LPRC joins the Baseload Capital Online Seminar #3: Geothermal and Risks (part 2)

Drilling risks

The key to the economies of scale in geothermal is to reduce uncertainty whilst drilling linked to poorly known geology. On average, 66% of deep geothermal drillings are successful. This low rate can be explained by the uncertainty of geothermal drilling. A profitable geothermal field, on paper, may not translate to real profitable margins. There is a risk that the well fails on the first heat up or that there is a delayed failure due to the formation environment like the presence of corrosive fluids. When a failure occurs, the loss of production and cost of repair can be quite significant compared with the cost of completing the well. Current technologies offer two solutions to drilling risks:  horizontal wells and drilling deeper:

  1. Horizontal wells do not rely on a limited amount of energy stored within the direct vicinity of a vertical well. A horizontal well can be drilled for thousands of meters in the ideal reservoir alleviating the risk of a colder spot and thus reducing the risks of an unproductive well.
  2. The other solution is to drill deeper in basement rock. This method aims at using hot dry rock at depth to produce heat. At high depth (more than 5000m), the rock layers become more consistent thus creating more certainty whilst drilling. In addition, deeper wells tap into warmer rocks thus producing high temperature for a more profitable process.

NIMBY (not in my backyard): stories from the field

Even if economically sound, a geothermal project can be cancelled if local communities oppose it. In Taiwan, Baseload Capital faced a challenge: Initially favorable to geothermal energy, local turned against the project when they witness the noise, dust and smell caused by the drillings. The problem lied in miscommunication between the company in the communities. Communities had a lack of knowledge vis-à-vis geothermal power, in addition they were afraid that the power plant would bring harm such as water depletion and pollution. Given the relative remoteness of the local communities, there was also a distrust of a company they had never seen before.

Although these problematics can seem futile to people with deep understanding in geothermal, it is necessary to take a step back and listen to these divergent opinions. Without this, a project can very quickly create massive backlash and even be cancelled. Based on this, a geothermal project shall generally follow the following steps when dealing with local communities:

  1. Become trustworthy: Outline clearly the how the project will work at meetings with locals. Never take anything for granted and act on your promises.
  2. Be respectful of local communities by being present when they have questions, arranged face-to-face meetings, listen to their concerns, learn about the local cultures and respect local habits.
  3. Be transparent. Being transparent is vital to earn trust. This can be performed by hosting local hearing to understand complains and misconceptions. These meetings should always be about dialogue and never be one-sided. It is also important to show progress and discuss future plans.
  4. Get involved in the local community be celebrating events with them. Geothermal should have a strong community focus in its operation (using hot water for local businesses and ensuring that the plant will create jobs locally. Any geothermal project shall participate to the local economy and be an active member of the society.


The Covid-19 pandemic showed how quickly the market can adapt to new needs. Within a year time, millions of masks, PPE and vaccines have been produced to respond to a disease that can affect us all. Climate affect us all too. The real risk of climate action, the one we are all confronted is inaction. Inaction in the climate transition will threaten biodiversity, as habitats and lives become endangered. We need to act, and we need to act fast.

Geothermal energy involves taking risks. However, as shown in this article these risks can be alleviated if projects are managed in a transparent and responsible manner. The battle will be won or loss in the next decade. If we fail to transition to a sustainable global economy, it is estimated that global GDP will plumet by 11%. However, if we succeed it will rise by 4%, showcasing a bright light at the end of a challenging time.

LPRC joins the Baseload Capital Online Seminar #3: Geothermal and Risks (part 1)

On the 3rd June 2021, Baseload Capital (Swedish investment bank specialised in sustainable energy) hosted its 3rd online seminar session of the year, this time on risks within the geothermal industry. Specifically, the day’s session tackled risks across various inter-linked topics: environmental risks, drilling and social acceptance.

