New research released in April estimates the value of the global geothermal energy industry will grow to $9 billion by 2025, up from $4 billion in 2018.

While this growth is translating to geothermal heated greenhouses in the Netherlands, a zero-emissions power plant in Italy and geothermal chocolate bars in the Philippines, it hasn’t meant much for Canada — despite the country’s substantial documented potential.

Geothermal energy comes from natural heat in the earth’s crust. Steam from hot spots near volcanic ranges, such as those in B.C., can be used to spin turbines to generate electricity, while warm water from cooler areas can be used as direct energy to heat homes, melt snow or grow food in greenhouses, like the Icelanders do.

The form of renewable energy, which provides uninterrupted baseload energy as opposed to intermittent alternatives such as wind and solar that rely on the weather, seems an obvious choice for many provinces and territories looking to increase sources of electricity while also decreasing greenhouse gas emissions.

Thus far, Canada is the only country on the Ring of Fire, a tectonic zone where the earth’s heat is abundant, that doesn’t have a single commercial geothermal power plant in operation.

But there have been positive developments — from a small geothermal power plant in Saskatchewan to an aquaponics startup in the Yukon — that may be signalling a long-awaited change in tide.

Saskatchewan’s DEEP geothermal project poised to be Canada’s first

Advocates and supporters of geothermal energy across the country are watching construction of the DEEP project — Canada’s first geothermal power facility in the southern Prairies — with hopeful anticipation.

Located in southern Saskatchewan near the U.S. border, the DEEP project requires a well drilled down 3,500 metres and will generate approximately five megawatts of power from heat in the Williston Basin hot sedimentary aquifer.

The company estimates hundreds of megawatts of power could be developed in this basin with the drilling of additional wells.

“The DEEP project has stirred up a lot of excitement, people are asking questions that weren’t necessarily being asked before,” says Zach Harmer, policy director at the Canadian Geothermal Energy Association (CanGEA).

And the questions are important, because it’s a push-pull narrative between government policy and the public’s appetite for demanding change. “If you have the public on your side, chances are that politicians will want to be there,” he says.

DEEP geothermal drill rig. In December 2018, DEEP drilled the province’s deepest well, more than 3,000 metres deep, to harvest hot water. Photo: DEEP Corp.

And the DEEP project needed that political support. Initial exploratory work and feasibility studies cost the company $8 million — a substantial investment that was made worthwhile when the province’s utility provider SaskPower announced a power purchase agreement with the company that guaranteed a set price for the plant’s energy.

Jumping on the opportunity, the federal government announced $25.6 million in funding for the DEEP project earlier this year.

The project will power 5,000 homes a year while offsetting about 40,000 tonnes of carbon emissions, the equivalent of taking about 8,000 cars off the road, according to SaskPower. Wastewater from the project may also provide its own offshoot opportunity.

“There’s a huge business case for our wastewater,” DEEP CEO Marcia previously told The Narwhal.  

“The water that comes out of the plant is still 65 degrees Celsius, so it’s extremely hot still. We’ve done some modelling on what we can do with that: as it turns out, from just one of our plants, we could heat a 45-acre [18-hectare] greenhouse.”

Marcia has also previously suggested that heat could help grow a variety of products, including legal marijuana.

The company announced it successfully drilled its first well — the deepest in the province’s history — in December.

Beyond its position as Canada’s first geothermal plant, the story of the DEEP project in Saskatchewan holds promise for another reason: its heat resource was originally mapped by oil and gas developers.

Leveraging Canada’s oil and gas data for geothermal

Canada first expressed interest in geothermal during the energy crisis of the 1970s.

Steve Grasby, a geoscientist with the Geological Survey of Canada, who worked on mapping Canada’s geothermal potential between 1975 and 1985, said most of the data we have about the resource stems from that original research.

“It’s fairly simple to determine how windy or sunny a place is,” Grasby told The Narwhal, “but much harder to know what the temperature of the rocks are [four kilometres underground] and do they have enough fluid to produce to surface.”

Refining the target zones through more passive methods, or “desktop studies” as he calls them, is helping to reduce the uncertainty of investing in active exploration.

Continued research and observation over the years have added layers of information to help pinpoint locations, but in comparison to research on other renewable energy sources Grasby said “geothermal is certainly behind,” and drilling is still the only way to be 100 per cent sure.

A deep well to get the essential data for geothermal costs millions, Grasby says. That’s a huge barrier, but one that can be eliminated when looking for geothermal where oil and gas activity has already taken place.

Wellhead data from the hundreds of thousands of wells drilled across B.C., Alberta and Saskatchewan includes temperature readings and has proven useful for estimating geothermal potential.

The Canadian Geothermal Association, for example, has identified more than 60,000 wells with bottom temperatures of more than 60 degrees Celsius. Of those wells, 7,702 have temperatures above 90 degrees, enough for heat exchange systems that can power refrigeration, and 500 showed temperatures above 120 degrees — hot enough for power generation.

As Alberta figures out what to do with its growing roster of unused wells, these legacy temperature readings provide the provincial regulator and energy companies with much needed information to determine where geothermal potential might underlie pre-existing oil and gas infrastructure.

That helps eliminate expensive risk, making geothermal projects much more attractive. This was the case for the town of Hinton, where some of these hotter wells are located. Last year the town received $1.2 million in federal and provincial funding to conduct a feasibility study of using geothermal for municipal heat and possibly electricity.

“In the renewable energy industry, we don’t have the privilege to have a well turn out to not be in the right area. It can be the make or break for a project,” CanGEA’s Harmer said.

This is also why getting government support and funding for “capacity-building projects” (shouldering some of the burden in drilling exploration so a community has enough funds to actually develop a power facility) is key.

Policy and tax incentives take shape, but hurdles remain

For many years, companies drilling for oil and gas across Canada were unable to drill for hot water. The permitting structure just wasn’t in place.

