Sarah Jewett of Fervo Energy and Alex McWard from NCSL join the podcast to discuss the potential of geothermal energy, an energy source that is attracting the attention of state lawmakers who are looking for additional ways to tap into clean energy.
On this episode, we dive into geothermal energy, a process that involves tapping into underground reservoirs of heat and steam and using that heat either directly or to generate electricity. Geothermal is attracting the attention of state lawmakers who are looking for additional clean energy sources, new techniques to generate geothermal energy by pumping water into heated layers of the Earth, make geothermal an option in areas of the country where the underground reservoirs of hot water have disappeared.
Joining the podcast to explain the issue are Sarah Jewett, vice president for strategy at Fervo Energy, and Alex McWard, who tracks energy issues for NCSL.
Jewett had explained the history of the geothermal industry, how new techniques have changed the outlook for geothermal and the role she thinks this energy sector will play as demand increases sharply for electricity. McWard pointed to a few states that have taken legislative action to encourage geothermal development and why some state lawmakers are excited about the potential of geothermal.
Resources
Speaker 1 (00:12):
Hello and welcome to "Our American States," a podcast from the National Conference of State Legislatures. I'm your host, Ed Smith.
Speaker 2 (00:21):
So, it's basically taking heat from the Earth's core and using it to generate power that powers our homes in its most basic form.
Speaker 1 (00:30):
That was Sarah Jewett, vice president for strategy at Fervo Energy and one of my guests on this episode looking at geothermal energy and its potential to provide significantly more energy through advanced techniques and technology. Also, joining the conversation is Alex McWard, who tracks energy issues for NCSL.
Geothermal energy involves tapping into underground reservoirs of heat and steam and using that heat either directly or to generate electricity. Geothermal is attracting the attention of state lawmakers who are looking for additional clean energy sources, new techniques to generate geothermal energy by pumping water into heated layers of the Earth, make geothermal an option in areas of the country where the underground reservoirs of hot water have disappeared.
Jewett had explained the history of the geothermal industry how new techniques have changed the outlook for geothermal and the role she thinks this energy sector will play as demand increases sharply for electricity. McWard pointed to a few states that have taken legislative action to encourage geothermal development and why some state lawmakers are excited about the potential of geothermal.
Here's our discussion starting with Sarah Jewett.
Sarah, welcome to the podcast. Great to have you here.
Speaker 2 (01:46):
Thanks so much, Ed. Great to be here.
Speaker 1 (01:49):
So maybe to get started, you could offer listeners a little primer on geothermal energy. I think many of us have a general notion of how geothermal works, but probably not much more than a general notion. So tell us a little bit about geothermal energy.
Speaker 2 (02:04):
Excellent. I think a general notion, we'll do just fine for starters. So geothermal energy is all about harvesting heat from the earth to generate energy that we can use on the top of the earth. There are a couple of different types of geothermal energy. I am specifically in the business of geothermal power, which means harvesting heat from the earth, bringing it up with water that gets really, really hot from the earth, and then in traditional geothermal energy, running that water through a turbine to generate electrons in the type of geothermal that we are doing. It's run through a heat exchanger, a different working fluid, picks it up and is run through a turbine to generate electrons, and then we re-inject a hundred percent of the water under the surface. So, it's basically taking heat from the earth's core and using it to generate power that powers our homes in its most basic form.
Speaker 1 (03:01):
So, tell us a little bit about how Fervo Energy fits into this part of the energy sector, and so a little bit about the company and what your role is there.
Speaker 2 (03:10):
Yeah, so Fervo energy was started in 2017 with the hypothesis that we could basically harvest energy from the earth better and more predictably and more scalably than geothermal energy had in the past. Geothermal has been around for a really long time going back to actually the 1800s and the earliest power, geothermal power facilities in the U.S. date back to the 1950s and sixties. So, it's something that's been around for a really long period of time but has not benefited from any really meaningful amount of innovation or scale in the last quite a number of decades. And so Fervo Energy is co-founded by two guys, one with subsurface knowledge and one with drilling and completions experience from the oil and gas industry who said, this is an industry we really could innovate upon. And they brought an approach that was really developed in the oil and gas shale revolution and said If we apply that approach to the geothermal energy industry, we're going to be able to extract heat more efficiently and more predictably.
