This article was written for the Montreal Gazette - The Logic by Jonathon Got
The Derek Riddell Eavor-Lite™ Demonstration Facility located near Rocky Mountain House, Alberta. (Eavor Technologies Inc.)
Alberta-based geothermal-energy startup Eavor is only five years old, but it’s already co-building a commercial project in Germany, the world’s deepest directional geothermal well in the U.S., and is in talks to revive a geothermal project in the Caribbean.
Yet, despite the company’s claim that its renewable-energy system is usable in most of the globe, Eavor’s wells have yet to commercialize on its home turf.
Talking Points
The Alberta startup Eavor leveraged the province’s oil and gas expertise to develop its geothermal technology, but has developed more wells abroad than at home
Although progress to include geothermal energy in Alberta’s regulatory framework is heading in the right direction, Canada is still behind European countries like Germany in terms of financial support
In Canada, the company has only built one technology demonstrator near Rocky Mountain House, Alta. The firm’s experience highlights how the development of geothermal energy has been slow in the country, where there is a lack of financial incentives to scale up, cyclical oil prices have stalled interest in the technology and a regulatory framework including geothermal resources hasn’t gotten off the ground, experts say. Despite Canada’s sluggish pace of development, they add that Alberta may have the most potential to commercialize geothermal wells in the country—but even that province is far behind other countries.
While solar and wind energy have had the advantage of benefitting from years of government support to become part of Canada’s medley of renewables, the story hasn’t been the same for geothermal.
Eavor’s full-scale prototype in Alberta cost $12.1 million to build and its commercial system to power up to 30,000 buildings in southern Germany had an estimated price tag of €200 million. The German government has provided 20-year feed-in tariff contracts for geothermal-energy projects since 2004, and it has hovered around US$0.28 per kilowatt hour since 2015. The same subsidies for other types of renewables in Germany, like solar and wind, are at less than half that price, illustrating how geothermal energy might need twice as much support to be economically competitive.
“It’s not surprising that geothermal wasn’t particularly competitive in those calls, because the cost profile of it now is still significantly higher than wind and solar,” said University of Calgary Professor Hastings-Simon.
“What happened for wind and solar is just … having technology-specific support for that resource to have it deployed,” said Sara Hastings-Simon, a University of Calgary professor and director of its sustainable-energy development master’s program.
“I think there has to be a longer-term look out to that 2035 net-zero electricity-grid target that the federal government has, to say, ‘Yes, if we’re really going to meet that, then we need to start getting serious about supplying some of this [support].’ … And so it can’t only be a matter of picking between the two types of renewables; it’s got to be all hands on deck.”
Traditional geothermal wells rely on hot and permeable aquifers that naturally occur in limited parts of the world, making them costly, risky and prone to delays. The Eavor-Loop changes that: it’s a closed-loop geothermal system with parallel pipes that collect heat from Earth’s natural geothermal gradient, which addresses those issues, the company claims.
Eavor is initially pursuing international markets that it considers “low-hanging fruit” with high energy prices and financial incentives. The company listed Germany as an example in its report for Emissions Reduction Alberta, a non-profit that partially funded its Alberta demonstrator. CEO John Redfern told Singapore’s Business Times in a January interview that Eavor has a 20-year feed-in tariff agreement guaranteeing a set price per megawatt hour of energy for their project in southern Bavaria.
Eavor did not respond to The Logic’s request for an interview.
While OECD data from 2019 shows that many European countries and the U.S. have a history of providing guaranteed prices to encourage geothermal adoption, Canada hasn’t done so.
The Alberta government has publicly solicited contracts for difference for renewable energy, which would act like feed-in tariffs for the province’s deregulated electricity market, offering a fixed price for a set volume of energy to mitigate day-to-day market volatility.
“It’s not surprising that geothermal wasn’t particularly competitive in those calls, because the cost profile of it now is still significantly higher than wind and solar,” said Hastings-Simon.
“It’s important to have different types of support for technologies at different points in their development stage, from proof of concept, to piloting, to early stage, to scaling up,” she added.
Right now, Alberta’s geothermal industry is still in an early development stage. Canada’s Oil Sands Innovation Alliance partnered with Eavor in January to study the feasibility and risks of deploying geothermal energy to power oil-sands mines.
“The first phase of the study indicates some promise, and what Eavor has proposed is a second phase that would involve drilling a test well,” said Robert Mugo, director of greenhouse gas and environmental priority area for the alliance. “But at this time, our members haven’t made a commitment yet. They are still studying the results and also looking at other technologies out there, as well.”
“We are getting excellent feedback,” he added. “Geothermal, after being on the shelf for a while, is gaining a lot of attention.”
The U.S.-based oil and gas drilling firm Helmerich & Payne invested in Eavor and provided a drilling rig for one of Eavor’s projects in 2021. However, while geothermal benefits from shared hardware with the oil sector, drilling for oil can also draw attention away from drilling for heat when oil prices are high, said Hastings-Simon. But when oil prices fall, there’s often a lack of resources to invest in new technologies.
This cyclical pattern of going from not having enough attention to not having enough money means that efforts to include geothermal development in the energy regulatory regime have proceeded at a snail’s pace—something that Hastings-Simon described as “a very good example of market failure.”
Currently, only two Canadian provinces separate regulations for commercial geothermal development. B.C has had its Geothermal Resources Act since 1996 and Alberta proclaimed the Geothermal Resource Development Act in December 2021, establishing a regulatory regime for delegating geothermal energy under the Alberta Energy Regulator.
Companies need regulation to know what it takes to get approval and access to a resource. Including geothermal development in Alberta’s regulatory system gave the sector “a big leg up,” said Laurie Pushor, a former deputy energy minister of Saskatchewan and current CEO of the Alberta Energy Regulator.
Pushor added that Canada’s largest oil-producing province is well-positioned to grow the geothermal industry for another reason.
“When you think about the expanse of oil and gas developments, the number of wells that we have data on and how they’ve performed, our geological survey has mountains of data,” explained Pushor. “It’s given us insight into where the opportunities might exist. And it’s also given us that commercial infrastructure that can drill a well, and tie it in and bring it into production. That just gives us a big, big advantage in many, many respects.”
Those geological surveys give companies a clear idea of which areas have the most potential for geothermal energy production. Alberta also included geothermal energy in its annual energy resource estimates for the first time this year, and will continue to include it as a resource for the longer term, said Pushor.
Progress in bringing geothermal technology into the fold is heading in the right direction, but they have only been baby steps compared to some European countries.
“In a case like geothermal, it’s both the cost and certainty around the performance of the technology. … If you have to do wind or solar resources, people are pretty comfortable with how much that’s going to produce over its lifetime,” said Hastings-Simon. “I don’t think that investment-level certainty is there in Alberta for geothermal. … All new technologies need support to get developed and overcome market barriers.”
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