As far as policy goes, British Columbia and Saskatchewan are “at the forefront in Canada,” Harmer says; they’re the only provinces in Canada to have a formal framework that enables developers to drill explicitly for geothermal.

And it was just in 2017 that the federal government even acknowledged the existence of geothermal energy as a potential recipient of tax breaks and flow-through shares to help attract investment.

But even with a more lucrative tax structure, obstacles remain.

Geothermal energy is expensive, for starters, and requires a lot of capital investment up front. As a reliable, low-emission energy source with a small physical footprint, the gains of geothermal come over time, but perhaps not quickly enough to satisfy short-term political cycles.

More difficult, though, is a lack of appetite for energy from provincial utilities.

This, in part, accounts for an absence of geothermal power generation in B.C., where the resource is among the most promising in the country.

Geothermal “has not been competitive with other renewable resources because of its cost and exploration risk,” a spokesperson from the province’s ministry of energy, mines and petroleum resources told The Narwhal.

The ministry’s website touts the benefits of harnessing geothermal as “a source of clean, renewable energy with a small environmental footprint,” but is not expected to purchase electricity from alternative energy projects until after 2030, because of the construction of the Site C dam, which will add 1,100 megawatts of power to the provincial grid.

“Beyond 2030, additional conservation measures and geothermal, wind, solar and other clean, renewable resources can supply the electricity we need to support low-carbon electrification and achieve our climate targets,” the spokesperson said.

The Site C dam is expected to oversupply electricity to B.C.’s grid, pushing out wind and solar producers, while flooding 107 kilometres of the Peace River and its tributaries and displacing local residents who currently live in the dam’s flood zone.

This hasn’t stopped all geothermal activity in B.C., however. The town of Valemount is forging ahead with plans for a geothermal ecovillage that won’t rely on feeding power to the provincial grid and will instead generate power and direct heat for local businesses, including a brewery, greenhouses and a European-inspired spa.

Valemount’s geothermal project has survived despite a lack of support from the provincial utility, BC Hydro, which has put additional pressure on the local community partners and Borealis, the company spearheading the project, to stoke investor interest.

Borealis is using creative methods, such as aerial drone surveys, to keep exploratory drilling costs down.

Geothermal takes long-term vision

Those initial investments in drilling and building have long-term gains that will pay off financially, Harmer said, adding geothermal requires “an aged look at energy pricing.”

“If you look at the straight dollar per megawatt for geothermal energy, it’s expensive, but if you look at a levelized cost, then it is very comparable, even competitive with other forms of energy.”

But forging ahead with geothermal power may depend on the public demanding it, Harmer said. That also means getting a better sense of the role geothermal can play in areas other than energy production. Recently an agriculture company in the Yukon integrated direct geothermal heat from a local hot spring into its plans for an aquaponics greenhouse and tourist attraction.

“We need to see it as a viable solution.”

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Opportunities provided by 21st century renewables, such as geothermal, wind and solar, have either been ignored or the costs over-inflated in BC Hydro documents justifying construction of the Site C dam, the B.C. Utilities Commission Site C Panel was told by presenters during two days of technical briefings.

Speaker after speaker pinpointed holes and inaccuracies in BC Hydro’s math, claiming the bottom line was skewed in favour of building the $8.8-billion dollar dam on the Peace River.

Geothermal power projects are thriving in Oregon and Idaho and the geology does not instantly change at the B.C. border, said Alison Thompson, chair of the Canadian Geothermal Energy Association (CanGEA), pointing to the number of hot springs and drilled natural gas wells in the province, which indicate the presence of geothermal resources.

“So, how much has BC Hydro spent in the last 15 years in exploratory drilling for geothermal resources?” she asked.

“We believe this number to be zero.”

BC Hydro has said none of the calls for independent power projects produced viable geothermal proposals.

ICYMI: Canada Has Enormous Geothermal Potential. Why Aren’t We Using it?

“This perplexes us when we hear in a submission that the exploration to date has not identified any viable geothermal resources. We refute that and think that there is, in fact, remarkable potential for geothermal development in our province.”

CanGEA mapping indicates there are about 5,000 megawatts of geothermal in B.C., and, if time and money was put into exploration, there could be more, Thompson said. The Site C dam is projected to have about a fifth of that capacity, at 1,100 megawatts.

Thompson questioned Geoscience B.C. figures that formed the basis of BC Hydro’s cost estimates, and said she “absolutely refutes the numbers that they were coming up with for exploration.”

Geoscience B.C. used out-dated technology, looking at large diameter wells, instead of more cost effective slim wells used in modern exploration. Doing so bumps up the estimated cost of a 2.5 kilometre well to $12-million, when the cost of a slim well would be $2-million to $4-million, according to Thompson, who also predicted that, based on U.S. figures, 660 megawatts of geothermal would result in 1,122 permanent jobs ­— about 15 times more than Site C would provide.

#Geothermal Would Create 15 Times More Permanent Jobs Than Site #C, Panel Told As BCUC Hearings Complete https://t.co/EOve99S3jC #bcpoli

— DeSmog Canada (@DeSmogCanada) October 17, 2017

BC Hydro ‘Biased The Analysis’ With Skewed Assumptions: Energy Expert

The story was similar when John Dalton, president of the energy management consulting firm Power Advisory LLC, spoke on behalf of the Canadian Wind Energy Association and Clean Energy Association of B.C., and pointed to BC Hydro’s habit of over-estimating demand for electricity — against a backdrop of a decline in energy consumption across North America — while simultaneously over-estimating the cost of alternative power.

“BC Hydro has employed a series of assumptions which have biased the analysis results against alternatives to Site C,” Dalton told the panel. “Collectively the effect of these biases is to ensure that alternative portfolios offer a cost that is significantly higher than Site C.”

BC Hydro considered only wind and pumped storage as possible alternative power sources and failed to consider geothermal, solar, biomass and battery storage, Dalton said.

