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Techniques pioneered in fracking for oil and gas have unlocked a potential source of renewable energy from the earth’s crust that could rival the cost of producing wind and solar energy within a decade, the International Energy Agency said on Friday.
The ability to drill more than 3km into the earth, and to drill horizontally, could make geothermal energy — now only practical in a few regions around the world — available to “nearly all countries”, the IEA said in a new report.
Geothermal energy presently only meets less than 1 per cent of global demand.
But the IEA, one of the world’s most respected sources of energy data and analysis, said that if governments and businesses invested the $2.8tn required to develop full geothermal potential, it could provide up to 8 per cent of the global electricity supply by 2050.
“New technologies are offering the possibility of meeting a significant portion of the world’s rapidly growing demand for electricity securely and cleanly,” said Fatih Birol, head of the IEA. He added that it was a “major opportunity to draw on the expertise of the oil and gas industry”.
The idea of drilling wells to draw heat from underground reservoirs to the surface is more than a century old, but is now used at scale in only a handful of countries that have suitable sources close to the surface, notably the US, Indonesia, Turkey, the Philippines, Kenya, Iceland and New Zealand.
Two new technologies were offering to transform the sector, said the IEA. One involves artificially fracking rocks to create the conditions needed to inject and heat water. The other is a closed-loop system where water is contained within pipes that are built deep into the earth.
The IEA said that “with the right support, costs for next-generation geothermal could fall by 80 per cent by 2035”. Reaching this would require the overcoming of hurdles such as the speeding up of project approvals and achieving significant corporate investment.
At that point, it estimated that geothermal plants could generate electricity for around $50 per megawatt-hour, making them “one of the cheapest dispatchable sources of low-emissions electricity, on a par or below hydro, nuclear and bioenergy”. The IEA added that geothermal would also be “highly competitive” with solar and wind power paired with battery storage.
In the past year, Big Tech companies searching for clean sources of power for their data centres have started to invest in geothermal projects.
In May, Microsoft said it would work with G42, the UAE-based artificial intelligence company, to build a data centre that runs entirely on geothermal energy in Kenya.
The following month, Google said it had signed a deal to buy 115MW of capacity from a plant pioneered by Fervo Energy in the US state of Nevada. Fervo, which is backed by Macquarie, BHP and Mitsubishi Heavy Industries, said it had used its experience in oil and gas drilling to create horizontal tunnels inside geothermal reservoirs.
In August, Meta, the owner of Facebook and Instagram, said it had partnered with Sage Geosystems to explore the use of geothermal energy for datacentres, with a first project due online in 2027 and providing up to 150MW of geothermal baseload power.
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