Speaker 2 (04:16):
And so that is what we are going to do. And so, it was started in 2017 with that hypothesis. At that time, there was some demand for what we call firm clean energy, which is energy that is non weather dependent and produces around the clock, but it was still sort of a niche term to think about clean firm or 24 7 energy or around the clock clean energy. And there were only a few utilities who were really trying to buy it at that point in time. So it was niche commercially and it was niche technologically. Now we are at a point where we have proven the approach. We drill horizontal wells and we create fractures between those wells to generate sort of our own subsurface radiator, and then we pull water from that. We push water down, it flows across the resource to pick up heat, we pull it up, it's run through a heat exchanger, then it goes to generate electricity and we re-inject a hundred percent of our water. So we've proven the solution. It's no longer technologically niche. At the same time we have definitely arrived in the commercial world and clean firm energy is now something that's really, really widespread and in high demand.
Speaker 1 (05:28):
Well, I want to talk to you in a minute about that process, which, of course, here in the West sounds very familiar to fracking. But let me ask you first just how big a part of the larger energy picture is geothermal, and I don’t know maybe how much bigger you think it might be.
Speaker 2 (05:45):
It's teeny tiny today. So, we as an industry generate about 0.4% of U.S. electricity mix. It's really, really tiny and it's been tiny for the last several decades. In a recent Department of Energy study, they basically said that geothermal could power 20% of the grid by 2050. We at Fervo are biased, but we believe that 20% is actually the baseline by 2050 and that we could power a way bigger percentage of the grid with geothermal power, not only America, but also abroad.
Speaker 1 (06:20):
So, explain to me and the listeners this idea of these enhanced geothermal systems. I've read a little bit about this, pretty interesting stuff, and I wonder if you could explain how they're different from sort of the traditional way that geothermal energy has been gathered.
Speaker 2 (06:37):
So traditional geothermal, also known as conventional geothermal also often referred to as hydrothermal geothermal. The way that you can picture it is a steam bearing reservoir. So, there are rocks with a lot of steam trapped in them or water trapped so that when you release pressure becomes steam and you basically can stick a straw onto the earth and you can pull steam out of the earth and then you can use that steam directly to generate electrons from spinning a turbine. That's kind of like geothermal in its simplest version, is pulling steam directly out of the ground and using it directly to generate electricity. We are doing something that is a little bit different. We are going into rocks that don't necessarily have a ton of steam actually trapped in them. In many cases the reservoir is completely dry, but it's very hot and we are drilling long wells. And then we are using a process very similar to hydraulic fracturing from the oil and gas industry to create small, teeny tiny pathways between parallel wells. And then we're basically pushing water into that system where it picks up heat from the rocks and then we're pulling it to the surface. We're harvesting the heat from that water to generate electricity and then we're putting 100% of the water into the Earth. So it's a little bit more engineered and therefore more predictable than this traditional approach where you're just pulling steam out of the earth.
Speaker 1 (08:12):
So, for those of us who are sort of geological idiots, and I would include myself in that group, what you're saying is that the hot rocks are down there pretty much everywhere, but there's not water everywhere. So, if you add water to the hot rocks, you basically can create the same situation you have when you find the water naturally occurring in that strata.
Speaker 2 (08:34):
That's pretty accurate, yes.
Speaker 1 (08:36):
Yeah. OK. Let me ask you about, and we talked about this just for a moment before about, existing oil and gas extraction infrastructure. Are you able to, the way you've described it, it sounds like it's part of, it's a similar process. Are people able to use that then for this enhanced process?