ICYMI: Falling Costs of Renewable Power Make Site C Dam Obsolete, Says Energy Economist

And the estimated cost of integrating wind power was wrong, Dalton told the panel, adding that BC Hydro does not appear to have done any analysis of integration possibilities.

“BC Hydro adds a $5-megawatt hour wind integration cost, while also including $48-megawatt hour for pumped storage, which can assist with integration. Considering both costs is double counting,” he said.

BC Hydro’s accounting came under further scrutiny from energy consultant Robert McCullough, speaking for the Peace Valley Landowner Association and Peace Valley Environment Association.

ICYMI: Terminating Site C Dam, Building Alternatives Could Save B.C. Over $1B: Economist

“If we believe that British Columbia cannot build a wind farm for the same price that Governor Inslee in Washington can, there’s something wrong — with the same culture, the same level of expertise, the same workers, the same terrain,” he said.

Marc Eliesen, former CEO of BC Hydro, focused on BC Hydro’s mismanagement of the project, with cost overruns already on the horizon.

In August, BC Hydro president Chris O’Riley told the commission that Site C was on time and on budget, but, earlier this month, the story changed. Geotechnical and construction problems and a year’s delay in the river diversion, will mean an additional $610 million on the bill, he said.

“BC Hydro’s current and continued project mismanagement can only lead to a conclusion that the project will reach $12 billion before it is complete,” Eliesen said.

“BC Hydro’s efforts to reach a point of no return for this project have added costs to the project which have not yet been properly identified or calculated and would not have been incurred if BC Hydro had been working toward the publicly announced plan.”

However, O’Riley, one of a team of BC Hydro spokesmen at the technical briefings, said Site C offers the best deal for British Columbians and, if the project is terminated, ratepayers will pay $3.2 billion, with nothing to show for it.

The BCUC panel will make a recommendation to government on the future of Site C on Nov. 1 and it will then be up to cabinet to make a decision.

Image: geothermal. Photo: National Renewable Energy Lab via Flickr

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Saskatchewan has developed a bit of a negative reputation on the environmental front lately.

Guess that’s what happens when a premier threatens to sue the federal government over mandated carbon pricing and instead promotes the extremely expensive technology of carbon capture and storage.

That’s why it came as quite a surprise when provincial electricity utility SaskPower announced in mid-May that it had signed a power purchase agreement (PPA) — a contract for guaranteed sales at a fixed price — with geothermal company Deep Earth Energy Production.

The project in Williston Basin is an extremely small one: at five megawatts (MW), it will represent only 0.1 per cent of the province’s current electricity capacity. But it will be the first geothermal power project in Canada and experts say that it’s a huge step forward for geothermal, not only for Saskatchewan but the entire country.

“Saskatchewan is very quiet and all of a sudden boom, they make an announcement,” says Alison Thompson, chair and co-founder of the Canadian Geothermal Energy Association (CanGEA), in an interview with DeSmog Canada. “This is a little bit unexpected, but of course very, very positive. It has to start somewhere.”

“We don’t have any geothermal power generation in Canada yet,” adds Kirsten Marcia, president and CEO of Deep Earth Energy Production, also known as DEEP. “A successful project like DEEP will really help bolster other projects in other provinces to move ahead and get a little more traction.”

There’s also plenty of opportunity for retraining oil and gas workers for geothermal projects, including in manufacturing components, performing electrical work and operating rigs. In 2014, it was calculated by CanGEA that while the controversial Site C Dam in northeastern B.C. would only generate 150 permanent jobs, the same amount of power produced by geothermal would result in 2,000.

Saskatchewan Did What?! Province OKs Canada’s First #Geothermal Power Plant https://t.co/cf6kY2lrkb #SaskPower #cdnpoli #renewableenergy

— DeSmog Canada (@DeSmogCanada) June 7, 2017

A downturn in oil and gas production in Alberta has also left a highly skilled drilling workforce without jobs. The geothermal industry has argued the province’s abandoned oil and gas wells present an opportunity to potentially put thousands of drillers back to work.

Recent Changes to Federal Tax Code Helped Push Project Forward

It’s anticipated that drilling for the project will commence later this year, but DEEP has been attempting to build this project for many years.

Initially, it was expected that power production would begin in 2013.

But Marcia says in an interview that it encountered problems in funding the project, resulting in delays. In 2014, a $2 million pre-feasibility study that was co-funded by Natural Resources Canada and SaskPower concluded that 2017 was a viable operational date for the project if studies and tests were completed in a timely manner.

Thompson — who also serves as a principal of Borealis GeoPower —  points to the federal government’s recent change to the tax code to recognize geothermal heat as renewable energy, which allows for flow-through share capabilities, as a key reason for why the project could finally move forward.

“The province wants to know that the developer is actually going to spend their money and develop,” she says. “By having the mechanism available to raise financing for a project and drill wells, that signals to the province that if they provided the PPA, the private sector could do their part and go ahead and get financing.”

Aquifer Could Support 20 Small Geothermal Plants

Thompson says that in the “volcanic section of the world” — which includes the likes of Iceland, New Zealand and California — it’s not unusual to have a geothermal plant with capacity to generate 200 megawatts of electricity.

That’s simply not possible in most of Canada. Instead, geothermal companies wishing to generate electricity from heat will have to drill over three kilometres into the earth to reach the resource in the range of 120 degrees Celsius, constructing a series of small plants within the same region.

Marcia notes that most geothermal gradings are about 30 degrees Celsius per kilometre. At this location — right along the United States border, near Estevan — it’s about 40 degrees Celsius per kilometre.

In other words, it’s an ideal spot.

According to DEEP, the Williston Basin Hot Sedimentary Aquifer could support 200 megawatts worth of capacity from more than 20 plants.

The current estimate for the first five megawatt plant is around $40 million in capital costs, or about $8 million per megawatt of new installed capacity. For context, British Columbia’s proposed Site C Dam would add 1,100 megawatts for $9 billion, or about $8.2 million per megawatt of installed capacity.

