By Byron King:

I just returned from a trip to California, where I attended a conference called the Geothermal Finance and Investment Summit. The conference was in San Jose, at the south end of San Francisco Bay. Why San Jose? San Jose is in the heart of Silicon Valley. And Silicon Valley is, as you know, ground-zero of modern high tech entrepreneurship in the U.S. The highways of the South Bay region are lined with office buildings bearing the names of many astonishing business success stories of the modern era, from Intel and Cisco Systems, to Yahoo, Sun Microsystems, Adobe and many more.

Over the past 30 years or so, a lot of investors laid a lot of money on a lot of tables. Those investors took a lot of risk on long shot ideas. And when some of those long shot ideas worked, they worked big. Microchips and mega-code have changed the world, literally bringing modernity to billions of people. And literally bringing billions of people to modernity. So what does high tech have to do with geothermal power? Well, it goes to show that when some ideas and industries come along at just the right time, there is almost no stopping them.

And so it may be with the application of geothermal power, an idea whose time is upon us. Geothermal is not, of course, software and data routing. It is not “high tech” as the computer geeks like to define it. In fact, mankind has been using geothermal energy sources for several millennia. Ancient tribes congregated near hot springs and geysers on every inhabited continent. The Romans built baths near thermal springs from Scotland to Turkey. Italy has been producing electricity from geothermal sources since 1903, and Iceland is today entirely electrified with geothermal power after a 25 year national effort. So geothermal energy is an old idea, and a well-established means of mining heat from the deep earth. But the modern idea - the idea whose time has come — is to extract energy from the heat of the earth’s interior on a massive scale, and use it to obtain steam to turn a turbine and generate electricity. When people realize the potential, they will in all likelihood demand access to geothermal energy for many reasons. Let’s think through some of the industrial implications of this.

Most electricity generated in the world today comes from burning coal, natural gas or uranium in one form or another. Each of these forms of electric generation has been around for a while, and so each has its historical advantages, its legacies and problem sets. Briefly, here is what I mean.

Coal generation requires a large power plant, replete with handling systems, burners and boilers. Coal plants require a tall stack that emits quite a bit of carbon dioxide (CO2), plus nitrogen - and sulfur-based chemicals, and various other particulates and air pollution. Coal plants usually require one or more rail lines, and thus we see trains hauling carloads of coal from the mine to the plant and returning the empties on backhaul. And coal plants create a market for strip-mines and deep mines, which create their own environmental and legacy issues (depleted aquifers, surface subsidence, etc.) Geothermal power, on the other hand, emits almost no CO2, no nitrogen or sulfur compounds, no particulates, requires no rail line, no trains and no strip-mines or deep mines. There is no acid rain or mine subsidence. Geothermal just needs a number of wells in the ground, with which to cycle the hot water or steam, and to re-inject it after use. And geothermal is a reliable source of base-load electric power — 24/7/365 — with well over 90% historical reliability.

Natural gas generation requires turbine plants, and even the most modern turbine plants emit relatively large amounts of CO2. In addition, gas-burners require a pipeline back to one or more gas-fields somewhere, onshore or offshore. And this necessitates a constant program of gas-exploration, drilling, discovery and development. This kind of constant well-drilling program is becoming more and more problematic in the post-Peak Oil world that we are encountering. (Of note, on November 19, 2007 the Wall Street Journal ran a page-1 article discussing the Peak Oil issue. We thank the Wall Street Journal. But you read it here first.) Geothermal, in comparison, requires production of geothermal fluids from a relatively small number of production wells and re-injections wells. Geothermal does not impact the landscape at anything approaching the scale of drilling that is necessary to fulfill a natural gas requirement over many years. And geothermal fields can last for many decades. By comparison with natural gas, the geothermal fuel - heat from the earth — is essentially free.

Nuclear power has its own requirements for massive infrastructure. A typical nuke plant covers a square mile or more, with associated security systems and gigantic containment structures that can withstand a direct hit from a crashing airliner if not an exploding cruise missile. Nuke plants are staffed with small armies of highly trained security and technical personnel, and require a continuing supply of uranium fuel. The uranium fuel requires a mine for the ore, plus upgrading and processing facilities, and other stages of high-security fuel-handling and treatment through the end of the cycle where radioactive waste must be contained for hundreds of thousands of years. By comparison, geothermal power is a relatively simple level of proven technology. And this is a good thing, not a drawback. We know how to drill wells, how to extract steam or hot water, and we know how to re-inject water after using its heat to spin a turbine. We know how to plug and abandon old wells.

So for a lot of reasons, the advantages of geothermal are obvious. Hands down, geothermal can beat coal, natural gas and uranium. Geothermal is more than competitive when it comes to price, such as cost per kilowatt-hour. There are no massive burner systems, no tall stacks, no rail lines or pipelines, no gigantic mines and processing facilities, essentially no air pollution, no toxic waste piles and long-term repositories.

Really, what is not to love about geothermal power? Come to think about it, why is the world not running on geothermal? Well, we can only speculate as to why some things happened in history and some things did not occur. But in our view, for reasons of historical legacy, coal, natural gas and nuclear systems were outgrowths of the developmental trend lines of the industrial revolution. Britain is an island built on beds of coal, and so the early British industrial revolution burned coal. And the early industrial development of the U.S. occurred in the East, near the coal measures of the Appalachians, so again people burned coal, and then oil and natural gas. Fossil fuels were so cheap for so long, that people just adopted fossil fuel solutions and stuck with them. As for nuclear systems, after World War II these novel atomic methods received immense government subsidies for decades. This was for reasons of national policy in the U.S., former Soviet Union, France and elsewhere. So nuclear also came to be a significant player in the production of electricity.

But things are changing in the world of energy, and they are changing fast and dramatically. It may be too ambitious to say that geothermal will soon be replacing large segments of the coal, natural gas or uranium components as the main source of electric power for the growing demands of the world economy. Coal, gas and uranium have been around for a long time and in a big way. There is a vast installed base of coal, gas and nuclear systems. These systems are what people know how to do. And thus coal, gas and nuclear will be around many decades from now. (China alone is commissioning a new coal-burning plant every four or five days. China has 565 coal plants scheduled to open in the next five years, about 113 per year.) But it is also reasonable to say that geothermal power will be taking up much of the slack for new electricity generation, certainly where the geologic conditions permit. In fact, the geothermal industry today is about where the oil industry was back in the 1940s. There is immense growth ahead.

And where is geothermal going? Nowhere but up, for many years. In California, for example, Pacific Gas & Electric obtains about 17% of its current base-load supply of electricity from renewable sources. About one-third of that is from geothermal, and PGE is looking for as much new geothermal power as it can sign up. Under California law, it is illegal for PGE to buy electricity generated from coal or natural gas. And it is just about impossible to construct a new nuclear plant in California. So PGE has almost no alternative but to support geothermal development (along, of course, with solar and wind development). And PGE is not alone. Many other U.S. utilities are finding themselves in similar straits. Thus on the all sides of the load-equation, it is fair to say that utilities are seeking a future supply of reliable, base-load electricity. And geothermal energy can and will meet much of that need. If not, then much of the modern high tech economy will become untenable.

When you think about it, San Jose was just the right kind of locale for a geothermal conference. The next, explosive, high-growth industry - one that will change the world — was coming together to plan for its future.