Speaker 2 (08:58):
Yeah, there are a couple of different ways to think about using the oil and gas industry. We are modeling a lot of our technology directly off processes that were invented or improved or deployed meaningfully so that a lot of innovation was allowed to occur in the oil and gas industry. So we're lifting a lot of processes from the oil and gas industry. We're also lifting a lot of people and a lot of equipment from the oil and gas industry. We're using a modern drilling rig that came directly from an oil and gas basin. We're using modern hydraulic fracturing crews. We're using modern casing and modern tools to design our wells. And a lot of the people deploying those are also directly trained in the oil and gas industry and are coming to our sites and don't require any meaningful retraining. We are not using traditional oil and gas infrastructure, think old wells that already exist have stopped producing oil and gas and now we just use them to produce geothermal. And there are a couple reasons why. One is many of those wells are actually not that hot. And so we are targeting 450 to 500 degrees Fahrenheit, basically 400 to 500 degrees Fahrenheit kind of in that window. And most of the oil and gas basins in the United States don't get much above 300 degrees Fahrenheit. So you do need a lot of heat. We are also increasing the diameter of our wells. We're trying to put a lot of water through these wells, and when you look at the majority of oil and gas wells end up at 4 1/2 inches in their production sections, and we are looking at wider diameter wells so that we can simply push more energy through them. That's a little bit of the reason why Fervo is not using existing infrastructure. There are a lot of companies that are interested in using it in existing infrastructure and trying to figure out ways to harvest heat from those old wells because the old wells already exist.
Speaker 1 (10:59):
As we established, there's a lot of hotspots that don't have water in them. So, I assume that that means you could then use this enhanced system in places a lot more places in the country. How much potential is there? I mean, are there just vast amounts of places that you could go with this approach as opposed to the current situation?
Speaker 2 (11:19):
Yeah, you definitely nailed it. There is heat everywhere. It's just a question of how deep. So, it is a truly limitless resource and it is a question of how deep that hot resource, I talked about 400 degrees to 500 degrees Fahrenheit. It's a question of how deep that 400 to 500 degrees actually sits because depth actually will have a meaningful impact on the economics of the project. And so, in southwest Utah where we're currently building a half a gigawatt project, Cape Station, the 450-degree resource lives at 8,500 feet deep. So just under two miles deep. If you went somewhere like New Hampshire, where I went to college, you would find that same resource probably 3 1/2 miles deep. It behooves us to go to a location where it's shallower to be able to economically figure out projects in the West. And once we do, we've been meaningfully reducing the cost of drilling, say in Western United States. As we reduce the cost of projects, as we deploy in the western U.S., we can go to much deeper geographies where we can access to 400 to 500 degrees at a deeper depth and make it work.
Speaker 1 (12:32):
That's a big difference between when we're talking miles down into the earth.
Speaker 2 (12:38):
It's a big difference. But I mean the cost learnings have been incredibly fast in the West. And so, one example is in our first project in northwest or in north central Utah, which was a pilot that came online in 2023. It took us over 70 days to drill our first well to the same depth that it now takes us 17 days to drill a well. If you're thinking like, OK, the resources 2x is deep, well, today we drill a well for 7x cheaper. We're getting a lot smarter, a lot faster, and so we will be able to open up the geography of this technology much faster than expected.
Speaker 1 (13:21):
So tell me, particularly thinking of our audience of legislators and legislative staff, other people interested in policy, what are the big obstacles to this technology, to this industry? Is it regulatory? Is it financing? Is it the simple technological obstacles?