However, Marcia notes that she anticipates the federal government will fund about half of the project, bringing down capital costs significantly. It’s also expected that economies of scale in later projects would result in capital cost savings of 10 per cent.

In addition, DEEP plans to sell the wastewater before reinjecting it back into the earth. Marcia says the most obvious client would be a greenhouse developer, with the wastewater discounted to the price of readily available natural gas and coming with carbon credits for the developer.

“There’s a huge business case for our wastewater,” she explains. “The water that comes out of the plant is still 65 degrees Celsius, so it’s extremely hot still. We’ve done some modelling on what we can do with that: as it turns out, from just one of our plants, we could heat a 45 acre greenhouse.”

In an interview with a Saskatchewan radio station, Marcia suggested that heat could help grow a variety of products, including legal marijuana.

Province Still Plans to Expand Fossil Fuel Power In Future Years

This is all taking place within the context of Saskatchewan’s commitment to have 50 per cent of generating capacity from renewable sources by 2030.

Saskatchewan’s grid currently has 4,437 megawatts of capacity. The plan is to increase that to 7,000 megawatts by 2030, meaning that 3,500 megawatts of capacity will have to come from renewables if the government sticks with its commitment.

“Obviously, five megawatts isn’t a lot when they’re looking at possibly a 7,000 megawatt grid by 2030,” says Mark Bigland-Pritchard, energy consultant and co-author of the report SaskPower’s Carbon Capture Project: What Risk? What Reward? “By itself, it’s insignificant. If they can do a whole lot of them as they are saying, then it’s another contributor.”

Most of the growth in renewables to 2030 will come from new wind power, via a controversial procurement process that only allows for utility-scale producers to bid (effectively disqualifying the community-scale wind projects). Solar projects are expected to add another 60 megawatts, an arguably small amount given the province is one of the sunniest places in North America.

Bigland-Pritchard notes that Saskatchewan’s plan completely disregards the “low-hanging fruit in climate policy” of conservation, and includes a further buildout of fossil fuel powered electricity. In addition, Saskatchewan is the only province that relies on coal-fired power that hasn’t announced a roadmap to phasing out the high-polluting source.

Despite that, he suggests there is potential for geothermal projects in Saskatchewan, especially if DEEP manages to get its first pilot plant working in two years or so.

“If — and it’s an enormous ‘if’ — they can make this geothermal system work in the first one to five units, then they could easily get enough to replace at least one coal unit,” he says.

Electric Utilities Must Grant More Permits for Geothermal

Next up for DEEP is the completion of the $8 million bankable feasibility study, which the company has already secured funding for. Marcia says the company will be drilling in the fourth quarter of this year, once final well licensing is completed and depending on rig availability.

Thompson emphasizes that SaskPower will have to give out far more permits to DEEP and other geothermal companies in order to ensure the power source is allowed to expand; she emphasizes that it’s not that companies don’t have the knowledge or technology or even the financing. The hold-up is the permitting process.

She adds there have been no permits given for geothermal in Alberta.

“[SaskPower’s decision] really speaks to not the resource quality, but to their commitment to use all the tools in their toolbox for renewable energy,” she concludes. “And I hope it sends a strong message to British Columbia, who has been very, very slow in giving out electricity purchase agreements to the geothermal industry, even though the resource there is the best in Canada.”

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For more than a decade, advocates of geothermal energy have pushed for the same kind of treatment other energy producers receive from the federal government — with little progress.

But with the release of the federal budget on March 22, that changed.

The budget included the expansion of financial mechanisms to geothermal, which will allow these emerging renewable energy operators to write off more expenses. The change is significant for geothermal energy, which requires higher upfront investments than wind or solar.

“This is a milestone for us,” said Alison Thompson, chair and co-founder of the Canadian Geothermal Energy Association (CanGEA). “We’re legitimate. We’re there.”

Granted, the budget only provided one of seven things CanGEA requested.

Conservative MP Matt Jeneroux, who recently tabled a private member’s motion in the House of Commons to support Alberta’s geothermal sector, said in an interview that the budget was “an early success” and shows awareness of the industry.

“Now we really need to make sure that awareness translates into actual action,” he said.

Alleged Typo Previously Prevented Sector From Growing

Thompson says the geothermal sector was successful in getting the tax code changed to recognize geothermal energy a few years ago.

But there was a typo. Or at least, that’s the suspicion.

“Geothermal energy was stated in the tax code, but further down [in the code] it became just ‘geothermal electricity,’ ” Thompson explains. “So for the past several years, we’ve had this situation where geothermal has been acknowledged as a renewable energy, but only the electricity side.”

But you have to have geothermal heat in order to spin a turbine to generate electricity, meaning the suspected typo seriously restricted the industry.

Budget Allows for Flow-Through Shares, Key Tool to Attract Investors

Up until now a dollar invested in geothermal wouldn’t go as far as the same dollar invested in solar, oil, gas or mining projects. It’s why the tweaks in the budget matter.

The changes also allow for the legal use of “flow-through shares,” a mechanism that can help attract investors during the early exploration stages. Such measures have a tax value of about $9 million.

Unlike wind or solar, it’s impossible to know that an area is good for geothermal until drilling. That requires bringing on investors at an “earlier risk stage” than other technologies.

“There’s still a huge amount of risk associated with exploratory drilling and seismic testing,” explains Sean Collins, president at Terrapin Geothermics.

“Any sort of project or process or incentive or write-off program that can allow for capital to flow more easily towards exploratory drilling really is one of the main areas we see there being an opportunity for significant growth and development of the industry.”

Geothermal Appeals to Wide Variety of Political Interests

Jeneroux, who represents the riding of Edmonton Riverbend, says that he first became interested in the concept of geothermal via the issue of orphaned, abandoned and suspended oil and gas wells in Alberta.

After all, there’s plenty of potential for retrofitting some of the wells to capture geothermal energy and create lots of jobs. But Jeneroux says he started to see a number of hurdles at the federal level that needed to be overcome before the sector could proceed. He says he talked to Conservative interim leader Rona Ambrose about a year ago, and she gave him the clear to look into the issue a bit more.

