Interview with Peter Reid – Exploration Manager, Petratherm (ecogeneration)
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Where does your interest in clean energy stem from?
I am a geologist by training and my early work was in palaeobiology and sedimentology – studying ancient earth environments from approximately 600 million years ago, as preserved in the rock record. This gave me a deep appreciation of the earth’s ever changing and delicate climate, and the intertwined relationship with organic life on earth. This established the motivation to work in a business which seeks to produce energy outside of the earth’s natural carbon cycle, thus allowing modern society to aspire to a life which has minimal impact on the natural environment.
What does the geothermal industry need to do to be cost competitive with traditional energy generation? How is Petratherm working towards this goal?
In Australia, we have no active volcanic sources which are necessary for the well-established, low-cost conventional geothermal industry, so the types of geothermal systems being tested are Engineered Geothermal Systems (EGS). These projects generally require deeper drilling to source high enough rock temperatures and require engineering techniques to allow the circulation of water through the hot rock to extract the heat.
EGS are therefore of higher risk to develop and have a higher cost than conventional geothermal systems due to the increased engineering involved. EGS are, however, very large. They could theoretically provide for all of Australia’s energy needs thousands of times over, and they have potential in many areas of Australia where new power generation is required.
At this point in time, large-scale EGS are generally modelled at costing around $100 per megawatt (MW) hour, which makes them the lowest cost renewable energy source. It is also baseload, unlike other renewable sources such as wind and solar. With future incremental improvements in drilling and power plant costs per unit of energy delivered, studies of power cost curves over time show that EGS could be the lowest cost power generator by about 2030, undercutting gas and coal-fired generation.
Petratherm’s Paralana EGS project in central South Australia is one of only two advanced EGS projects in the country, with the other being Geodynamics’ Cooper Basin Project located near Innamincka in South Australia.
I believe the main driver to lower cost is simply incremental learning from demonstration and scale-up, as the fundamental technology is already at hand.
What has been the greatest achievement of the geothermal sector in the past five years?
We have seen for the first time the commercial operation of two small EGS plants, located in the Rhine Valley region bordering France and Germany. The Soultz EGS project in France is currently generating 1.5 MW, and Landau across the border in Germany is generating 3 MW.
Waste heat from Landau is also being used to centrally heat about 3,000 homes. Both plants have been in operation for about two years and demonstrate that EGS is a reality and not merely a research and development project. It’s a humble beginning but I expect the next five years will see EGS growing exponentially in the same way the wind and solar industries have done in their early years.
What is an example of a government incentive that you have found particularly helpful to the growth of the geothermal industry?
The principle driver behind the growth of the Australian geothermal industry was the introduction of legislation to allow for geothermal exploration and tenure in various Australian states and in the Northern Territory. This began in South Australia in 2000 with the passing of the amended Petroleum Act to allow geothermal exploration. In the early 2000s, the private equity markets were flushed with cash, and that, along with optimism about EGS potential, allowed so many new companies to raise significant funds on the back of newly awarded geothermal licences, creating the industry we have today.
What one piece of advice would you give new entrants to the clean energy industry?
At the end of the day it’s all about having enough money to achieve what you set out to do. The current geothermal industry in Australia has slowed significantly due to the drying up of equity from the private sector and the state and Federal governments. While governments are hugely supportive of the technology, they have stopped short of meeting the cash requirements to kick start the industry in a meaningful way again.
My advice for new technologies which still have technical risk is to ensure you have a sound business and funding model. Future funds will come from the delivery of technical and commercial milestones. To complement the technical merits you need the ability to be able to do business deals and sell the product, otherwise the technology will go nowhere.
What promising project/technology is your company currently developing?
At the Paralana EGS site, Petratherm, in a joint venture with major Australian oil and gas company Beach Energy, is initially seeking to build a 3.75 MW commercial EGS power development to supply a local off-grid mine. The long-term objective is to provide large-scale (260+ MW) power through the national grid.
The project is at a critical stage, with an initial deep well to 4 km depth and large-scale fracture stimulation works to create the fluid pathways through the hot rock successfully completed. Late in 2011 an important milestone of flowing the well marked the first recovery of geothermal energy to the surface. The next phase is the drilling of a deep production well in 2012 to complete a fluid circulation loop, and the construction of a small pilot plant.
In addition to the Paralana EGS project, Petratherm has proposed a new Clean Energy Precinct near the Paralana site where wind, solar and gas power is planned to be augmented with geothermal to generate up to 600 MW, to meet the large growth market from mining developments in the northwest of South Australia.