Speaker 2 (13:40):
I would say that the biggest obstacle that we face today as we're now a mature startup, but we are still a startup and we have a different approach to extracting energy in an old industry. And that is an industry that has not benefited from extreme amount of productivity over the last five decades. So here we are, this new company saying, OK, we have a different way of doing it and we are going to make it more efficient and we're going to make it ubiquitous Geographically, I think people look at geothermal and they say like, OK, the headwinds are against you. There is not much that has ever happened in this industry. Why would now be different? I think that there is a pretty meaningful degree of skepticism that what we're building is actually sustainable and scalable and can be cost effective. And because of that capital availability has been our No. 1 one challenge. We often say that we encounter people who have experience in financing geothermal projects and they say the number one rule of geothermal project financing is that you don't do it. And that's because this industry has had a pretty mediocre performance over the period of time that it has been actually working. And so I think capital availability is kind of number one, and really the onus is on us to prove that what we can build is cost effective and scalable, and that I think the capital will follow.
Speaker 1 (15:10):
Well, that's interesting because it gives me sort of an entry to my next question, which is several months ago I did a podcast about AI and data centers and I was shocked, and I try to pay attention to these things, at the projected increase in electrical use in this country that's coming. And we've been at a relatively flat level for a long time for a number of reasons, and everybody's sort of scrambling for new sources. So, I would think that would kind of enhance your attractiveness from a finance point of view in the sense that it's kind of all hands on deck. We're talking about more nuclear, certainly more other types of projects, renewable projects. How significant a factor do you think this approach could be, particularly with those kinds of data centers?
Speaker 2 (16:03):
It's incredibly meaningful. So, we are in conversations with every hyperscale or every data center construction company. You hit the nail on the head, they're desperate for power right now, and it's not even a conversation anymore. I mean, the corporates were the ones who really set aggressive targets on cleaning their power sources. And it's not even a question anymore of where is the clean power and how are they going to get it? It's all about firm energy. So we need firm energy where we want it, when we want it, and we don't care if it's clean or not right now. And so I think we are now in a race with nuclear, with new natural gas, with new hydro, new everything, and it's a question of how quickly can these projects get online? And we started drilling at Cape Station in June of 2023, and we will bring our first plant online. We're targeting in 2026. Right now it's a three year cycle time. That's pretty quick, but we have every intention to reduce that cycle time from three years down to two years down to 18 months to ensure that from the moment a commercial agreement is signed, we can deliver that power 18 months later. And if we start doing that effectively, we're going to be the contender for one of the most prominent sources of just energy in the United States.
Speaker 1 (17:26):
Yeah, I think the speed of bringing new energy online, you're right, is just from everyone I've spoken to, that's the premium. So, as we close up with that in mind, where do you and your colleagues at Fervo see your company in five years and see the projects you're doing? Where are you going to be?
Speaker 2 (17:47):
Man, it's such a good question. I joined five years ago, and at that point in time, we were looking at the near future and we were looking at the commercial demand, and we sort of thought for the medium term, this would be a business where we go repower old geothermal facilities. And that's what we did on our first commercial pilot project Red in north central Nevada. We basically provided power uplift to the existing Blue Mountain Power facility. But while we were building that project, the demand for the product that we were putting online just absolutely blew up. And now it's kind of like we can't build fast enough to meet the market demand. The market demand right now feels completely limitless, much like the resource that we have. So, when you marry a limitless resource with effective execution and a limitless demand, I think what we start thinking about is that we could be one of the largest energy companies or one of the largest electricity companies in the United States, and I really focused on United States because I'm a near-term being and that's what I'm thinking about right now. But the global potential of what we're building is massive. And so I think where five years ago we might've thought we would be sort of a niche repower company, now we're thinking that we could be one of the largest electricity generators in the world. So that won't happen in five years, but I think we are well on our way and we will see the direction we're headed in five years’ time.
Speaker 1 (19:16):
Well, one thing we do know from all the stories about the companies like Meta and Amazon, there's a whole lot of money out there to invest in energy projects. So, I wish you the best of luck in tapping into that, and thanks so much for explaining this to us. It's very interesting. Take care.
Speaker 2 (19:34):
Thanks so much, Ed. Thanks for listening.