“Initially, there was a lot of education needed as to what geothermal technology was and is and now that people — especially my colleagues — understand it a bit more, it’s more ‘well, why haven’t we been doing this before?’ ” he says. “It’s become unanimously supported in our caucus and now hopefully strong support from the House of Commons as well.”

Conservative support for geothermal is something that gives Thompson great hope. It’s confirmation that geothermal is “bipartisan energy” that appeals to politicians of all ideologies, regardless of where they land on issues like climate change, energy security or job creation.

Geothermal energy is “starting to bubble to the forefront,” Collins added.

Advocates Look to Mid-Year Budget Review For Further Changes

But there’s still much more to be done to really get the geothermal sector up and running.

Jeneroux’s motion will likely help keep the subject relevant for a while longer: it still needs to go through the process of being debated and brought before a committee, which has an uncertain timeline.

There’s also the potential for more federal support to be unveiled with the mid-year budget review, says Thompson, or maybe something next spring. She emphasizes that “parity has not been achieved” for geothermal.

Further steps the federal government could take to “de-risk” the sector include: loan guarantees, expansion of the Eco-Energy for Heat Initiative, providing more funding to industry groups such as CanGEA and taking a leading role in resource mapping.

“Let’s just solve the whole problem,” Thompson suggests. “Let’s not do it piecemeal. Because that does not lead to investor confidence or certainty.”

At this stage, it’s largely about exploratory drilling, and setting projects in motion.

Borealis GeoPower has received a drilling permit for its Valemount project in British Columbia. Thompson, who serves as principal at Borealis, says the company is working hard to have a late spring or summer drilling season.

While the federal budget didn’t give geothermal advocates everything they were hoping for, it is a good start for setting a precedent.

“We’re now starting to see politicians from all parties and stripes recognize that the geothermal industry fits almost every single political agenda,” Collins said.

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(Valemount, B.C.) — A forestry town is working to re-invent itself as a renewable energy leader with a project that promises community revitalization from the ground up.  

The mountain village of Valemount, British Columbia, located along the Rocky Mountain trench is eyeing the nearby Canoe Reach hot springs — one of the hottest surface hot springs in Canada — as a source of geothermal heat and renewable electricity generation.

“Valemount used to be a typical northern forest town,” Silvio Gislimberti, head of the Valemount Geothermal Association, told DeSmog Canada. “But now we would like to create a geothermal industrial park.”

An old mill that shut down in 2007 provides a near perfect location for Borealis Geopower, the company working with the community to make something of the region’s geothermal potential.

Craig Dunn, chief geologist with Borealis Geopower, said Valemount is one of the best-known hot spots for geothermal development in all of Canada.

“The resource opportunity is pretty incredible all the way down the Rocky Mountain trench, including opportunities like Radium and Fairmont, which are all a part of the system.”

Valemount has a “competitive advantage” according to Gislimberti.

“We know we have a good heat source, that heat source is — relatively speaking — close to the surface, so 1.5 to two kilometres down, and we have easy road access to the Kinbasket Canoe Reach region from existing forestry roads,” he said.

Valemount sits on the end of a long power line, which means any electricity generated in the area could be fed back into the provincial grid. Unlike large-scale hydro projects like the Site C dam, geothermal has a very small environmental footprint. And unlike wind and solar, geothermal can provide base-load electricity production even when the sun isn’t shining or the wind isn’t blowing.

“I think the concept is great,” said Steve Grasby, geochemist with Natural Resources Canada. “Instead of looking at where the high potential regions are in Canada — which can sometimes be far from demand — they’re starting with the demand.”

Grasby said it just makes sense to explore heat resources “near a town that is closer to people and demand.”

“The question is can they find a reliable heat source,” Grasby said. “My understanding is there hasn’t been any exploration drilling done yet. That will be the telltale thing.”

Grasby added geothermal is similar to oil and gas exploration: “You just don’t know until you start drilling,” he said.

Borealis began to engage with the community in Valemount in 2010 after the company received a geothermal exploration permit from the B.C. government. The permit grants Borealis the opportunity many other geothermal developers across the border in Alberta are desperate for — taking a commercial geothermal project from the drawing board to the drill bore.

But for Borealis, and for the villagers of Valemount, the geothermal dream amounts to much more than power generation.

Borealis hopes to build a 15-megawatt power plant that will supply power back to the BC Hydro grid but the community envisions a “holistic energy development program,” as Dunn put it, that will support a whole host of community-led projects.

“Places like Iceland are getting more and more use of what is called heat-cascading,” Dunn said. “So you have a high-temperature resource that may be used for power, then it may be used for brewing applications, and then greenhouses and in the end it may be used to make sure your sidewalk doesn’t freeze.”

Meet The Forestry Town Striving to Become Canada’s First #Geothermal Village https://t.co/6QSYozKwWv #bcpoli #renewables

— DeSmog Canada (@DeSmogCanada) August 19, 2016

Beyond that, Dunn said locals already have plans for the residual heat leftover from the proposed 15-megawatt power plant Borealis wants to power with steam-driven turbines.

“That creates an opportunity for what looks like an eco-village or a geo-park…That means we can have a number of organizations like greenhouses, fish farming, brewery, silviculture, or timber industry applications in close proximity and they can actually take advantage of each other’s opportunities, trading CO2 with each other if necessary from the brewery back to growing operations.”

The local Three Ranges Brewery is already lined up to use the geothermal resources developed by Borealis.

“Three Ranges brewery is one of the Robson Valley highlight reels of new development in the area. It’s a small microbrewery that brews incredible beer — if I do say so myself,” Dunn said with a laugh.

Three Ranges owner and brewer Michael Lewis said he is excited to incorporate geothermal energy into his operations.

“As a brewery we use a lot of temperature control — both on the hot side and the cooling side. My options here are either propane and electric and we use primarily electric, but it would be nice to have a renewable energy resource like geothermal that we could use on the heating and cooling sides and get the best bang for our buck.”

