Tim Latimer on Solving the Financing Problem for Geothermal
Odd Lots
Deep Dive
Why is geothermal energy not more widely adopted in the U.S. despite its potential?
Geothermal energy faces a financing challenge where firms need customers to secure financing, but customers are hesitant without proof of project feasibility and financing. This creates a chicken-and-egg problem that hinders scaling.
What is advanced geothermal and how does it differ from traditional geothermal?
Advanced geothermal, or enhanced geothermal systems, uses new technology to access deeper or impermeable rock formations to generate heat. Unlike traditional geothermal, which is limited to specific geologies like Iceland or Northern California, advanced geothermal can be deployed in more locations.
How much of the U.S. energy mix does geothermal currently account for?
Geothermal currently accounts for about three gigawatts of power, which is less than 1% of the U.S. electric grid.
What is the potential for geothermal energy in the U.S. by mid-century?
A study with Princeton University suggests that geothermal could provide up to 750 gigawatts of power by mid-century if the right technology is developed and deployed.
What is the technological overlap between fracking for oil and gas and geothermal drilling?
Both industries use horizontal drilling and hydraulic fracturing to create permeability in low-permeability formations. However, geothermal drilling requires higher temperatures and often deals with harder rock types like granite.
What was the first successful advanced geothermal project by Fervo Energy?
Fervo Energy's first successful project was completed in late 2023 in Northern Nevada, in partnership with Google. It included the first two horizontal well pairs for geothermal and demonstrated stable production over a year.
How has Fervo Energy's funding mix evolved over time?
Initially funded by grants from the Department of Energy and venture capital, Fervo has recently secured project finance, including a $100 million construction loan in July 2024, moving away from expensive venture capital.
How do rising interest rates impact geothermal projects?
Rising interest rates make it harder for capital-intensive, long-payback projects like geothermal to secure funding. The high upfront costs and long payback periods mean that even small changes in interest rates significantly impact the economics of these projects.
What role has the Department of Energy played in supporting geothermal development?
The DOE has provided grants and research funding, including an $84 million allocation for geothermal in the bipartisan infrastructure law, with Fervo receiving a $25 million grant. The DOE's reports have also helped raise awareness and validate the technology among investors.
What are the three main priorities for energy resources according to Tim Latimer?
The three main priorities are cleaner energy, affordability, and reliability. While people may prioritize these differently based on their perspective, all three are essential for the future of energy.
What is the current permitting timeline for geothermal projects in the U.S.?
The typical permitting timeline for geothermal projects in the Western U.S. is six to eight years, due to extensive environmental reviews and federal permitting processes.
How could permitting reform impact geothermal project timelines?
Permitting reform could reduce the timeline from six to eight years down to two to four years by streamlining redundant processes and improving staffing at regulatory offices.
What is the current bottleneck in scaling up geothermal energy according to Tim Latimer?
Currently, the bottleneck is the supply chain, particularly for transformers and other high-voltage electrical equipment, which have long lead times and high demand from data centers and other energy projects.
- First geothermal power plant: over 100 years ago in Italy
- Current US geothermal power: ~3 gigawatts (<1% of grid)
- Potential US geothermal power: up to 750 gigawatts by mid-century
Shownotes Transcript