Speaker 1 (19:38):
I'll be right back after this break with Alex McWard from NCSL
Speaker 3 (19:48):
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Speaker 1 (20:45):
Alex, welcome to the podcast. Glad to have you on.
Speaker 4 (20:48):
Thanks for having me, ed. Excited to be here.
Speaker 1 (20:51):
So, Alex, you track energy issues for NCSL in terms of what's going on in state legislatures, and I wonder if you can tell me why legislators are particularly interested in geothermal energy, given what a really tiny part of the overall energy picture It makes up.
Speaker 4 (21:08):
Geothermal does make up a pretty small portion of our current energy mix in the country right now, but the U.S. is in a pretty interesting position right now in terms of its energy portfolio. Much of the country is in the middle of an energy transition as a lot of states have set clean or renewable energy targets where they aim to have a significant portion, if not all of their electricity, come from clean energy sources. But then at the same time, we are seeing a sudden rise in our load growth due to electrification from things such as electric vehicles, but then also increased development of data centers is really driving up demand significantly. And so now we kind of have to figure out how to strike this balance between new source of energy while still meeting that growing demand. There's not a silver bullet solution to this issue.
Speaker 4 (21:53):
Policymakers across the country are exploring all sorts of different energy options that are available to reduce emissions while also meeting demand. This is where geothermal has started to emerge as one of those options, and it's actually one of the few sources of energy that has relatively decent support from both sides of the aisle. The United States has a tremendous amount of natural geothermal resources, particularly in the West, and the heat from these resources can be tapped to generate electricity. The generation of electricity from geothermal is relatively clean and it can produce constant energy for 24 hours a day, seven days a week. And that last point is really one of the primary benefits of geothermal energy compared to other renewables. If you look at wind and solar, which make up the majority of our current renewable energy resources, those are both intermittent sources, which means that their production is not constant. So solar is going to fluctuate as sun rises and goes down. Same thing with wind turbines are going to adjust their production based on wind speeds. So that constant clean energy that geothermal can offer is definitely intriguing for a lot of legislators and really sets it apart from most of the other renewable energy resources we see.
Speaker 1 (23:07):
Yeah, renewables without some sort of massive advance in battery storage still has that problem exactly that you're describing. So what kind of legislation are you seeing from the states to, I assume, encourage geothermal experimentation?
Speaker 4 (23:23):
So in the past few years, states really have been considering more and more legislation regarding geothermal energy. And like we discussed, geothermal currently makes up a relatively small portion of the United States energy production. So, a lot of the legislation we've seen in the past couple of years is really that first initial step to explore or even kickstart geothermal development within these states. And so one major piece of legislation enacted last year that was kind of critical in geothermal was in Washington state where they passed a bill aiming at promoting geothermal energy through several key initiatives. And the first initiative was kind of requiring a geological survey to be conducted to compile a public database with a bunch of subsurface geologic information such as temperature gradients, geothermal, well records, rock properties throughout the state. And all this information is really meant to help facilitate geothermal development throughout the state by providing extensive geological data and really showing where the optimal sites for a power plant may be within Washington.
Speaker 4 (24:27):
The same legislation then also set new guidelines for geothermal lease rates for the leasing of land state owned land for geothermal purposes. And so basically it states that the rates Washington offers need to be competitive with the rates in other states and federal rates as well in order to help attract geothermal projects to Washington. Well, a lot of the significant legislation we've seen has come from Western states. We also have seen some action out east regarding geothermal. So last year, Virginia amended its renewable portfolio standard to include geothermal as a qualifying resource. And basically what that means is that as Virginia moves towards its goal of achieving a hundred percent renewable energy by 2050, geothermal officially qualifies a renewable resource and can therefore contribute to the state's energy portfolio. Then this year, Maine enacted legislation requiring the governor's energy office to conduct a study evaluating the potential for geothermal power plant development within the state. And so this really just shows that even out east where natural geothermal resources are less abundant than in the West states are still exploring opportunities to implement geothermal energy.
