What is geothermal energy?
There are two main applications of geothermal energy: The first is based on using heat from the earth to create electricity or to provide direct services, such as hot water heating or warming of greenhouses. This heat may be derived from geothermal geysers that naturally come all the way up to the earthâs surface, or accessing this heat may require drilling down into the earthâs crust to reach areas that are hot enough to use for energy production. These resources typically are found from a few hundred meters to about 3,000 meters below the earthâs surface.  The second application of geothermal energy is based on using the thermal mass of soil or ground water to drive a heat pump, which can be used for either heating or cooling applications. These are known as geothermal ground source heat pump applications.
There are approximately 8,000 peak electrical megawatts (MWe) and 4,000 direct-use thermal megawatts (MWt) of geothermal capacity installed worldwide today. The U.S. accounts for 2,800 MWe of electrical capacity and approximately 600 MWt of thermal capacity. U.S. geothermal electrical capacity is enough to supply about 2.8 million average U.S. homes. U.S. thermal capacity is the equivalent of saving about 4 million barrels of oil per year for electricity production.
All types of geothermal energy are renewable as long as the rate of heat extraction from the earth does not exceed the rate at which the thermal reservoir it depends upon is recharged by the earthâs heat. For electricity generation, it may take several hundred years for a geothermal reservoir to recharge after it has been fully depleted. District heating systems may take 100-200 years to recharge, and for geothermal heat pumps, reservoir recovery may take 30 years or so. 
One can argue that geothermal energy is not truly renewable, because over time the earthâs core will cool and the radioactive decay of elements that help keep the earthâs core warm will decrease. However, because the earthâs geothermal heat reservoirs are immense in magnitude compared to humanityâs rate of use, geothermal energy is effectively renewable.
Geothermal power plants that tap the earthâs heat for energy production do have finite lives oftypically 30-50 years because, eventually, the plantâs equipment wears out. However, by reinjecting the water that comes out of a geothermal well back into the system, or by using other water sources, such as reclaimed waste water, the life of geothermal wells can be extended, and production increased.
The major larger-scale application for geothermal energy is the production of electricity from the earthâs interior heat. The largest geothermal plants in the world used for electricity generation are located in the Geysers area in Northern California, USA. The installed generating capacity at the Geysers reached its peak in 1989 at 1,967 megawatts (MW). Since 1987, the Geysers has experienced a decline in steam pressure and electricity production that has coincided with older power plants in the area reaching the end of their useful lives. However, as of 1998, the Geysers retains its first-place status, with a peak capability of nearly 1,100 MW -- enough electricity to supply a city of over a million Californians.
Most households are unable to use geothermal energy directly for heat or electricity. However, some locations are able to use geothermal heat for industrial processes, greenhouse heating, crop drying, heating individual buildings and district heating. These direct-uses of geothermal energy can provide savings of as much as 80 percent from traditional fuel costs. Direct-use systems require a larger up-front capital investment compared to traditional systems, but have lower operating costs and no need for ongoing fuel purchases.
Geothermal ground source heat pumps for residential use
Residences in the U.S. and other countries can use geothermal ground source heat pumps (GSHPs) to reduce air conditioning peak loads, winter heating loads, and water heating loads. GSHPs rely on the thermal mass of the earth and subsurface water flows rather than geothermal heat that resides deeper in the earthâs crust. There are about 500,000 geothermal heat pumps in use in the U.S. today. GSHP's are 50Ð70% more efficient at heating and 20Ð40% more efficient at cooling  and can reduce electricity use by 25%-60% compared to tradition electric heating and cooling systems.  According to the U.S. Department of Energy, GSHP's provide water heating free in summer, use about half the water heating energy in winter, have a payback time about 2 to 10 years and, and reduce emissions up to 72% when compared to an electric resistance heating and standard air conditioning systems.
The cost of geothermal electricity in the U.S. ranges from $0.05 to $0.08 per kilowatt-hour, and technological improvements are steadily lowering that range. [10,11] The lowest cost geothermal producers sell power for $0.015 per kilowatt hour, the Geysers sells power at $0.03 to $0.035 per kilowatt hour, and a geothermal power plant built today would require about $0.05 per kilowatt hour to be economic.  The reason newer geothermal power plants cost more is that they are generally tapping into lower temperature resources, thus requiring more and deeper drilling into the earthâs crust to produce a given amount of power than earlier geothermal power plants that tapped into higher grade (higher temperature) geothermal resources. By comparison, modern natural gas-fired power plants, and wind turbines in good wind resource regions are producing power at about $0.03 per kilowatt-hour.
