Continued Investment Expected in Geothermal Sector
We forecast that 2023 will be viewed through a narrow, economically focused lens.
As the world grapples with the complex and competing demands of energy security, affordability, and emissions reductions, all potential sources of energy are coming under closer scrutiny.
Among them, geothermal energy stands out as a veritable diamond in the rough because–despite its immense potential–it has long been undervalued and underutilized. But as the world searches for solutions to these pressing issues, geothermal energy is finally getting the attention it deserves.
This is particularly true when it comes to the geothermal application of district geothermaling and cooling and the inclusion of geothermal tax credits in the U.S. Inflation Reduction Act of 2022.
For these reasons and more, 2023 will undoubtedly prove an exciting year for geothermal energy.
Geothermal District Heating & Cooling–2023
Geothermal energy isn't just for the future. It's for the present, too. While enhanced geothermal systems are still in the process of being commercialized, there are already ways for us to tap into this abundant source of energy.
One such way is by installing geothermal pumps in our homes. And the best part? The United States has now implemented a policy that offers a significant incentive for those who take the plunge. The Inflation Reduction Act of 2022 set aside $500 million in tax breaks for U.S. residents who install geothermal pumps in their homes. These pumps work by using the constant temperature just five meters below the surface of the Earth–for example, under your driveway or backyard–to geothermal or cool air, providing a highly efficient, low-emission geothermaling and cooling system. Not only are you saving money on your energy bill, you're also doing your part in reducing emissions. We at Baseload Capital call that a win-win!
And it is not only the U.S. that is booking wins in district geothermal energy. Innargi, a Danish geothermal energy company aiming to address district geothermaling solutions in Denmark, has already announced in 2023 two separate drilling locations for geothermaling in plants in Aarhus.
This is an exciting announcement for a fellow Scandinavian geothermal company!
War Creates Uncertainty Again–But Reinforces the Case for Geothermal District Heating
The outbreak of the Russia-Ukraine war sent shockwaves throughout the energy industry in Europe, particularly Germany.
Concerns about energy security were heightened by the disruption of gas supplies from Russia. In the face of this crisis, district geothermal geothermaling emerged as a necessary alternative energy source.
Unlike fossil fuels such as natural gas, geothermal energy is a domestic and renewable resource, immune to the geopolitical risks that plague the European energy market.
Beyond its reliability, district geothermal geothermaling systems offer a number of other benefits. Centralizing the system allows resources to be shared and can result in lower costs for individual building owners. Geothermal energy is also a clean energy source that does not produce greenhouse gas emissions, which aligns with Germany's goal to reduce carbon emissions and achieve a more sustainable energy mix.
Expect the Unexpected for Geothermal Energy in 2023
What will geothermal investment look like in 2023? While it’s still the first quarter, there’s already some big news coming out this year!
While the future is inherently uncertain and unpredictable, we remain intensely bullish about geothermal in 2023. We are optimistic that, again, more megawatts will come online, more geothermal venture capital will be raised, and more technical development and innovation will occur across the entire industry.
Here’s to the biggest year in geothermal energy yet!
Ryan Faulkner-Hogg is an Australian journalist and podcaster with a deep interest in the power and potential of Geothermal Energy. He has interviewed some of the top people at deep geothermal companies and keeps a keen eye on the drilling innovations that will take us deeper, faster.