Geothermal Energy: ABC Current Affairs Special Edition

ELIZABETH JACKSON: Hello, I'm Elizabeth Jackson. As part of the ABC's summer we now present a current affairs special.

As concern about climate change gains momentum, more than ever before attention is focused on clean, green energy alternatives.

Today we'll take an in depth look at the geothermal option.

Al Gore says it's potentially the largest and most misunderstood energy source in the world. And everyone agrees one of the best places to find it is deep beneath the Australian desert, in South Australia's Cooper Basin.

Geothermal energy promises a lot; a cheap, baseload, renewable energy source with zero emissions – but can it deliver.

Jess Hill travelled to the national geothermal conference to find out.

JESS HILL: It was a hot November morning in Brisbane, and over 400 geothermal explorers crowded the third floor of the Hilton Hotel.

The national geothermal conference was about to begin, with the Federal Minister for Resources and Energy due to open the proceedings.

When Minister Ferguson took the lectern, he made his position clear.

MARTIN FERGUSON: Geoscience Australia who has a very close working relationship with the industry, and again has represented here today, advises me that if just one per cent of Australia's geothermal energy was unlocked, it would equate to 26,000 times Australia's total energy consumption.

That represents a huge opportunity for Australia.

JESS HILL: But it wasn't just the size of Australia's resource that had captured the Minister's imagination.

MARTIN FERGUSON: It really is about potential: baseload, reliable power, a clear alternative to our existing reliance on coal-fired power stations; and the potential growth that is going to occur in gas in the foreseeable future.

JESS HILL: Baseload means supplying reliable electricity 24 hours a day. Unlike solar and wind, which both rely on the weather, geothermal draws its power from hot rocks several kilometres underground.

CHARLES BARON: The combination of being baseload, carbon free and then the potential for it being quite low cost combined with the gargantuan resource potential of EGS means that it really has enormous potential to play a major role in the grid.

JESS HILL: Charles Baron is on the Climate and Energy Team at, the search engine's philanthropic division. Google describes EGS – which stands for enhanced or engineered geothermal systems - as "the sleeping giant" of clean power, and is investing in its research and development in the United States.

EGS is considered to be a huge leap forward from conventional geothermal, which uses hot volcanic water to generate electricity in countries like Iceland, New Zealand, Indonesia and North America.

CHARLES BARON: With EGS you're able to get at a much larger resource than with conventional geothermal. And literally around the world, anywhere you go, there's hot rock below. So at some depth the rock is hot enough to produce electricity. That is true on virtually every continent on earth.

JESS HILL: Thanks to the oil and gas rush of the 20th century, drills were invented that could burrow several kilometres into the ground. It's these traditional mining techniques that have revealed, sometimes accidentally, the enormous amount of heat trapped deep within the earth's crust.

TIM FLANNERY: The discovery of the hot rocks in the Cooper Basin was really an accidental by-product of looking for oil and gas, and we're still trying to work out how to determine where these very hot rock provinces exist.

JESS HILL: Scientist and environmentalist Tim Flannery has long advocated the development of geothermal energy in Australia.

TIM FLANNERY: That single deposit in Central Australia has enough embedded energy in it to run the entire Australian economy for a century. So we're talking about a huge amounts of energy here.

JESS HILL: Geothermal and coal-fired power plants basically operate the same way - they both convert water into steam, which is used to power an electric turbine. The difference is that instead of using coal to boil the water, EGS uses hot rocks.

To access these rocks you need to drill two wells, around three to five kilometres deep. Down the first well, you inject a high-pressure liquid, like water, with enough force to open existing fractures in the rock. As the water flows through these fractures it becomes superheated, and is pumped back up to the surface through the second well.

It is then converted into steam which is used to power the electric turbine.

The water is constantly re-circulated, as Gerry Grove-White, CEO of Australian geothermal company Geodynamics, explains.

GERRY GROVE-WHITE: One of the key design constraints is that we don't use water. The brine is brought up, circulated and re-injected. So there's 100 per cent reinjection. The steam cycle itself is a zero-water steam cycle, in the sense that we have no process losses from it all.

My own view is, I'm sure many in this room would support it, the politics of water here in Australia are at least as heated as the politics of carbon. And so we've taken the position that we won't use water.

JESS HILL: Anthony Budd is from Geoscience Australia, a federal government agency that conducts geoscientific research. In 2006, he started the Geothermal Energy Project, which provides valuable heat map data to the Australian industry.

He says that unlike conventional geothermal, EGS is totally emissions free.