“It would make us the first geothermal brewery in Canada,” Lewis said.

Lewis said the village was quick to establish a Direct Use Heat Committee and the Valemount Geothermal Society when the idea of developing the heat source first arose.

“There’s a rising tide making sure we get something going and become the first geothermal village in the entire country.”

The idea of creating a new zero-waste community while also using geothermal heat is exciting, Lewis said.

“It has the potential for being a really ticketable showcase to show the world what can be done with geothermal.”

Despite the excitement, there is still the issue of the high upfront cost of geothermal. “It’s significantly more expensive because it’s not highly practiced.”

Lewis said even transitioning his brewery to use a geothermal heat-exchange system is going to cost him. “It’s more expensive than doing something with natural gas, but it’s smarter.”

“It’s a part of that pioneering spirit that is this valley.”

Alison Thompson, president and founder of the Canadian Geothermal Energy Association, said the community of Valemount has exhibited an extraordinary amount of interest in geothermal, which puts the project at a huge advantage.

“You can have an association, you can have government, industrial project proponents pushing for projects, but there’s something to be said for pull,” Thompson told DeSmog Canada.

“The villagers are very well informed. That’s what really sets them apart.”

Thompson added the community established a Geothermal Committee and has sought out independent experts to weigh in on questions that come up about the project.

“I think this is what is so unique in Valemount — it’s not one person or one committee, or one business, or group: it is the village.”

“For other communities that are interested, I think they could take a lesson from the way Valemount has nurtured this and rolled it out to be inclusive,” Thompson said.

Corie Marshall, president of the Valemount Geothermal Society, said locals are prevented from growing food beyond the short summer season so the community is planning on using warm water leftover from the proposed geothermal power plant to heat greenhouses throughout the colder months.

“A lot of times in the winter we can get minus 35, sometimes minus 40…We tend to get a lot of snow. There are also times in the summer where people lose their tomatoes because of frost.”

Many people feel conflicted about burning wood for heat and even for heating greenhouses because of the impacts on air quality, Marshall said.

“We’re at the end of a transmission line that comes up from Kamloops. There are times when a branch falls near Kamloops and we’re out of power, three hours away,” she noted.

Geothermal electricity production offers a way to both stabilize the local grid as well as limit the need for electricity from direct heat use, Marshall said.

Marshall said that at this stage the project needs financial support to take it to the next step. Borealis is currently on the hunt for project investors.

“The biggest thing is we need to actually drill holes. Borealis Geopower has done lots of surface studies, a lot of good science, good information but at one point we need to drill holes. The drilling is expensive but now is the best time to do it because so many of the drill rigs are out of work in Alberta.”

“Somebody needs to find — or fund — the first drills and then we go from there.”

When asked when she hopes that will happen, Marshall smiled and said, “yesterday.”

Image: Carol Linnitt

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Abandoned oil and gas wells in Alberta are on the rise — but where many see a growing liability, Alberta’s fledgling geothermal industry sees massive opportunity.

“We’ve got these old wells that we know are hot and we’re going to fill them with cement and walk away,” says Tim Davies, CEO of geothermal company Turkana. “It’s just stupid.”

There’s currently no permitting framework for geothermal in Alberta, leaving the renewable energy out of play.

“I own the well, I own the land and I own the oil. But I can’t own the heat,” Davies said. “There’s just no mechanism for that in place.”

“The oil business has drilled 400,000 wells in Alberta alone,” Alison Thompson, president of the Canadian Geothermal Energy Association, told DeSmog Canada. “They’ve already found all the hot water the province has.”

“The oil patch has those skills to get the most out of every well,” Thompson said, adding the workforce has been hamstrung by a lack of forward thinking policies. [view:in_this_series=block_1]

The number of orphaned wells — left in the wake of a mass exodus of oil and gas producers — has quadrupled in the last 12 months.

Ben Lee, owner of Raven Thermal Systems, says the oil and gas sector’s loss could be the geothermal industry’s gain.

“For the first time in more than a decade you’ve got very skilled workers that have exactly the skillset that a successful geothermal project needs,” Lee told DeSmog Canada.

Geothermal energy draws on the earth’s natural warmth to create a renewable form of energy with a low environmental footprint and virtually no carbon emissions. Importantly, geothermal provides reliable base load capacity, similar to a hydro dam or gas-fired power plant, enabling system stability.

Despite being home to enormous geothermal potential, Canada is the only country on the Pacific Ring of Fire that doesn’t use the resource to produce commercial-scale energy.

CanGEA released a report in late 2014 that found geothermal could supply all of the energy needs of British Columbia for much cheaper than the Site C dam, currently under construction.

“You’ve got top-notch geologists, reservoir engineers, drilling and completion engineers, surface engineers and all the associated landmen and everything else that comes along with a successful drilling program,” Lee said.

“They are available, and available on the cheap to some extent right now, because there is so much supply.”

Lee, who has a degree in aerospace engineering and specializes in heat transfer systems, used to work in other resource industries but last year founded Raven when he saw an opportunity to bring underutilized geothermal energy to the forefront.

But Alberta has yet to see a single geothermal operation materialize.

Lee said the regulatory climate in Canada has failed to keep pace with knowledge of Canada’s vast geothermal potential. Currently there is no licensing framework in place for the development of geothermal energy in Alberta.

For Lee and others struggling to find work in the province, waiting for policy to catch up has been painful.

“We have some very available high-end skill that’s sitting around and could be very quickly turned around because at the end of the day whether you’re drilling for oil or drilling for hot water, the process is the same.”

Craig Dunn, an exploration geologist with Borealis Geothermal, the only company in Canada to have a geothermal exploration permit for B.C., said many of the techniques used to develop oil and gas deposits are directly applicable to geothermal.

