Geothermal pitched as Alberta's next big energy source

Standard thinking for decades has been that geothermal technology is too expensive and inefficient to be a significant source of energy.

But a growing number of experts say the time may be right for geothermal to assume a higher profile, especially in oil-rich Alberta.

The economics of renewable energy projects are improving as governments begin to introduce carbon taxes and other fees on large carbon-emitting facilities, such as coal power plants.

Geothermal power plants turn hot water into electricity. Companies drill underground for water or steam similar to the process of drilling for oil. The heat is brought to the surface and used to spin turbines. The water is then returned underground.

"I think Alberta is perfectly situated to make the technology work," said Todd Hirsch, chief economist with ATB Financial. "All the geothermal energy experts say it is all wrong for Alberta. You have to go down so deep to get any heat. Well actually, we have experience drilling through four miles [6.4 km] worth of rock to get at other things that are valuable."

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Hirsch describes geothermal as "a perfectly green, perfectly renewable source of electricity." He also suggests geothermal could be a boon for the province, where companies have had a knack for developing "marginal resources" such as the oilsands.

"I think geothermal energy might be one that Alberta wants to champion specifically because it doesn't work here," said Hirsch. "If we can make it work here in Alberta, then it is a cinch to sell the technology to the Chinese and the Germans and everyone elsewhere geothermal doesn't work."

Alberta lacking program

While no geothermal electricity is currently produced in Canada, companies are trying to build facilities. Some are proposed in B.C. and Saskatchewan.

Calgary-based Borealis GeoPower would like to have a project in its home province, but instead is pursuing opportunities in neighbouring B.C. The main reason is because B.C. has a geothermal program in place for companies to develop electricity, while Alberta does not.

"That's a massive hurdle," said Craig Dunn, head geologist with Borealis GeoPower. "With a lack of a geothermal policy for development in Alberta, it makes a number of developers, including ourselves, apprehensive about approaching that market."

A geothermal company wanting to secure the rights to a thermal deposit would have to compete with oil and gas companies for the subsurface permit, since there is no separate program for geothermal, says Dunn.  

The Alberta government's Energy Department did not immediately respond to a request for comment.

Borealis GeoPower has geothermal projects under development in Terrace and Kinbasket Lake, B.C.

"I joke it's a great way to make your kids rich. You are creating the infrastructure for a resource that has no fuel costs," said Dunn. "I'm developing something that could be around for generations."

What are the costs?

Geothermal power plants cost more money than natural gas facilities. For some perspective, consider the Neal Hot Springs plant in Oregon that was constructed in 2012 for $139 million for 22 megawatts of production.

The Shepard natural gas power plant in Calgary began operating this year with a total cost of $1.4 billion for 800 megawatts of electricity. In this comparison, the geothermal facility costs three times as much per megawatt of power.

Enbridge, a part-owner of the Neal Hot Springs plant, has said the plant saves about 159,000 tonnes per year of carbon dioxide emissions compared to a similar-sized natural gas facility, and about more than 340,000 tonnes per year compared to a coal power plant.

Coal facilities supply nearly 40 per cent of electricity in Alberta.

While the NDP government has yet to announce a specific policy, the party ran on a campaign platform in the recent election pledging to phase out coal.

Premier Rachel Notley has announced an increase to the province's carbon pricing rules and is expected to announce significant climate change policies this year. Such changes improve the economics of renewable energy projects, such as geothermal.

"It requires a long-term vision to develop," said Dunn. "How much do we want to invest in the future?"