Speaker 1 (25:43):
Well, you can certainly understand why Virginia would be encouraging this because they've had this explosion of data centers and the electricity demand that comes with them. I wanted to follow up on something Sarah Jewett discussed in our earlier conversation regarding the reuse of existing oil and gas infrastructure, especially fracking equipment for this enhanced geothermal approach. What are states doing in that area?
Speaker 4 (26:06):
I think a lot of policymakers find this aspect of geothermal attractive as states are starting to phase out their fossil fuel resources like oil and gas, they can repurpose the existing infrastructure and use it now for geothermal purposes. And in some ways, this repurposing can really help alleviate those upfront costs of establishing a new geothermal power plant. And so, a key example of a state embracing this recently is in New Mexico in this past year, New Mexico enacted the Well Repurposing Act, which this bill basically allows the state's department of natural resources to authorize conversion of oil and gas wells into facilities for geothermal development. The bill also goes on to clarify some more of the responsibilities and requirements that department may establish for this process, but this is really one of the first key instances we've seen of a state enacting legislation to set authority and guidelines for an official process for repurposing wells for geothermal use.
Speaker 1 (27:09):
Lemme ask you this. I was just mentioning the enhanced geothermal process, and I wonder have any states particularly maybe in the east actually taken action to try to encourage that? It sounds like the kind of thing Washington State did would of course be very helpful.
Speaker 4 (27:24):
The amount of legislation specifically on enhanced geothermal systems is actually pretty limited, but it's definitely something that's on a lot of legislators’ radar. This year, California introduced legislation that would mandate a strategic plan for new in-state geothermal generation, and a specific provision within that plan must focus on enhanced geothermal systems. Going back to the bill in Washington I mentioned earlier, similar to California, it mentions enhanced geothermal as a potential avenue to consider as the state looks to move forward with geothermal development. Right now, we really aren't seeing any major legislation specifically targeting enhanced geothermal, but we have seen a bit of an uptick in the past couple of years and the amount of legislation introduced that mentions enhanced geothermal as an option to explore. And since this is still a relatively cutting edge technology, I wouldn't be surprised to see more legislation specifically targeted at enhanced geothermal systems. The technology continues to progress.
Speaker 1 (28:26):
What do you think the next steps are for states when it comes to this area?
Speaker 4 (28:30):
Yeah, so a lot of the major legislation we are seeing right now, and as I've mentioned, it's coming out of the West, which makes sense since that's where most of the natural geothermal resources are in the country. But as the industry continues to evolve and new technological innovations emerge, like enhanced geothermal, as we've discussed, we could see geothermal become more accessible throughout the country. And then I think if you add the bipartisan support as well as the federal support we're seeing for geothermal, I think it's likely that we'll continue to see geothermal implementation out in the west as well as continue to see action from eastern states as well. And I will note that geothermal isn't just gaining traction as a source of energy. States all over the country are exploring other options such as heat pumps or geothermal energy networks to provide heating and cooling for buildings. So there's a lot of different uses for geothermal energy or geothermal resources in general. But of course, that's a whole other conversation we could get into next time, ed.
Speaker 1 (29:33):
Well, I think any area of energy that has bipartisan and federal support is probably going to get a good tryout. Anyhow, thanks for filling us in on legislative landscape on this. It's a very interesting topic and I think one that probably a lot of people are not all that familiar with. So Alex, thanks a lot. Take care.
Speaker 4 (29:49):
Thank you for having me.
Speaker 1 (29:55):
I've been talking with Sarah Jewett of Fervo Energy and Alex McWard of NCSL, about the potential of geothermal energy and how states are dealing with the issue. Thanks for listening.
You can search for NCSL podcasts wherever you get your podcasts. This podcast are American States dives into some of the most challenging public policy issues facing legislators, our occasional series across the aisle, feature stories of bipartisanship. Also check out our special series Building Democracy on the history of legislatures.