While the ten speakers at the virtual seminar generally focused on geothermal, many of their comments could be applied to the energy transition itself. For example, several speakers emphasized the importance of collaborations between myriad stakeholders.Those speakers included the CEO of DNB Sweden (DNB is a Norwegian banking giant with a large portfolio of clients within the fossil-fuel industries), the executive director of the International Geothermal Association, and representatives from the geothermal industry.
“We need to embrace risk, find ways to mitigate risk, and learn how to communicate and understand risk from different perspectives, from the capital market, the banking side, the development side, the community side. Then we can drive the [energy] transition into a transformation,” said Alexander Helling, CEO of Baseload Capital, an investment firm in Sweden focusing on geothermal projects that organized “the Earth Has Power. Let’s Switch It On.” The June 3 seminar, the third in a series, was attended by some 700 people from around the world.
Tough Topics
The subject of the latest seminar came about because “we realized that our favorite topics were also the toughest ones. So we decided to take on the trickiest subject of all: risk,” said Kristina HagströmIlievska, chief marketing officer for Baseload and moderator of the seminar.
To that end, speakers addressed geothermal risks associated with investment, the environment, and drilling. One speaker also told a story from the field about a community’s resistance to a geothermal project, the lessons learned, and advice for everyone going forward.
Elisabeth Beskow, CEO of DNB Sweden, began the program with an alarm. “When it comes to reducing emissions in the power sector, the battle will be won or lost in the next decade, so we are running out of time,” she said. “We all need to buckle up because…policy, legal, and market changes are developing faster than ever as the world seeks to transition towards a lower carbon economy.”
That said, she referred to the COVID-19 crisis “as showing that we can change faster than we think. It has already led to permanent and significant changes in the world.”
Investment Risks
Beskow noted that DNB is managing risk associated with the energy transition in part by helping the very companies that need to change, such as those in oil and gas. DNB clients, for example, are using the bank’s risk-assessment tool to adjust their businesses into more sustainable ones.
She also encouraged a wide range of collaborations between banks and fintechs, banks and other banks, and even banks and NGOs. Another example: she believes “geothermal energy is a perfect match with the oil industry” given the similarities between the two (think drilling). Collaborations between those particular industries could “make magic happen.”
Beskow also noted that it’s important to support green solutions that, although risky, could be disruptive. “The actual risk could be that we are not brave enough” to do that, she said. “Are there any financial risks if all banks go green? Isn’t that an exciting thought and relevant question?”
Later in the program those thoughts were echoed by NiklasAdalberth, founder of Norrsken Foundation. Norrsken is a non-profit that supports entrepreneurs and startups working to solve some of the greatest challenges of our time, such as poverty and climate change. Adalberth believes Norrsken’s approach—investing in companies that could change the world— is part of a megatrend. He encouraged listeners to “really bet on this megatrend,” in which “revenue and impact go hand in hand.”
Environmental Risks
Could geothermal energy actually contribute to the carbon-dioxide emissions we are trying to curtail? What is the impact of geothermal on land use? And what about seismicity? Could geothermal drilling trigger earthquakes?
These were among the risks addressed by Marit Brommer, executive director of the International Geothermal Association, and Ann Robertson-Tait, president of GeothermEx, Inc. Baseload’s Hellman led the session, in which he asked the two whether these risks were overrated or underrated.
There was considerable disagreement. For example, Robertson-Tait believes that the risk of carbon-dioxide emissions is underrated for geothermal reservoirs hosted in carbonate rocks. “They have emissions that are similar to natural gas plants and even as much or greater than coal plants,” she said. Further, some of the countries with these limestone reservoirs have no regulations to mitigate the emissions. “That’s totally inconsistent with our aspirations for geothermal, and can seriously degrade our green image,” she said. Binary geothermal plants “operate in a way that keeps carbon dioxide in solution and reinjects it back into the reservoir, but there are limitations.”
Brommer thinks the issue is overrated. The global geothermal industry, she said, has only about 10 percent of the carbon-dioxide emissions from fossil fuels. “So even though I would [prefer] zero emissions, I think the overall risk is overrated because we are already so low.”
