Despite its high levelized cost of electricity (LCOE), interest in geothermal energy has increased in recent years due to its potential to provide low-carbon baseload power and heat. This value proposition resembles other thermal power generation technologies (e.g., concentrated solar power) and has gained consistent traction in recent years as more intermittent renewable energy sources have been added to the energy mix.
Among all the topics and technologies that intersect across geothermal power generation, we have identified the following categories as key to driving future technology innovation: geothermal drilling, oil and gas wells, binary geothermal systems, and enhanced geothermal systems (EGS).
Each category is populated with a diverse number of industry players – from academia and research institutions to startups and large corporations. To get a comprehensive overview of the geothermal landscape and distribution of players, we have combined our analysis on geothermal developers with historical publication of patents and papers, early-stage funding, and ongoing demonstration projects. This information serves to define future trends and, more importantly, helps identify opportunities for those seeking to enter the geothermal space.
- Innovations regarding nonmechanical drilling are largely driven by startups, academia, and R&D institutions. These players focus on a variety of novel methods to overcome limitations in geothermal drilling, which is typically characterized by hard, impermeable rocks that are expensive to drill using conventional oil and gas tools. As an alternative to mechanical drilling, most startups in the space have leveraged a combination of laser, plasma, chemical, and/or electric arc. For instance, GA Drilling has developed a noncontact plasma-based drilling tool that uses an electric arc to produce steam-based plasma for melting and disintegrating rocks. However, most startups in this space are at an early stage of development and have often switched focus to higher-value applications in order to generate cash flow to support geothermal developments – leading to a rather scattered startup landscape. On the other hand, academic and patenting activity has been consistent, with the China University of Petroleum and Halliburton leading each of these categories.
Oil and gas wells
- A group of players are focused on repurposing oil and gas wells for geothermal power generation. This value proposition has triggered startup activity in North America, where aging oil fields offer untapped potential for geothermal power generation. Some examples of key startups developing retrofit systems include GreenFire Energy and TerraCOH. Eden GeoTech has also developed a retrofit solution for heat production, though the company recently pivoted to fracking technologies. Despite the opportunity that retrofitting represents for oil and gas companies, there have not been any major commitments on this side to date, and large players in this category are mostly patent holders (e.g., Schlumberger, Halliburton). Lastly, academic activity has been mostly led by Chinese institutions, such as the China University of Petroleum, the Chinese Academy of Sciences, and the University of Science and Technology of China. The only exception to this rule is the U.S. Department of Energy (DOE), which holds one of the largest patent portfolios concerning retrofit of oil and gas wells.
- Binary systems represent a fairly consolidated technology; hence, this landscape is dominated by large energy players and medium-size companies. The most salient example of a medium-size developer is Exergy, which operates as a subsidiary of Nanjing Tica Thermal Technology. As for large corporations, the most relevant players are Shell (which holds the largest patent portfolio), Ormat Technologies, and a group of waste heat recovery companies, such as Nanjing Tica Thermal Technology and Echogen Power Systems. Being a mature space, academic activity regarding binary systems has been minimal, with most of the contributions coming from the Chinese Academy of Sciences and Gaziantep University.
Enhanced geothermal systems
- This approach is based on injecting high-pressure water into the ground to increase rock permeability – a technique that can potentially unlock geothermal power in more regions but has been pointed out as a triggering factor for seismic activity (for instance, in South Korea). This added risk has limited commercial activity and concentrated innovation efforts in the hands of R&D players and a small group of startups. The main exception to this rule are patent holders like Chevron, Halliburton, and China National Offshore Oil Corporation (CNOOC). Among R&D players, the U.S. Department of Energy is a clear leader in this space, followed by the Helmholtz Association and ETH Zurich in Europe and the Chinese Academy of Sciences in Asia. The leading role of the U.S. DOE has ultimately shaped the EGS landscape, to the point that the leading developers nowadays are those that received support from the DOE – namely AltaRock Energy (granted $21.4 million) and Ormat Technologies (granted around $10 million).
Advanced closed-loop systems
- A small number of players are targeting advanced closed-loop systems for locations where geothermal power production is limited by low amounts of fluid and rock permeability. This value proposition resembles that of EGS, with the difference that novel closed-loop systems do not require rock fracturing. Looking at recent activity, the outcome is also similar to EGS – as large installation and operation costs eventually diminished innovation efforts. As a result, startups dominate the landscape for advanced closed-loop systems, with GreenFire Energy and Eavor in the lead. Other non-startup players include Shell (which has supported Eavor's pilot project), China University of Petroleum, Korea University, and the U.S. DOE.
Overall, the landscape of geothermal energy is mostly dominated by research institutions and a fragmented group of startups – which have often pivoted into higher-value applications due to the poor economics of geothermal systems. Large corporations active in the space are mostly patent holders with broad portfolios that cover various aspects of geothermal power production. Some recurrent companies include Shell, Halliburton, Schlumberger, and Baker Hughes, while R&D activity is mostly dominated by the U.S. DOE, the China University of Petroleum, and the Chinese Academy of Sciences.
Out of the categories described above, geothermal drilling has captured most of the attention and is expected to remain the dominant innovation focus, with a growing number of demonstration projects. On the contrary, companies should expect EGS activity to drop slightly in favor of advanced closed-loop systems. This configuration is likely to capture the attention of energy utilities not only due to its potential to unlock new geographies but also because of increasing natural gas bans that create a new opportunity for geothermal, namely space heating. We also expect the oil and gas industry to leverage its upstream expertise and play an increasing role in the geothermal landscape – including partnerships and acquisitions of smaller developers that struggle to cope with the elevated costs of geothermal systems.
Lastly, companies should expect North America to remain home to most startups and R&D centers, but also keep an eye on East Asia. Japan and Taiwan have favorable sites for geothermal power generation, and China leads academic activity in Asia. In recent years, efforts initiated by the Chinese Academy of Sciences and a group of Chinese universities have steadily picked momentum, and the country is expected to see a rise in commercial activity in the near future.
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