ANTHONY BUDD: Elsewhere in the world, some of the fluids that we pull out from volcanic systems do contain CO2. We don't have those systems here in Australia. So it is a zero emission technology for Australia.

JESS HILL: Terry Kallis is the managing director of Petratherm, Geodynamics' main competitor. He says that power from EGS has the long-term potential to be the cheapest form of energy.

TERRY KALLIS: We do believe that we will be the lowest cost producer in the renewable component, bar none. Thirty years competitive with coal, as we've said, without subsidy.

JESS HILL: I put that claim to Walter Gerardi from McLennan Magasanik and Associates, an independent consulting firm that provides energy economics advice to both government and corporate clients.

WALTER GERARDI: I would agree that there's a strong potential for it to be the lowest cost technology.

JESS HILL: Potential is the operative word, because EGS hasn't started producing electricity yet.

Andrew Stock is the executive general manager for major development projects at Origin Energy, which is a joint venture partner with Geodynamics.

ANDREW STOCK: Through Geodynamics it's been proven that energy can be extracted from deep underground, and it's around 4.5 kilometres underground, at quite high pressures. So it's been proven that it's possible to extract energy.

JESS HILL: The big hurdle, he says, is the cost to get started. The industry is in a catch-22. To get more funding and investment, they need to prove they can produce electricity on a commercial scale.

But the drilling required to reach the commercial stage costs about two-thirds of the project's entire budget.

As luck would have it, Minister Ferguson had come to Brisbane with some good news: $153 million for the two kingpins of EGS, Petratherm and Geodynamics.

MARTIN FERGUSON: These grants will provide a major boost to the Australian geothermal industry, demonstrating for the first time the large-scale production of geothermal energy here in Australia.

JESS HILL: Petratherm aims to build its first 30 megawatt plant by 2015. Geodynamics hopes to beat them to it - a 25megawatt plant by 2013.

These grants will help them do that, but they're not quite the boost the Government has provided to other low emissions technologies, like the $1.6 billion for the Solar Flagship Program, and the $2.4 billion for research into carbon capture and storage.

This funding conundrum was highlighted on the first night of the conference, when two gentlemen from Tasmania appeared on stage between the entree and the main course.

(Two gentlemen singing: "We're drilling through the continental shelf, but we can't fund this program all by ourselves, we need big bucks to keep this thing on a roll, I'm talking hot rocks down in the hole.

Don't talk about financial risk bro, climate change is real or didn't you know, reduce emissions with ingenious techno, we're got some hot rocks down in a hole.")

In the audience that evening was Alexander Richter, an Icelandic banker who invests in geothermal projects all over the world.

ALEX RICHTER: What is quite remarkable in Australia is the interest of the mining sector, and the willingness of investors to actually invest in companies raising this much capital on the public markets; makes a lot of North American players really jealous of Australian companies.

And it's thanks to these investors that in the fields, deserts and valleys all over the country, 48 companies are spending $1.5 billion on the hunt for hot rocks.

But there's one place in particular that's got the whole world's attention, and that's in South Australia, home of the Government's two grant recipients. Alistair Webb is the commercial manager for Geodynamics.

ALISTAIR WEBB: The Cooper Basin is recognised worldwide for being the most prospective and easiest EGS resource to access. It's like all the planets have aligned in the Cooper Basin. If EGS is going to work anywhere, it's going to work here.

(Two gentlemen singing: "Up the Princes Highway, down Strzelecki track, don't stop in the byways, there's no going back.

Drilling rock... Drilling stone")

Geoscience Australia's Anthony Budd:

ANTHONY BUDD: The reason it's being developed as one of Australia's first geothermal developments is because we know very well a lot of the geological information that we need to know in that area. We know about the temperatures, we know about the rock types down there.

When you go to some of these areas throughout Australia we just don't know as much, and it makes it very difficult to properly understand the resource potential of any one area.

(Two gentlemen singing: "If you think it's easy making pure green power, try drilling for a thousand hours

It's a long way down the drop if you want a hot rock hole")

There might be a lot of heat in the Cooper Basin, but there's a distinct lack of something else: electricity transmission lines. To provide electricity to the national grid, the industry needs to find a way to connect to it.

ALISTAIR WEBB: The nearest connection point is Olympic Dam. Depending on the expansion and how that goes with BHP that might be the optimal point of connection, or it might be down at the Port Augusta.

But those points are about 550 kilometres and 650 kilometres away from where we are. The cost of those; we're talking in the order of half a billion dollars.