The steam-assisted gravity drainage, or SAGD, used to recover bitumen deposits in the Alberta oilsands is “basically geothermal in reverse,” Dunn said, saying with one steam is pumped into a reservoir and in the other steam is pumped out.

“I got into this because one of my last jobs was in a heavy oil play,” Dunn said.“And I thought, ‘is this the best we can do? Is this a resource we want to hand down to our children?’ ”

Canadian Companies Going Abroad for Geothermal Opportunity 

Brett Erickson from FlashPoint Resources Management Inc., a Calgary-based drilling and completions firm, said his company has been busy applying its skills in Nicaragua and other countries, such as the U.S., that are open to geothermal development.

“Alberta has some of the best engineers and best mind power when it comes to drilling and power generation as a whole,” he said, but other countries “are ahead of Canada when it comes to green energy.”

“I believe it’s because we’ve got access to easier, cheaper energy like oil, gas and coal,” Erickson said. He added geothermal is expensive to start but it’s “the greenest energy out there.”

“It’s a lot more reliable than hydro or wind,” he said, “with less of a footprint.”

Erickson said it’s going to take some help to get geothermal up and running in Canada.

“It is an expensive technology but over the long term it has a payback and that’s what investors care about, the long-term payback,” Erickson said

Proving geothermal is low risk but high return has been a key struggle for geothermal companies in Canada, Erickson said. “With the downturn in oil there are investors that are sitting on money that usually would have gone to oil projects.”

“The pieces are in place for geothermal to take off in Canada.”

Thompson, who previously worked with companies interested in using geothermal energy to reduce the carbon footprint of the oilsands, said industry is eager for the opportunity to apply what they know to this new resource to reduce greenhouse gas emissions.

“If someone would just at the government level formulate a task force…we don’t need to reinvent the wheel,” Thompson said. “It’s plug and play. That’s what we’re hoping for.”

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Like a stand of eager horses chomping at the bit, Canada’s young geothermal industry is waiting impatiently at the starting line, ready for the race to begin.   But there’s no starting pistol in sight. At least, not yet.   Getting geothermal projects up and running in Canada "has been harder than it needs to be,” according to Alison Thompson, founder and president of the Canadian Geothermal Energy Association (CANGea).   Thompson, along with a group of delegates from Canada’s geothermal industry, is currently in Reykjavik at the Iceland Geothermal Conference where delegates, experts and scientists from around the world are swapping stories from the geothermal trenches.   Despite having the second largest delegation at the conference after Iceland, Canada has little to show or tell.   “Canada has an incredibly high quality resource and we can’t even get out of the starting gate,” Thompson told DeSmog Canada.

The Iceland Geothermal Conference 2016 in Reykjavik, Iceland hosts delegates from over 50 countries. Iceland is one of the largest producers of geothermal industry in the world. Photo: Carol Linnitt.

Maps released by CanGEA show Canada, especially in the oil and gas rich west, is teeming with geothermal activity, the same natural forces behind British Columbia’s beloved hot springs. Conveniently, much of the temperature of the province’s varied geography has already been mapped thanks to high levels of natural gas drilling.

“The United States is the number one producer of geothermal energy in the world. Mexico is number four,” Thompson said. “I want to see Canada up in the top five.” 

“We have enormous potential for geothermal energy in Canada,” Stephen Grasby, geochemist with Natural Resource Canada’s Geological Survey of Canada, said.   The “in place capacity” of geothermal energy in Canada “is well over a million times what Canadians actually use,” Grasby told DeSmog Canada.   “There’s always a distinction between what’s in place and what you can extract from that and that’s where economic barriers come in,” Grasby said, adding the high capacity is “comforting because it says we only need to produce a tiny fraction of that to supply a significant amount of energy for Canada.”   Canada spent a full decade studying the country’s vast geothermal resources during 1975 to 1985 but when the energy crisis ended, so did the country’s desire for renewable energy security.   But now concerns about climate change have pushed the alternative energy portfolio back onto the table.   In 2007 Grasby, along with a team of scientists and researchers, began updating Canada’s old research, finding geothermal potential exists right across the country.  

Stephen Grasby photographs Hellisheidi, the world's largest geothermal power station outside of Reykjavik, Iceland. Photo: Carol Linnitt.   How you view the resource “depends on what end use you want to make of it,” Grasby said. “You can use it for direct heating, electricity generation or heat exchange systems.”   Geothermal plays are greatly varied, Grasby said, meaning how one uses the resource largely depends on what they want to do with the heat.   Grasby, who is also in Iceland for the geothermal conference, said he hopes his work at Natural Resources Canada can help advance the geothermal industry in Canada.   “We’re not a regulatory department, our main focus is to provide industry the geological information they need. That’s the one area we can help in.”   “We find the haystack and leave it to industry to find the needle,” Grasby said.   “Now we’re looking at what we can do to move things forward.”   Ben Lee, owner of Raven Thermal Services, says it’s unfortunate that in Canada geothermal “has always been something of an afterthought.”   Lee, who has a degree in aerospace engineering and a background in the oil and gas sector, said there are many ways of using geothermal heat effectively.   “I had a bit of an epiphany flying over Regina once in the late winter,” he said.   “It was amazing to see everything was white except for this big teardrop shape off the south edge of the city.” Prevailing winds from the north were pushing warm air generated in the city south, “creating this teardrop of melt,” Lee said.   “It just happened to be the perfect scenario for me to see that marked in the snow.”   Lee said thinking about heat — how it’s generated and how it’s wasted — plays a big role in how he sees his company utilizing geothermal energy.   “How can we capture that heat and use it more efficiently?”   Lee is also attending the Iceland Geothermal Conference in Reykjavik, a northern city entirely heated using geothermal direct heat systems. Hot water, piped 27 kilometres in from Hellisheidi, Iceland’s largest geothermal energy plant, is circulated throughout the city for district heating.

