy Act (NEPA) environmental assessments and impact statements; over 175 document sets amounting to hundreds or thousands of pages of documentation may be required for one project. This results in a timeline of 5 to 7 years for a geothermal project, compared to 1.5 years for a solar or wind project. Solar favoritism in state renewable portfolio standards
- So, how shall we encourage hydrothermal development in cold regions with nearby resources?
- Cannot rely on the CPP or the funding currently being provided by the EERE. To retain our title as a geothermal world leader, we must build more geothermal infrastructure, which would create new jobs and support local civil engineering industries.
- Since buildings consume so much energy for heating applications, buildings in climates with high heating needs should utilize renewable energy sources that offset heating energy use in addition to electricity. More robust and permanent policies and financial incentives to encourage the use of thermal sources like geothermal, solar thermal, and biomass will help to make these renewable sources more cost competitive and transform the market in the northern United States. Heating tech deserves their own incentives, just like solar. By reinstating tax credits to consumers, it will create a consistent source of well-paying jobs that cannot be outsourced: “you can’t import a borehole”.
- Geothermal or ‘ground-source’ heat pumps (GSHPs) take advantage of these moderate temperatures by drilling shallow boreholes into the surface of the Earth and using the favorable temperature difference to either utilize the Earth’s crust as a heat source or heat sink, depending on the season. Because of their energy efficiencies, GHPs contribute less to climate change: a 2010 study found that for every ton of refrigeration of heat pumps installed, 21 metric tons of CO2 emissions are mitigated. Despite higher costs than a conventional HVAC system, GHPs installed in new homes can provide positive cash flow from day one, as the increased debt service on the mortgage is considerably less than the energy savings from the heat pump system. A 2010 report assessing the potential of retrofitting all U.S. single-family homes with high-efficiency GHP systems found that the investment would yield a positive net present value over a 20-year period. A 2,000 sf house can operate comfortably at $1/day year round for HVAC energy with a GSHP system. For every $1 reduction in energy bills, home value increases by $10-25 according to the National Association of Realtors Appraisal Journal
- GSHPs have the lowest life cycle costs of any heating and cooling system on the market. Due to long equipment life and lower cost of operations and maintenance, the large upfront investment is quickly paid back in big energy savings so that a single family home with a new GSHP install could expect a payback period of 5 – 8 years. Payback periods are intrinsically dependent on tax credits and supportive state-level policies and incentives.
- GSHPs have the lowest life cycle costs of any heating and cooling system on the market. Due to long equipment life and lower cost of operations and maintenance, the large upfront investment is quickly paid back in big energy savings so that a single family home with a new GSHP install could expect a payback period of 5 – 8 years. Payback periods are intrinsically dependent on tax credits and supportive state-level policies and incentives.
- Consumers need help offsetting first costs of GSHPs and the GSHP industry needs incentives to be cost-competitive with air-source heat pumps. Other barriers to adoption include the cost and risks of drilling boreholes for a ground loop or a standing column wellfield. Exploratory boreholes are usually required (and recommended), and test bores can be just as costly as drilling for the final install. And as geotechnical projects go, you may not like what you find and may have to do the whole process again to find suitable ground conditions and heat flow. Sizing and quality of installs are crucial, and if projects do not account for the site geology appropriately, geothermal wellfields may not provide adequate heating or cooling capacity for the building being served, and additional wells may have to be drilled to provide necessary capacity. If quality control is poor or an installer is inexperienced with geothermal infrastructure, operational issues like glycol leaks may occur and adopters of geo technology may be turned off and vow to never do it again.
- How can we get a GSHP in every residential and commercial building in America?
- Most Americans do not know what a heat pump looks like, let alone how it works. Because many of the components of GHP systems (like ground loops) are buried in the Earth, many people do not develop any familiarity with them, and therefore do not think of GHPs as renewable energy resources. A dual approach is necessary. The private sector should educate, promote, and train. The public sector should champion inclusive legislation and supportive financial incentives.
- There are lots of options that have already been well-tested by the solar industry as it made its way to cost-competitiveness. For example, developers can shoulder the financial burden and risk of a GSHP community energy project, while leasees can benefit from the lower energy costs. Example: Whisper Valley net zero housing community in Austin, Texas.
- Greater consumer understanding and financial tools will bring increased GSHP marketshare.
- I hope that you enjoyed my presentation. I would love to hear your questions. If we don’t get to speak, please email me, check out the Cx Associates blog, and follow me on Twitter. Thank you to ASCE for publishing my paper and inviting me to speak today.