What about seismicity? Brommer, citing serious seismic incidences in the past related to geothermal drilling, believes the risk is underrated and “this needs to be taken as seriously as we can, because it stops projects from happening.”
Robertson-Tait, who co-authored a protocol on induced seismicity, believes the risk is overrated, and can be lowered “by limiting the injection pressure and avoiding active faults.” Further, she said, “induced events are typically small and non-damaging, so I think this microseismicity is really a nuisance more than a risk.”
A geothermal power plant will also have an impact on the land. Is that a problem? Brommer believes that “the risk of geothermal to land use and to our habit of preservation” is underrated because we currently don’t measure that risk in a standardized way. That said, she noted that a tool to that end will be available soon.
Robertson-Tait said that the issue is overrated, noting that solar power requires a great deal more land than geothermal for a fraction of the [power] generation. Further, she said, “nothing can live underneath those expanses of solar arrays.” She cited two geothermal projects in Indonesia that coexist with a tea plantation and a protected forest. Geothermal “is far more compatible with the environment and other uses of the lands.”
Drilling Risks
“The biggest risk a geothermal developer sees is probably the cost related to drilling,” said Pernilla Wihlborg, Baseload’s chief operating officer. To address different approaches to that risk, Wihlborg introduced Tim Latimer, co-founder and CEO of Fervo Energy, and Carlos Araque, co-founder and CEO of Quaise, Inc.
Latimer noted that historically the success rate for drilling deep geothermal wells is about two out of three because of the uncertainties associated with the rock formations encountered. “That’s where the oil and gas industry was about 20 or 30 years ago. But with the advent of horizontal drilling and other advanced technologies, that success rate has moved to close to 100 percent” today, he said. Fervo Energy is deploying new technologies like distributed fiber optic sensing that Latimer hopes will have the same effect on the geothermal industry.
Araque’s company, Quaise, is developing a drilling technique that could allow access to the mother lode of geothermal energy that’s generally found at much farther depths into the Earth than can be reached today. Conventional drill bits can’t withstand the heat and temperatures associated with those areas.
Araque notes, however, that if you can get that deep, other risks are greatly reduced. That’s because the rock itself becomes more competent, or harder, preserving the integrity of boreholes (they won’t collapse in on themselves, as can happen in the sedimentary formations nearer the surface.) “We’re betting on creating the technology that will allow us to access a more certain environment and actually get these holes done,” he said.
Later, Wihlborg asked about transferring drilling expertise from the oil industry to the geothermal industry. Said Latimer, “Carlos and I are both proof that it can be done.” Before starting their respective companies, Latimer and Araque were oil men.
Not In My Backyard
Van Hoang, chairman and CEO of Baseload Power Taiwan, described the considerable community protests associated with building a geothermal plant in Taiwan, the lessons learned, and advice for others going forward. His primary takeaway: communicate communicate communicate with the people who live nearby, and do so early on.
“Being transparent is vital to trust,” said Hoang, who gave many examples of how his company worked hard to better inform the public about geothermal and address their concerns. He and colleagues not only went door to door talking to residents, but also learned about the local history and culture, responded to—and solved—problems like construction noise, and showed how the coming geothermal plant could contribute to local economic development.
“I deeply believe that what we are doing is good for the community, the environment, and Taiwan’s energy transition,” Hoang said. As a result, he said, he was even “bold enough to join the national Saturday Night Live TV talk show to share our vision and mission.”
Concluded Wihlborg near the end of the seminar, “the best way to reduce risk is really listening to each other, opening up, telling our stories, sharing. Then we as a community can do great things.”
The complete Baseload Capital seminar is available here. The preceding seminar, which explored the future of the growing geothermal industry, is also available. A story on that event appeared earlier this year.
About the Author: Elizabeth A. Thomson is a Correspondent for Quaise Energy
Photo Caption: PernillaWihlborg, chief operating officer for Baseload Capital, chats with Carlos Araque, CEO of Quaise, Inc., and Tim Latimer, CEO of Fervo Energy, at a June 3 virtual seminar on risks in the geothermal industry.
