Geothermal Set to Rise in 2020
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- Feb 24, 2020 10:21 pm GMT
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The geothermal energy sector encompasses two primary systems, both of which require heat located below the Earth's surface. The first involves geothermal power plants, which use heat from wells at least a mile into the Earth to generate steam and make electricity. Then, there are geothermal heat pumps. They rely on heat located about 10 feet from the Earth's surface to warm buildings or water supplies.
People are attracted to the prospect of thermal energy for numerous reasons. For example, it's a renewable source, and extraction happens without using fossil fuels. This form of power is always available, too. People interested in money-saving options often find that renewable energy meets their needs. Statistics show it can reduce power bills by up to 80% compared to using fossil fuels.
Evidence strongly suggests this market will gain momentum in 2020 and beyond. Here's a look at some of the factors causing its growth and success.
Governmental support is one of the main reasons for the anticipated rise in geothermal energy adoption. When cities, states, towns and countries have the backing of government officials, it becomes easier to move ahead with plans and experience a minimum amount of friction.
For example, in The Netherlands, the country's government created a Geothermal Heat Action Plan. Netherland officials have invested in software that improves geothermal heat exploration efforts. The administration also helps businesses cover the costs of risk insurance associated with this form of electricity. Plus, if parties are put off by the initial financial investments associated with this renewable power, they can apply for federally sponsored grants.
In Poland, Sędziszów will become the first town in the nation to receive its heat from geothermal sources. Reports indicate the local government will provide the necessary land for the forthcoming power plant project. Members of the town's municipal council have also forged partnerships with local business people and cooperatives. Participants will help finance the initiative, receiving heating price reductions in return.
Federal officials in the United States are not as focused on this source, although many states have set targets for getting at least a certain electricity percentage from renewable sources by a specified deadline. Nevada passed a bill in April 2019, requiring the state to receive at least 50% of its power from renewables by 2030.
Around the same time, Washington State set a target for 100% clean energy by 2045, following similar moves from Hawaii, New Mexico and California. Although these renewable targets don't mandate that a state only select geothermal options, these ambitious aspirations will undoubtedly spur decision-makers to see if this renewable meets identified needs. The whole sector will grow as a result.
Beyond support from administrative bodies regarding geothermal, several other aspects indicate that the sector is poised for growth. Indeed, adoption rates are lower than other renewables, such as wind and solar. But it likely won't be long before this industry starts catching up. A forecast for 2018-2024 from Research and Markets expects a 12.2% combined annual growth rate for the period.
Geothermal heat pumps are ideal for residences in cold climates because the Earth's subsurface temperature rarely changes, even during extreme temperatures. It's also appealing for people who live in regions characterized by high electricity prices. These systems require much less energy to heat and cool compared to traditional ones, and as mentioned earlier, the savings can be substantial.
There is currently a 26% tax credit for individuals who live in the United States and install geothermal heat pumps on their properties. The credit decreases by 4% unless they implement the systems by the end of 2020. That incentive is likely another factor that will cause individuals to embrace the opportunities these heat pumps provide.
The corporate world is getting on board with this renewable, too. A Swedish company called Climeon recently received $12.5 million in funding from a Bill Gates-backed fund called Breakthrough Energy Ventures. Climeon aims to make geothermal power as accessible as other widely used renewables. The company's environmental payback time — the period to make up for the negative environmental aspects of installing renewable options — is only 15 days.
As these examples illustrate, the geothermal industry will likely show healthy growth in 2020. However, this sector's success is certainly not limited to that year alone. Both government officials and individuals should continue to view this renewable as a viable choice, primarily as the world gravitates toward clean energy choices.