Insulated pipelines carry hot water from the Hellisheidi geothermal power station to Reykjavik for district direct heating, a system that has been in use in the city since the 1930s. Photo: Carol Linnitt.   “A piece that gets missed in Canada is the direct heating side of geothermal,” Lee said. And being in Iceland, Lee said he’s excited to see geothermal heated greenhouses used to grow much of the country’s produce.   “They’ve got greenhouses growing food in the Arctic — as if that is not applicable to Canada,” he said.   “I had a friend go up to the Northwest Territories and pay $16 for a single red pepper. My question is how can we leverage our geothermal resources to address our concerns about food security up north, particularly for First Nations?”   For Lee, the opportunities for geothermal are a vast as the resource: “We can help a lot of people solve different problems with the same solution.”   But that solution is caught in a regulatory grey zone that has so far prevented any major projects from getting off the ground.   Despite the resource potential, Canada has zero mega watts of energy production.   “There’s a regulatory pathway to owning an oilsands mine in Alberta, or for opening up a coal mine,” Thompson said. “But there’s no regulatory pathway to operating geothermal.”   She added the industry doesn’t enjoy any of the tax benefits or incentives given to other sectors.   “At the national tax level we’re legally disadvantaged against mining, oil and gas and other renewables.”   “We’re not looking for a hand out we’re looking for a hand up — we want parity with other industries.”   Thompson said without favourable tax and policy structures in place, finding investors to back geothermal projects, which are capital intensive in the early stages, has been near impossible.   “Because we can’t get the tax incentives, unless you get a geothermal lover, an investor is going to put their money elsewhere.”   “We’ve been in this valley of death,” Thompson said, but added she hopes public awareness about geothermal as well as increasing government interest might get things moving in a positive direction.   “We can do this. We just need to want to do it.”

Image: Power generation at the blue lagoon, Iceland. Photo: Carol Linnitt.

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Geothermal energy offers a low-cost, clean and viable alternative to the $8 billion Site C dam proposed for the Peace River, according to a new report released Tuesday by the Canadian Geothermal Energy Association (CanGEA)

The report, Geothermal Energy: The Renewable and Cost Effective Alternative to Site C, estimates that geothermal power would ring in at about $73 per megawatt-hour (MWh). BC Hydro has estimated the cost of Site C at $83 per MWh. The report also says the proposed geothermal plants could be built for approximately $3.3 billion, less than half the cost of the Site C dam.

“Geothermal can be built as you need it, where you need it, and the capital costs are much lower,” CanGEA Chair Alison Thompson told a press conference in Victoria.

The B.C. cabinet is expected to decide whether or not to proceed with the Site C dam before Christmas. The federal and provincial governments issued environmental assessment certificates for the Site C dam in October, but the project is facing five legal challenges and calls from local governments to delay the decision for a year while other options are considered. The dam would impact 13,000 hectares of agricultural land in the Peace Valley and is opposed by B.C.’s Treaty 8 First Nations.

Read DeSmog Canada’s 12-part series on the Site C dam.

The joint review panel’s report on Site C called the province of B.C. out for failing to pursue research into B.C.’s geothermal resources over the past 30 years. That report provided wind beneath the wings of the geothermal industry, Thompson said.

“Evidence at the Site C hearings created new urgency for the mapping work we had already begun,” she said.

Now that favourability mapping indicates that geothermal can meet all of B.C.’s future energy needs, including the 1,100 MW of capacity and 5,100 gigawatt hours per year of energy that would come from the Site C dam.

“It’s been convenient to dismiss geothermal,” Thompson told the press conference. “This mindset around what people think geothermal is, it’s just not true anymore. And so B.C. has remained on the sidelines over the past 30 years when 25 other countries have installed geothermal power plants.”

Canada is the only country around the Pacific Ring of Fire that does not produce geothermal power at a commercial scale. (Read: 5 Reasons Why Geothermal is Nowhere in Canada.)

CanGEA’s new report lays out 10 key advantages of geothermal when compared to the Site C dam.

Those include the generation of more permanent jobs (2,000 permanent jobs for geothermal vs. 150 permanent jobs for the Site C dam) distributed throughout the province and a reduced need for transmission upgrades.

“The $1 billion northeast transmission line can be avoided or delayed,” Thompson said.

Thompson also pointed to a proposed geothermal power plant in Valemount, an area that consistently experiences brownouts due to its location at the end of a transmission line.

“That project provides base-load power for the area, provides economic stimulus and avoids the need to shore up that [transmission] line,” Thompson said.

There are also opportunities to decrease the greenhouse gas emissions of the oil and gas sector by electrifying the region, displacing the use of fossil fuels at well sites, for instance.

Oil and gas companies have helped identify B.C.’s geothermal potential through their drilling in the northeast of B.C. Often the water and gas that comes up out of the ground is piping hot, which presents another opportunity.

“They could run that through a heat exchanger, which then can be sent to the power plant,” Thompson said. “They can produce micro-power, enough probably for their own operations. They often, on purpose, cool the products before it goes into their machines. It’s a win-win for everybody.”

CanGEA is calling for a one-year moratorium on the final investment decision on Site C to allow time for further due diligence on geothermal. The industry group is also calling on the B.C. Utilities Commission to review its findings and make recommendations by November 2015.

“We’re crazy not to look at this further,” Oak Bay-Gordon Head Green MLA Andrew Weaver told DeSmog Canada. “The government has said many times that they want to protect the ratepayer … that requires them to look at geothermal. It would be irresponsible not to do it.”

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At a time when B.C.’s politicians are considering flooding the Peace Valley for the Site C hydroelectric dam, a new project by the Canadian Geothermal Energy Association says the province could be sitting on a figurative gold mine of power with low environmental impact.

“The low level of effort is surprising, especially if it results in a plan that involves large and possibly avoidable environmental and social costs,” the panel wrote.

The Site C joint review panel recommended that, regardless of the decision taken on Site C, that BC Hydro establish a research and development budget for the engineering characterization of geographically diverse renewable resources, such as geothermal.

“If the senior governments were doing their job, there would be no need for this recommendation,” the panel added.

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