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Geothermal power doesn’t get a lot of attention in Canada, likely because there aren’t any commercial plants here that take advantage of the earth’s natural heat. But Kenneth MacLeod, CEO of Vancouver-based Western GeoPower (TSX-V: WGP), calls geothermal the “unsung hero” of the energy world. “We’re eclipsed in public relations by the wind industry, but, at the same time, geothermal could have a much more profound impact on the electricity industry than wind can have,” he says.
MacLeod should have a chance to prove himself later this year. GeoPower is preparing to build Canada’s first commercial geothermal power plant, which could produce up to 100 megawatts of power per year—enough to power 80,000 households. The company will drill more than one kilometre below ground, where water is under such intense pressure that it stays in its liquid form even at temperatures of more than 200° C. Air is injected into the water to gradually bring it to the surface, where it flashes to steam that is then used to power a turbine. The steam is condensed and pumped back underground for reuse.
GeoPower’s site is located in the Meager Creek hot springs, about 170 kilometres north of Vancouver. B.C. is an ideal spot for geothermal power, because it is located on the Pacific Ring of Fire, where the Earth’s jostling tectonic plates cause molten rock to rise close to the surface, thereby creating pockets of intense heat.
The company will conduct further tests this summer to more accurately determine the site’s potential, and the project is also contingent on financing. The price tag to construct the plant is around $400 million. (At least one other firm, Candorado Operating Company in Vancouver, has plans for geothermal in Canada, though it is still in the exploration phase.)
GeoPower currently has no commercial plants anywhere, but another project in California could boost its credibility and finances before its Canadian operations get underway. The company is building a 35-megawatt plant about 120 kilometres north of San Francisco in the Geysers Geothermal field, which has been the site of geothermal power since the 1960s. GeoPower in late May announced an agreement with the Northern California Power Agency to provide electricity for 20 years at a rate of US$98 per megawatt-hour—which will be worth about US$26 million in revenue a year once the plant is completed in 2010.
There is potential for more geothermal power in California, too. The state derives about 5% of its energy needs from geothermal sources, or approximately 2,500 megawatts. MacLeod believes that number will double over the next 10 years as the cost of electricity rises and geothermal becomes more economical. “We want to be a part of that,” he says.
But MacLeod is also looking beyond North America. GeoPower in April opened an office in Chile, where the government has been pursuing alternative energy ever since Argentina (which supplied the country with almost all its natural gas) began curtailing shipments a few years ago due to impending shortages. GeoPower has bid on three land concessions in the country, along with four other geothermal companies. The concessions should be awarded by the end of June.
The prospects for geothermal in Canada are perhaps less promising—at least with existing technology. Geothermal has been slow to catch on simply because the province for which it is most suitable, B.C., has been able to rely on cheap hydropower for decades. But that method is no longer enough to meet demand, which is why MacLeod sees the possibility of at least 5,000 megawatts of geothermal power in B.C. over the coming years.
Alberta and Saskatchewan hold some potential, too. Dried-up oil and gas wells in those provinces are likely places to explore first instead of drilling anew, but the farther east one goes, the trickier geothermal becomes since the ground temperature cools. Some companies, such as California-based GeothermEx, are involved in an emerging field called enhanced or engineered geothermal systems, which use new techniques to draw energy from areas typically thought of as unsuitable. One method involves injecting water into hot rocks deep below ground to create the steam necessary for power generation. Such work could eventually result in geothermal power as far east as Ontario.
MacLeod points to Germany, which produces more than 500 megawatts of geothermal power, as a source of inspiration. “If Germany can embrace geothermal power, there’s potential for eastern Canada, as well,” he says. “I don’t see much difference in temperature gradients in Toronto versus Munich.”
The big catch, of course, is price. The industry in Germany is heavily subsidized, and the government purchases geothermal power at around $300 per megawatt-hour, MacLeod says. That’s about three times the rate in Canada. “The Canadian public is not ready for $300 power,” says MacLeod.
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