Hot and Steamy By Byron King

http://www.agorafinancial.com/afrude/2007/10/30/hot-and-steamy/


When it comes to harnessing geothermal power, the go-to place on the planet
right now is the Republic of Iceland. Yes, Iceland. It is a large island at
high latitude, composed mostly of dense basalt lava flows. Iceland straddles
the Mid-Atlantic Ridge, which provides that country with an almost direct
link to the primordial heat energy within the mantle of our planet. And that
is one all-but-immeasurable store of energy.

Thus, Iceland is the world’s leading nation in terms of exploiting its local
geothermal power resources. In Iceland, the insiders refer to the process of
extracting geothermal energy as “heat-mining,” and they are getting rich from
the effort.

Recently, the president of Iceland, Olafur Grimsson, visited the U.S. to
speak at a number of events and testify before the U.S. Senate Committee on
Energy and Natural Resources.

In a speech delivered at Harvard on Sept. 26, President Grimsson emphasized
the importance of geothermal energy to the economy and society of Iceland. He
stated that Iceland has undergone a “radical transformation” from dependence
on coal and oil in the past 30 years. As recently as the 1970s, Iceland was
among the poorest countries within what was then known as the European Common
Market (now called the European Union). That is, by most measures of gross
domestic product and other economic output, Iceland was an economic laggard.

But then Iceland made a conscious, strategic commitment to develop its
domestic geothermal energy resources. From large industrial projects down to
the level of family housing, Iceland focused its public and private energy
investment on making a geothermal energy vision into an energy reality. Now,
according to what President Grimsson told his Harvard audience, Iceland is
one of the most affluent nations in the world. Fully 100% of Iceland’s
electricity now comes from renewable sources, geothermal and hydroelectric,
and almost all buildings in Iceland are heated with geothermal energy. On the
whole, about 72% of Iceland’s total energy usage is tied to geothermal
sources, which eliminates essentially all carbon emissions and dramatically
reduces reliance on imported fossil fuels of any type.

According to President Grimsson, Iceland has “turned this production] into an extremely profitable business.” For example, electricity
is so inexpensive in Iceland that there is a booming business on the island
that imports bauxite from the Caribbean area for the purposes of refining
aluminum, a highly energy-intensive process.

In comments after his prepared speech at Harvard, President Grimsson
expressed his “astonishment” at the utter paucity of geothermal power
generation in the U.S., merely 0.3% of all electricity generated across 50
states. And much of that power comes from one location in California, called
the Geysers. President Grimsson noted that the U.S. sits atop “the second
largest geothermal resources in the world, following only Indonesia.”

President Grimsson concluded that by harnessing the “fireball on which we
sit,” mankind could revolutionize energy production across the globe.

President Grimsson then took his geothermal views from Cambridge, Mass., to
Washington, D.C., where he spoke to members of the U.S. Senate. The Senate is
considering the National Geothermal Initiative Act of 2007, which is
legislation aimed at promoting the development of geothermal energy resources
within the U.S. The Senate bill sets a national goal to achieve 20% of total
national electrical output from geothermal resources by 2030, about a 64-fold
increase from the current base line.

In his remarks to the Senate, President Grimsson restated many of the
comments and observations he delivered earlier in the day at Harvard, adding
more perspective. “Our task,” he said “is to find the technology to harness
the fire inside the planet.” Also, “The companies doing business in Iceland
have found that geothermal energy is over 30% more profitable than any other
form of clean energy today.” President Grimsson noted that 25 years ago,
Iceland “had to beg for corporate investment.” But now companies are lining
up to gain access to Iceland’s low-cost, clean energy opportunities.

In response to a question from Alaska’s Sen. Lisa Murkowski, President
Grimsson stated that the geothermal energy resources of Alaska could serve as
an “investment magnet” for that one state alone, if developed properly.

Alaska is one of the most seismically active regions in the world, with many
geologically controlled areas of significant geothermal potential. President
Grimsson said that geothermal energy development could be extraordinarily
important for Alaska and provide “alternatives to oil and gas” that help
smaller communities build their economies and improve the lives of their
residents.

President Grimsson’s comments dovetail entirely with comments made last year
to the same U.S. Senate committee by Walter Snyder, director of the
Intermountain West Geothermal Consortium. In 2006, Mr. Snyder focused on the
geothermal potential for the Western parts of the U.S. The energy potential
is so vast, he claimed, that no one really knows its full extent. Some
geologists who work in the field believe that just the state of Nevada alone,
already a national leader in geothermal energy production, could become the
world leader. This is particularly true due to Nevada’s proximity to power-
hungry California, where environmental regulations prevent much in the way of
traditional energy development. Mr. Snyder said that known but untapped sites
in Western states could be developed within a reasonable time to produce
13,000 megawatts of geothermal energy, or the equivalent of about 15 nuclear
power plants or 30 coal-fired plants. Mr. Snyder noted that the potential of
the Western U.S. “may actually be two or three times greater” than that
figure.

The outcome of these Senate hearings may well be a major change in U.S.
national energy policy distinctly favoring geothermal energy production. By
itself, just the idea of mandating an increase of total national electricity
production from the current 0.3% geothermal to 20% by 2030 would be the
energy equivalent of President Kennedy declaring in 1962 that “We choose to
go to the moon.” But then again, hey, we took the policy goal and actually
went to the moon. All we have to do with geothermal is go to Nevada or
Alaska, or to a hot spot near you.

So what is currently a very small sector of the U.S. energy business is on
the verge of seeing immense growth, if not just plain spectacular expansion,
over the next two decades. That kind of arena is exactly where we want to be
with our investments. With policy changes like what we are seeing for
geothermal, this is another moonshot primed to happen.