Geodynamics produced its first electron last week using its five kilometre deep hot rocks geothermal resource, known as the Innimincka Deeps (as opposed to the shallows which are ‘only’ three kilometres underground).
This is a major breakthrough in demonstrating the viability of engineered geothermal resources – where rocks are fractured to create a series of cracks that enable water to flow between two drill holes as they are heated-up by the surrounding rocks.
For those close watchers of the geothermal sector in Australia, it has been a long time coming.
Back in 2002, when Geodynamics released its ASX listing prospectus, geothermal appeared to be a gamebreaker technology for decarbonising Australia’s electricity supply.
The resource was absolutely massive, but not only that, it could supply that magic type of power known as ‘baseload’.
Geoscience Australia estimates that 1 per cent of Australia’s geothermal energy shallower than five kilometres and hotter than 150 degrees Celsius, could supply Australia’s energy requirements for 26,000 years. Just within Geodynamics’ own tenements it claimed in its prospectus that the resource was the “thermal energy equivalent of 50 billion barrels of oil or 10.3 billion tonnes of coal.”
At the same time accessing the resource was simply a matter of applying technology already well known in the oil and power sector. The prospectus boldly stated:
The known, world-class geothermal resource can be accessed by standard oil well drilling technology. The heat will be extracted by circulating water in an underground heat exchanger, engineered using hydraulic stimulation techniques as developed by the oil industry.
The heat extracted by circulating water is converted to electricity using standard binary geothermal power plants, which are operational throughout the world.
What’s more, it wouldn’t cost all that much more than power already being supplied by conventional fossil-fuelled power plants. According to the prospectus:
“Studies as reviewed by independent experts have shown that HDR geothermal electricity can be generated at a total cost of $40 to $62 per MWh depending on scale.”
Geodynamics said it would have its proof of concept underground heat reservoir up and running within 18 months of ASX listing. Then by around mid-2006 it’d have a 13MW power plant producing power for Santos’ nearby Moomba gas plant.
Politicians and some bureaucrats (but certainly not all) became intoxicated by these alluring promises. For the Howard government, which was opposed to regulatory controls over carbon emissions, it offered something wonderful. No need for putting a price on carbon. No need to beef-up a Renewable Energy Target that led to Danish turbines on sticks producing some kind of dinky pretend power.
No, we could just give a few million dollars to an Australian company to prove-up the supply of real-deal power. After which they’d simply lower emissions without the need for a carbon price.
At the time of listing, Geodynamics had been granted a $5 million R&D Start Grant. This was supplemented by an earlier $1.8 million government investment via the Renewable Energy Equity Fund and $1 million that had gone to UNSW to assess the Cooper Basin resource. Then the Renewable Energy Development Initiative promised a further $5 million in 2005.
The Renewable Energy Demonstration Program in 2009 allocated $90 million to fund the demonstration power plant originally planned for completion in 2006. On top of this a further $7 million was granted under the Geothermal Drilling Program.
All up, including companies beyond just Geodynamics, I’ve managed to identify $184 million allocated in grants to geothermal by government.
Yet you know what – only a tiny fraction of this government money ever actually made it into the hands of the geothermal companies. While it made for great press releases, the conditions attached to the grants meant most geothermal companies didn’t have a hope in hell of putting that money to good use.
It turned out that it wasn’t just a simple matter of applying techniques gained in the petroleum sector. Geodynamics was pushing some serious technological boundaries. The depths it was drilling were seriously deep by the standards of the oil industry. What’s more it was trying to fracture granite, much harder than the sedimentary rocks the oil industry dealt with. This kind of drilling exercise was considered highly risky by the oil industry, yet they pulled out a resource worth a heck of a lot more than hot water.
It doesn’t, however, mean it was all a waste of time and money. No matter which way you look at it the Australian geothermal resource is incredible.
According to AEMO’s modelling of a 100 per cent renewable energy system, geothermal could still play an important role with capital costs three times what Geodynamics had originally estimated. Geodynamics persistence in the face of incredible difficulties should be applauded.
But the lesson from all of this is technological innovation in energy is almost invariably hard, slow and incredibly uncertain.
It shows up Bjorn Lomborg’s idea, popular with climate change doubters, to just spend money on R&D and provide no incentive to deploy and improve existing low carbon technology today as incredibly reckless and foolish.