A promising new approach to decarbonizing industrial steam is the use of geothermal energy. Roughly a fifth of global CO2 emissions are attributed to industrial heat, applied either directly to a process or applied indirectly in the form of steam. While decarbonization of direct process heat generally needs to be tailored to specific applications, decarbonizing steam can be more generic, with potential for application across a wide range of industrial sectors. Recent developments in geothermal energy promised to make it competitive with other sources of decarbonized steam supply, such as heat pumps and bioenergy.
For many years, geothermal energy has been synonymous with geothermal electricity, but this need not be the case. Indeed, geothermal steam has some important advantages over geothermal electricity. Much of industrial steam supply is at relatively low temperatures (around 150°C versus 250°C for electricity generation) allowing industry to utilize a vast quantity of resources that are unsuitable for electricity. Moreover, direct use of steam captures most of the energy in the steam, as opposed to losing ~70% of that energy in thermodynamic losses in steam turbines. On the other hand, steam is not an easily movable or tradable commodity like electricity, so it must generally be produced and consumed within the same facility.
How did geothermal steam become a potential decarbonization solution? Geothermal resource quality is based on two things: subsurface temperature gradient, which determines how deep a well must be in order to reach a given temperature, and connectivity, which determines flow rates. Using traditional methods of extracting geothermal, only a few locations in the western U.S., such as parts of California and Nevada, have had the necessary combination of shallow, high temperature, high flow rate resources. This restricted map and steam’s lack of long-distance portability posed a fundamental mismatch, since the majority of industrial steam consumption is in the eastern U.S.
However, technological advances drawn from the oil and gas industry may be dramatically changing the outlook for geothermal steam. The improved drilling technologies that have made the shale gas and shale oil revolutions of the last decade possible also apply to geothermal. Current state-of-the art methods make it less expensive to drill deeper, which allows for easier access to target resource temperatures; horizontal drilling allows for fewer wells to be drilled to access those resources; and hydraulic fracturing pumps high pressure fluid into the well to open small fractures, which increases subsurface connectivity and flow rates.
This study aimed to determine whether applying technological advances from oil and gas makes geothermal steam economically competitive. This was done by creating a techno-economic model that assigns a capital and operating cost to a geothermal steam facility based on its size and resource depth. Using a national inventory of boilers and cogeneration facilities and a geological map of resource depth, the levelized cost of heat (LCOH) from geothermal steam was calculated across the U.S. for three technology scenarios drawn from the NREL Annual Technology Baseline 2024. The analysis has shown that technological advances decouple well cost from resource quality. The upshot is that cost-competitive geothermal steam can be reasonably accessed very widely in the U.S., including – crucially – most of the places where steam is needed. This decoupling also means that LCOH is predominantly influenced by the facility size, rather than resource depth, as economy of scale takes precedence.
Technological advances from oil and gas have upset the old paradigm that economically viable geothermal energy is limited to a few spots in the western U.S (see Figure 1). In fact, LCOH for the reference geothermal steam facility is cut in half, from $14/MMBTU to $7/MMBTU, between the conservative and advanced scenarios, compared to $8/MMBTU for a new natural gas boiler (not decarbonized) and $17/MMBTU for an electric heat pump.
Project financing is an important challenge for geothermal steam. Geothermal steam systems require a large upfront cost, in contrast to boilers and heat pumps that are dominated by fuel costs. This means that facilities opting for geothermal systems are locked into the decision for decades, regardless of how the landscape for decarbonized steam may change during that time. This poses a financial risk to companies even where the long-term apparent cost is lower than alternatives. Policy can help to address this concern, as IRA tax incentives are already doing. Nonetheless, the fact that the same technology breakthroughs that produced the shale boom of the 2010’s are being applied to geothermal steam suggests that it could experience a similar trajectory in the coming years and start to play an important role in industrial decarbonization.
The full report is available below:
Figure 1. Calculated levelized cost of heat from geothermal steam in the United States assuming Advanced Technology Innovation. Bubble size represents the scale of industrial steam demand at 150°C or less.
About the Author: Jesse Griffin-Carney is a PhD Candidate at UC Berkeley who uses optimization modeling to conduct research on energy system decarbonization strategies, with a focus on hydrogen. She previously earned degrees in Environmental Science and Policy, and in Mathematics and Statistics, from Johns Hopkins University. She has held internships in the planning departments of both ISO New England and Vermont Electric Power Company. In summer 2024, Jesse investigated the potential of geothermal energy for industrial steam for her Summer Research Fellowship with Evolved Energy Research. This was a great opportunity for Jesse to explore emerging strategies for difficult-to-decarbonize sectors and further develop her energy system modeling skills. She plans to continue in this line of work after completing her dissertation.