The economics of geothermal power can be improved through co-production of goods and services from high-temperature geothermal brine. A zinc recovery facility at a 49 MW geothermal power plant in California's Salton Sea region will produce approximately 33,000 tons of high-quality zinc per year, almost a third of the 110,000 tons the West Coast galvanizing industry imports every year. This process will represent the most environmentally benign and lowest cost zinc-producing method in the world. Zinc is used for galvanizing metals to prevent corrosion, production of brass and other zinc alloys, chemical manufacturing, dry cell batteries, and many other uses. Silica is also co-produced with geothermal power because it is brought up from the earth with the geothermal brine being tapped. Silica may generate substantial revenue if it can be sold as a rubber additive at current market prices of around 70 cents per pound. 
Continued expansion of geothermal energy requires technical innovation, reduced costs, consumer education, and a level economic and regulatory playing field compared to other energy technologies. While geothermal power applications require advances in exploration, drilling, and power plant technologies, direct-use applications such as heat pumps require contractor familiarity with the technology and increased understanding among consumers that the benefit of low life-cycle costs more than offset high up-front costs. In other words, it may be expensive to install geothermal heat pumps initially, but the long term benefits make it financially and environmentally worthwhile.
Current geothermal power technology in the U.S. is limited to the Western half of the United States, and only in areas where the geothermal resources are readily accessible. Future geothermal technology, known as Hot Dry Rock (HDR) geothermal, may be able to tap into deeper geothermal resources, thus allowing geothermal energy to be used for electricity generation anywhere in the world. However, the technology to drill deep enough boreholes (approximately 4 to 10 miles into the earth's surface) does not yet exist and is a subject of current research and development. 
Geothermal energy actually provides significant portions of energy in many parts of the world. For instance, geothermal sources provided an average of 7.3% of California's electricity, or 213 billion kilowatt-hours, during the 15-year period from 1985-1999.  Significant potential exists for increasing geothermal production in California and the entire Western United States. The top three states for geothermal potential are California, Nevada, and Utah, with additional high potential areas in Idaho, New Mexico, Arizona, Oregon, and Wyoming.  Promising areas for new geothermal exploration are the Cascade Mountains of Washington, Oregon, and northern California. 
The California Energy Commission (CEC) estimates that an additional 4,000 MW can be installed in California using currently available technology. However, recent conversations with CEC officials indicate that only 1000 MW are likely to be installed in the next decade. The Geothermal Policy Working Group states that another 2,000 MW can be developed in Nevada within the next five years. The geothermal industry, with assistance from the U.S. Department of Energy, is working to achieve a geothermal-energy life-cycle cost of electricity of $0.03/kWh. It is anticipated that costs in this range will result in about 15,000 MW of new capacity installed by U.S. firms within the ensuing decade.  However, current costs of geothermal energy are greater than many of the alternatives, such as wind and natural gas power plants, reducing the economic incentive to develop new geothermal power at this time.
Using geothermal energy is an effective way to minimize air pollution while meeting energy needs. Current geothermal fields produce only about one-sixth of the carbon dioxide that a natural gas fueled electrical generating power plant produces and none of the nitrous oxide (NOx) or sulfur bearing (SOx) gases.  New state of the art geothermal binary and combined cycle plants produce virtually no air emissions. Each 1,000 MW of new geothermal power will offset 1.9 million pounds per year of noxious and toxic air pollution emissions in Western skies and offset about 7.8 billion pounds per year of climate affecting CO2 emissions from gas fired plants or much larger amounts from coal fired plants.
All types of geothermal energy are renewable as long as the rate of heat extraction from the earth does not exceed the rate at which the thermal reservoir it depends upon is recharged by the earthâs heat. A geothermal reservoir that has been used for electricity generation may take several hundred years to recharge after it has been completely depleted. District heating system reservoir recovery may take 100-200 years, and geothermal heat pump reservoir recovery may take 30 years or so.
In 1999, geothermal energy provided 0.4% of U.S. electricity generation (14.3 billion kWh), enough to supply electricity to over 1,400,000 average U.S. homes. U.S. geothermal capacity grew only slightly from 1990 to 1998, by 2.7% from 2,775 MW to 2,850 MW. Worldwide, geothermal capacity in 1999 was 8.24 million kW, or 0.26% of the 3,180 million kW of total world installed electrical generating capacity. Worldwide geothermal capacity grew much more rapidly than the U.S. over the last decade, by over 40% from 5,867 MW in 1990 to 8,240 MW in 1998. However, the United States still accounted for 35% of worldwide installed geothermal capacity in 1998. [22,23]
OREGON--The Oregon Institute of Technology campus has been heated by the direct use of geothermal energy since 1964. Three geothermal wells supply all of the heating needs of the eleven building 60,400 m2 (650,000 ft2) campus. In addition to heating, a portion of the campus is also cooled using the geothermal resource. This is accomplished through the use of an absorption chiller. The chiller, which operates on the same principle as a gas refrigerator, produces 540 kW (154 tons) of cooling capacity. The annual operating cost for the system is about $35,000 ($0.05 per square foot per year) including maintenance salary, equipment replacement and the cost of pumping. This compares to an annual cost of $250,000 to $300,000 for a boiler plant using natural gas.