Environmental risks

Environmental risks although real can be either overrated or underrated based on preconceptions or past assessment which do not hold in the current state-of-the art. The first environmental risk assessed was the one linked to CO2 in geothermal: whilst green and sustainable, geothermal power plants may emit CO2. The reason for the leakage of these quantities of gases emitted from geothermal power plants aren’t due to power production because there’s no combustion. These gases are naturally present in the rock basement, minor constituents of most geothermal reservoirs. The importance of this risk varies greatly from one region of the globe to the other as well as the technology involved. Furthermore, naturally emitted CO2 is poorly regulated worldwide despite available CO2 leakage solutions exist such as binary plants (see figure below). The trend in the industry is to reach carbon neutrality thanks to binary geothermal power plants that have basically zero CO2 emissions during the production process. On a positive note, the average non-binary geothermal power plant releases between 100 and 120 grams of CO2/KWh whereas fossil fuel plants release between 1000 and 1500 grams of CO2/KWh.

The second type of environmental risk boils down to thermal well stimulation and induced seismicity. The scientific consensus around thermal well stimulation is that this is nowadays an overrated risk. It is a quick and effective way of injecting cold water into a hot geothermal well which leads to contraction of fractures and allows the permeability to be recognised. Most deep geothermal wells make use of that methods to great effect with minimal risk. Other well stimulation methods involve acid stimulation (either hydrofluoric or hydrochloric acid) of a reservoir and have to be handle with great care. Although suffering from a bad reputation, this acid gets neutralised in the basic environment of the reservoir (calcite veins and fractures) rendering it harmless whilst improving the productivity of the well. The other more dangerous aspect of situation is induced seismicity or fracking. This risk has to be taken with the most care and has the snowball effect of introducing fear in population leading to less geothermal project, thus less green development.

Figure: Geothermal plant scheme

LPRC @ Webinar – Recent installations, implications for the future of geothermal in Turkey

On Friday 29, Gauthier Quinonez (LPRC) attended the latest IGN online webinar on geothermal energy organized by Enerchange (PR and Event Agency focusing on renewable energy) and Think GeoEnergy (leading newspaper on geothermal). The event focused on the particular case of Turkish geothermal, its characteristics and future.

Top that occasion, the board invited Gad Shoshan (chairman at the board at the Israel-Turkey business council and chamber of commerce and managing director at Ormat Inc.) to discuss the current state of play. Ormat is a global renewable energy provider based in Reno (Nevada). The company has the particularity to be verse in multiple renewable energy sources (geothermal and recovered energy) as well as energy storage. In addition, with regards to geothermal, they managed to vertically integrate all phases of geothermal (Development, exploration, drilling, engineering, manufacturing, construction, operation and stakeholder management).

First of all, even though Turkey has become famous of over the past decade for its rapid and sustained development of geothermal, the country is still highly reliant on fossil fuels for domestic electricity production (Fig. 1). However, 3 caveats shall be made on this current status. First, all but one active Turkish power plants opened after 2006, highlighting the impressive capacity to adapt to new resources. Second, Turkish geothermal potential hasn’t been reached yet, indicating a possible growing share of geothermal electricity in the Turkish market for the future. Third, most fossil fuel consumption is linked to import from the East, highlighting a threat in local energy security and Turkish authorities made no secret about the need for a change in this matter.

Figure 1: Turkey’s electricity generation per resource

As per January 2021, geothermal energy’s output in Turkey is 1.6 GW produced by 77 power plants (with a mix of Organic Rankine Cycle[1] and flash). Although 77 power plants may seem like a high number for the country it does not meet the high demand of 84 million Turkish and does not cover the huge local geothermal potential. Figure 2 shows current knowledge of Turkish geothermal potential (red areas) and locations of operational plants (ref triangles). Based on the map, it can be concluded that Central and Eastern Anatolia are underexploited vis-à-vis their potential. In addition, there is still a lack of exploration and research to determine the true potential of the Mediterranean and Black Sea regions.

Figure 2: Turkish geothermal potential

All and all, the Turkish geothermal case study proves that the technology can be developed quickly and efficiently (76 power plants in under 15 years) despite a somewhat shaken economy (current devaluation of YLT and high unemployment). Lessons can be learned globally from the Turkish case.

[1] Organic Rankine Cycle is a technology that convert low-temperature heat sources into a mechanical energy, and it can be used to produce electrical energy in a closed system.