This article explains how Regenbiomass became interested in the potential of geothermal energy and why it is synergistic to its mission for developing Timber & Carbon Farms in California and Africa.
In May 2023, Eco-Enviro News Africa featured an article highlighting the initiatives of Regenbiomass in support of the Great Green Wall Initiative in the Sahel region of Africa. The article unveiled our concept of Timber & Carbon Farms, for generating regenerative lumber and facilitating decarbonization. The article mentioned that Regenbiomass was interested in an innovative technology called “Aquifer Pumped Storage” to provide irrigation water for its trees combined with generating zero emission and reliable electricity.
The article further indicated that the technologies resulting from the Inflation Reduction Act (IRA), which presents significant tax incentives for the advancement and implementation of renewable energy technologies in the United States, could be transferred to Africa, aligning with the continent’s energy transition goals.
As a wind energy pioneer, who installed 500 wind turbines in Palm Springs decades ago driven by tax credits, I recognized the opportunity for developing a hybrid technology that could synergistically produce base-load and dispatchable electricity with the bonus of irrigation water. Such a technology for resource-rich Africa, and for projects in the USA with IRA investment tax credits reaching 70%, promises to surpass the “California Wind Energy Gold Rush” investments during the 80’s that gave birth to today’s trillion-dollar wind energy industry.
I also recognized the timely potential of geothermal energy, which is abundant in the Salton Sea region (my backyard) for providing premium-priced baseload and dispatchable electricity to balance the California grid that has been overloaded with intermittent wind and solar power.
A decade ago, these drivers were not present, but now with the certainty of climate change and exigencies for decarbonization; an unstable electric grid burdened by unreliable renewables requiring storage; and generous IRA investment tax credits, we are at an inflection point whereby geothermal is “sine qua non” for the energy transition.
Furthermore, shale drilling and fracking techniques that sparked the oil and gas boom are being adapted to unlock massive, sustainable geothermal energy sources deep underground and recent advances with aboveground technologies allow the conversion of low-temperature geothermal heat into electricity. This combination promises to catalyze a geothermal bonanza on the scale of the shale revolution for providing abundant clean energy.
Africa’s Influence for the Energy Transition
Consider the impact of this syllogism. Major premise: if demographics are destiny, the continent of Africa is poised to become the center of global affairs within a generation. According to the United Nations, the populations of China and India will both recede to about 1.3 billion by 2050. Africa is currently home to approximately 1.3 billion people with the continent’s population forecasted to nearly double to 2.5 billion by 2050, and triple to 3.8 billion by 2100. Africa has the youngest population with the median age about 20; therefore, by the end of this century, one-third of the people on the planet will be African. By 2050, Africa’s combined business and consumer spending are projected to exceed $16 trillion, making the continent an attractive market.
Modifications (in blue) by ChainLink Research
Minor premise: Africa stands as a formidable force in shaping the transition towards a renewable energy future that can be monetized by its exceptional reserves of precious metals and hydrocarbons. The continent also boasts an astonishing wealth of mineral resources, including substantial deposits of gold, diamonds, copper, cobalt, and platinum, among others. These resources serve as crucial components in renewable energy technologies, such as solar panels, wind turbines, and electric vehicle batteries.
Conclusion: With its teeming population, untapped natural resources, and abundant sunlight, wind, and hydroelectric potential, Africa will influence trends for the energy transition that will dictate the future of the planet. In other words, Africa is poised to play a pivotal role in driving solutions that will shape the global energy landscape for generations to come.
Renewables Driving Demand for Energy Storage
The energy transition to renewables is poised to surpass the Industrial Revolution’s heavy reliance on fossil fuels, ushering in a new era of sustainable and clean energy sources that are dependent on energy storage. My home state California is a pioneering force in renewable energy and signaling a future where the need for energy storage becomes increasingly urgent. Affordable and effective energy storage technologies are vital for achieving utility load balancing amidst the intermittent nature of renewable wind and solar technologies.
In 2022, California led the United States in solar power generation and was second after Texas with wind power. However, electricity rates are among the highest in the nation at about 20 cents per kilowatt-hour (kWh) and it imports around 32% of its consumption. According to a study by the California Public Utilities Commission (CPUC) published in 2020, California could need approximately 40 to 70 gigawatt-hours of energy storage capacity by 2025 to support the integration of renewable energy and ensure grid reliability.