ICELAND--Geothermal energy is used to provide the majority of residential heating in Iceland
. There are 30 municipal district heating systems and some small 200 private networks in the rural areas, providing heat to 86% of all houses in the country. 
There are a number of policies that could be used to promote additional geothermal energy development. Among them are:
Geothermal energy and other renewables often carry a heavier tax burden than their polluting counterparts. A 1998 California Energy Commission study found that tax loads carried by renewable energy options were found to be up to 220% higher than that of equivalent natural-gas fired generation. In particular, levelized tax loads for geothermal energy are 1.8 times that of equivalent natural gas fired generation. The problem is that geothermal energy and natural gas compete to provide similar services in the same market, but have very different capital and expense profiles. Geothermal energy has high up-front capital costs, and no fuel costs, while natural gas technologies have lower capital costs, but continuing expenses for fuel. This results in unequal tax loads between these technologies. Under the emerging competitive electric services market, geothermal technologies and its supporting industries will face greater economic difficulty unless such equity issues as unequal taxation and unrecognized externality benefits and costs relative to the fossil competition are addressed. Until these equity issues are addressed, RD&D alone will not bring about competitiveness for the majority of renewable technologies, including geothermal energy. 
Continued and increased federal R&D funding
Federal R&D funding is important for maintaining technological progress in geothermal energy development, especially because private industry is unlikely to fund the continued research required. This progress reduces cost as well as increases energy yields from existing resources. Priority areas for research and development include:
--advanced drilling and exploration,
--power plant efficiency and durability,
--hot dry rock (HDR) technology
--geophysical diagnostics and modeling, and
Federal Production Tax Credits (PTC) provide an incentive for continued development of renewable energy technologies. Long-term stability of PTCs enable a stable economic climate for renewable energy development. It has been suggested the Federal Wind-Only Production Tax Credit be extended to all renewables. Intermittent wind generation, which does not provide baseload power, currently gets the only $0.017 per kWh PTC. The PTC reduces wind prices making them lower than other renewables, including geothermal, but is unavailable to benefit the other renewables. A more rational Federal tax policy would expand the PTC to geothermal power and other renewables. This would encourage the coupling of wind with geothermal power producing a balanced energy portfolio combining intermittent and baseload clean renewable power.
Most nations that have identified their indigenous geothermal potential have conducted some investigations and inventory studies of potential geothermal reserves over the past 20 years. In many cases, however, there has been limited development beyond this exploration stage. Progression to the drilling of deep exploration wells may be constrained by limited available budgets for such work. Many prospective geothermal reservoirs identified by surface studies and shallow drilling have not yielded the potential energy supply confirmed by drilling of deeper wells. Funding programs for deeper drilling of areas with identified potential could help advance the use of geothermal energy.
Renewable Portfolio Standards
A state or federal Renewable Portfolio Standard (RPS) would stipulate that a minimum percentage of retail power sales include renewable energy. This policy could bring a significant amount of new renewables, including geothermal energy, into the power mix. To encourage innovation, widespread development, supply diversity and competitive pricing, the RPS rules should stipulate prudent long-term wholesale contracts at prices consistent with clean power benefits. 
To read REPPâs testimony to Congress on production tax credits, click here .
Renewable Transmission Preference Policy
The Geothermal Policy Working Group recommends development of a Renewable Transmission Preference Policy (RTPP). This would provide preference to clean renewable power on existing interstate transmission lines, and potentially offset any imbalances in electric supply portfolios by securing transmission access for diverse renewable based generation. Currently, experts argue that unfair transmission policies afford preferential treatment to non-renewable power sources.
Geothermal heat pumps substantially reduce heating, cooling and water heating bills, and cause less pollution than other available heating and cooling technologies. However, geothermal systems usually have higher capital costs than conventional technologies, consumers and commercial facility managers know little about them, and contractors generally do not actively promote them. Policies to develop advanced design tools and substantially increase the number of architects, engineers, HVAC contractors and builders that are trained in the design and installation of geothermal systems would improve the acceptance geothermal heat pump technology. 
