An NYU Stern study says geothermal energy is the cheapest renewable energy out there, and could compete with coal with about $3.3 billion in government research funding.This echoes the general sentiment of an earlier MIT report on geothermal, which concluded in particular that enhanced geothermal system (EGS) technology could be developed to tap deeper heat sources in an economically viable and environmentally non-damaging way.
According to a colleague of mine who has some experience in the sector, geothermal assets are great once they're built - clean, cheap, and constant baseload power - but there are a number of drawbacks as well. First, known geothermal resources are quite small, and even with EGS they are unlikely to satisfy more than a small slice of U.S. power demand. Second, these resources don't coincide with population centers and thus have the same transmission issues that plague the wind industry. Finally, geothermal exploration has a risk profile similar to upstream oil (you can get "cool holes" instead of "dry holes"), and combining that with power market type returns doesn't make for a very attractive private investment.
Perhaps government investment can bring the technology along to the point where private sector can run with it, but this quote is telling:
Geothermal energy hasn't gotten a lot of attention from venture capital investors to date, given that it's seen as a limited market with very high entry costs. And geothermal companies have long complained that they don't get the government support they deserve.Any time VC investors and companies complain they "don't get the government support they deserve," the standalone economics of the business can't be that good.
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