As the demand for renewable solar and wind energy continues to surge, geothermal emerges as a clean, scalable, and sustainable solution to the energy storage conundrum. The technology boasts numerous advantages over battery storage, which is typically limited to a mere four hours for backup power and possesses a restricted lifetime due to limited charging cycles. Moreover, the reliance on lithium batteries exacerbates material and mineral shortages and is plagued with disposal challenges.
Energy Beneath Our Feet
As the world strives to make a decisive transition to renewable energy, one technology stands out as uniquely positioned to provide the Holy Grail of baseload, dispatchable, and energy storage. Enhanced Geothermal Systems (EGS), with its ability to tap into the virtually limitless reservoir of heat beneath the Earth’s surface, offers an inexhaustible and clean solution to meet the growing energy demands of the future. Unlike other renewable sources like solar and wind, geothermal energy remains consistently available, providing a reliable and uninterrupted power supply. By utilizing advanced drilling techniques and reservoir engineering, EGS has the potential to unlock vast geothermal resources in regions previously deemed inaccessible to offer a reliable foundation for the electric energy transition on a global scale.
Converting geothermal heat to electricity will be achieved by recent advancements in Organic Rankine Cycle (ORC) technology.[1] ORC systems, which utilize organic fluids to generate power from low to medium-grade heat sources, such as geothermal reservoirs, have undergone significant improvements in efficiency and performance. Advanced heat exchanger designs have been developed, allowing for better utilization of available geothermal heat, and increasing the overall energy conversion efficiency of the ORC process. Furthermore, the development of new organic working fluids with improved thermodynamic properties has enhanced the cycle’s performance and expanded its operating temperature range. These innovations have led to a notable reduction in the Levelized Cost of Energy (LCOE) associated with EGS, making it the most competitive and economically viable energy option.
Inflation Reduction Act (IRA) and Levelized Cost of Energy (LCOE)
The driving force behind future innovation and expansion for EGS and ORC will be the recently passed $369 billion IRA. This comprehensive legislation offers a myriad of incentives designed to stimulate investment in zero-emission technologies in the United States. Effective as of January 2023, an investment tax credit (ITC) of 30% has been set in motion. Moreover, there are stackable bonus credits for monetizing up to 70% of a project cost including 20% that can be obtained for projects deployed in low-income areas. The scale of support from this historic legislation, providing monumental federal tax incentives, will catalyze the influx of private sector capital for the development and deployment of bold and innovative technologies to accelerate the energy transition.
Furthermore, the IRA established extended phaseout schedules with a long runway for assuring the transition to clean energy. The credits are in effect either until the latter of 2032, or until U.S. electricity sector carbon dioxide emissions are equal to or below 25% of 2022 levels. According to Wood Mackenzie, IRA tax credits will be extended for substantially longer than 2032 to 30-40 years. Instead of several hundred billion dollars in tax credits for new renewables and storage through 2032, there could be trillions of dollars over multiple decades.
Moreover, the IRA includes a provision that allows individuals to sell unused tax breaks to third parties. This policy, known as “transferability,” permits developers and investors who don’t need certain tax benefits to monetize them by transferring them to other taxpayers who can use them on their own tax returns.
I connected with Mike Matson, Energy & Sustainability Expert at the Boston Consulting Group, who graciously provided this quote for promoting my articles: “EGS offers a more favorable LCOE compared to other conventional and renewable energy sources when the IRA tax credits are included. As shown in the graphic below created by our group, LCOE for Onshore wind is only $15 post-tax credits but it would require an additional $110 for storage making it more than double the LCOE of EGS for providing reliable electricity”.
In conclusion, private equity and venture capital firms are sitting on record levels of uninvested capital, termed “dry powder”, amounting to $3.7 trillion that could play a crucial role in funding the global transition to clean energy. This dry powder represents commitments from limited partners that must be invested by the general partners that manage the private capital funds. If deployed successfully, private capital dry powder could provide tremendous momentum for enabling a clean energy economy.
Copyright © 2023 Philip C. Cruver
RegenBiomass
Palm Desert, CA 92211 • Contact: Phil@Regenbiomass.Com
1 A description of how ORC works within geothermal systems can be found here: Investigation of Energy and Exergy of Geothermal Organic Rankine Cycle — Return to article text above