Air emission credits
New policies could allow new renewables to qualify for EPA air emissions credits. To the extent that states establish and/or have regulatory authority over air pollution emissions standards and/or air emissions credits for hydrocarbon based electric power plants providing power in or to customers in the states: (1) State agencies involved in such standards and regulations could issue standards and rules which allow a pound for pound criteria pollutant air emissions (CO, NOx, SOx) credit offset or future carbon (primarily CO2) emissions or particulate (PM) emissions rules in return for the purchase of power from, or the creation of, a new power plant which creates its power from renewable energy sources. This means that renewables get credit for being cleaner and that dirty fossil-fueled power plants have an incentive to pollute less. (2) The renewable air emissions credits to be retired by the purchaser or developer of the power from renewable power plants or the renewables credits could be traded or sold to third parties in manner similar to established air emissions trading credits programs.
Geothermal heat pumps (GHPs) are one of the most efficient active (as opposed to passive) technologies in the world for heating and cooling our homes, schools, businesses, and a variety of other buildings. GHPs use the normal temperature of the earth to heat buildings in the winter and cool them in the summer. GHPs take advantage of the fact that the temperature of the ground does not vary as much from season to season as the temperature of the air. GHPs operate much like a refrigerator, which is actually a one-way heat pump. In the winter, GHPs transfer the natural heat from the earth to a building. The heat is brought up by water that circulates in closed plastic pipes that are sunk into the ground nearby. In summer, GHPs move heat from the home or building into the earth, thus cooling the home. The same plastic pipe loop is used in the summer as the winter; the direction of the water flow is simply reversed. GHPs are more efficient than air conditioners because they essentially "move" heat around instead of expending energy to create heat. 
The U.S. Department of Energy has numerous web sites with useful information on geothermal power.
For an extensive overview of geothermal technologies visit: the EREN web site .
A District Heating System is a network of pipelines for the distribution of heat produced centrally in a district heating station or in a cogeneration plant by means of a heat carrier such as heated water or steam. This heat, which may be used for space heating, water heating, production or other purposes is supplied to a local community of residential, commercial, and/or industrial consumers.
In a binary geothermal power plant hot geothermal liquid is passed through a heat exchanger to transfer heat from the geothermal (primary) fluid to a secondary fluid of much lower vapor pressure. The secondary fluid becomes vaporized and is run through a turbine to create electricity, then condensed back to liquid and recycled back to the heat exchanger to be vaporized again. Binary technologies are employed when the geothermal resource is primarily liquid-based (hydrothermal), as opposed to higher temperature dry steam (direct steam) geothermal resources, which do not require an intermediate fluid to be used in the production of electricity.
A combined cycle geothermal power plant is used when the geothermal resource yields both steam and hot liquid. The steam and liquid are separated and the steam run directly through a turbine to generate electricity. The waste heat from the steam is transferred back into the hot geothermal liquid, which is run through a binary cycle geothermal system to produce additional electricity. Because the system uses two different methods to create electricity in tandem, and because the heat from one method is used to augment the energy production of the other method, the technology is referred to as a combined-cycle system.
An absorption chiller uses thermal energy (natural gas, waste heat or solar energy), not electricity, to create chilled water. This chilled water can then be used in an AC system to cool a building or home. For a technical discussion of absorption chillers and other combined heat and power applications, please see the U.S. Department of Energy Technology Focus website on Energy Efficiency Improvements Through the Use of Combined Heat and Power (CHP) in Buildings at.
A tax load is the total effect of construction sales taxes, property taxes, depreciation periods, and local use and other taxes, minus tax credits such as a renewable energy production tax credit (PTC) and depletion allowances accrued by a power plant project.
Levelized Tax Load
This is the average tax load in cents per kilowatt-hour over the lifetime of the power plant.
Tax codes and capital cost structures, as well as the presence or absence of fuel costs, may result in one energy technology paying higher levelized taxes than another energy technology. "Leveling the playing field" in the economic sense includes removing such tax inequalities.
An externality is a cost or benefit of some action or process that is not accounted for monitarily. Because environmental damage from air pollution may cost a nation more than it is paying for the technology to reduce emissions, the unaccounted-for cost of this environmental damage is known as a "negative environmental externality." Conversely, if the use of geothermal energy reduces air pollution emissions, but the geothermal power company is not explicitly paid for doing so, the reduced emissions are a positive environmental externality, or "externality benefit" of geothermal energy.
HVAC is an acronym for Heating, Ventilation, and Air Conditioning.
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11. The cost of generating power from geothermal resources has dropped by about 25% over the past two decades. (Source: Geothermal Energy Association. Geothermal Facts and Figures. Accessed May 31, 2001 at http://www.geo-energy.org/Facts&Figures.htm )
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Original research for REPP-CREST by