ANTHONY BUDD: I think when you start to look at the scale of generation for electricity that we'll get from these, and it's quite clear, and there have been studies including by reputable people like McLennan Magasanik and Associates, it's quite clear that overall there's a net economic benefit to joining up these areas of generation to the market.

So building the transmission lines.

JESS HILL: Origin's Andrew Stock says that for Australia to pursue a low emissions future, the grid must be connected to remote, renewable energy sources.

ANDREW STOCK: The challenges about connection to market are really no different for Geodynamics than they are for many other renewable energy sources, and as the world and indeed Australia look for a lower carbon footprint, finding ways to connect more distant renewable energy resources to markets is something that the regulators are turning their mind to.

JESS HILL: But not all of Australia's geothermal resources are so remote. In the coal mining heartlands of New South Wales' Hunter Valley and Victoria's Latrobe Valley, right below the grid, something other than coal lies deep beneath the surface.

(Gentleman sings: "Got out geo survey back/ it's sure to please/ cos 4 K below it's 400 degrees)

DOONE WYBORN: One of the reasons why where we work does coincide with coal mining activity is because coal seams are a big contributor to keeping the heat locked from deep down.

JESS HILL: That's Doone Wyborn chief scientific officer at Geodynamics.

It's almost poetic - the very thing the geothermal industry wants to render obsolete is one of the things keeping their rocks hot. But coal acts for and against geothermal - it traps the heat in the granite, but also blocks that heat from being detected by thermal mapping; which means geothermal explorers don't have a clue what the temperatures are until they start drilling.

MARK MILLER: We know we've got hot water at depth in the Latrobe Valley. Our parent company, in one way, shape or form, a company called Lakes Oil, was drilling in the onshore Gippsland area in 2001 and encountered hot water.

They're an oil and gas explorer; they were looking for oil and gas. They didn't find oil and gas on that occasion, but they did find hot water, and it was very hot and they found lots of it.

JESS HILL: Mark Miller is the CEO of Greenearth Energy, a Victorian geothermal company that plans to tap a vast aquifer of ancient brackish water, deeper than two-and-a-half kilometres below the surface in the Latrobe Valley.

Greenearth together with Hot Rock Pty Ltd have been granted geothermal exploration permits covering more than 46,000 square kilometres in Victoria, which includes areas already occupied by brown coal mines.

I asked the Victorian Minister for Resources and Energy, Peter Batchelor, how a geothermal company can coexist with a coal mine on the same land.

PETER BATCHELOR: The coal extraction and the extraction of the geothermal resource take place at different levels below the earth's surface. The coal mining takes place very close to the top - and even if the coal resource goes much deeper, there's only so far you can mine down in an open cut mine, and then the geothermal resources is many, many metres below that.

And as I say with a bit of commercial negotiation and good planning about where you site the activity you should be able to accommodate both energy activities.

JESS HILL: The New South Wales Government has a different approach. In August 2009, the Minister for Mining and Forestry, Ian MacDonald, released 22 geothermal exploration areas in the Sydney-Gunnedah Basin for tender, the first time in a decade, since one license in the Hunter Valley was granted to Pacific Power back in 1999.

The Australian Geothermal Energy Association says the best hot spots which are found under the Hunter Valley's black coal deposits, were excluded from the areas allocated. As a result, they say, only half of the areas were applied for

John Youssef is the Association's New South Wales state convenor.

JOHN YOUSSEF: It is physically possible for two explorers for different resources to coexist in respect to the same area of land. We know that - we see that in each state across the country. But what we have seen in this most recent tender is the excision of those areas subject to the coal leases from areas of geothermal exploration.

JESS HILL: Land that has a current coalmine sitting on it that potentially has geothermal resources under it, the New South Wales Government will not permit the geothermal companies to explore on that land?

JOHN YOUSSEF: That's pretty much correct, yes.

JESS HILL: If you're not allowed on the land with the mines, is that basically locking you out of a lot of the Hunter Valley's potential for geothermal?

JOHN YOUSSEF: Short answer is yes.

JESS HILL: Brad Mullard is the industry and investment executive director of mineral resources in New South Wales.

BRAD MULLARD: You can't actually, well you can't actually grant a tottle (phonetic) over an active mine.

JESS HILL: Why not?

BRAD MULLARD: Oh, because basically you'll actually cause major problems with the operation of the mine. Geothermal exploration involves drilling holes so you can't actually drill through the middle of an operating coal mine, there's various safety and operational issues that come into play.

Because the government has granted mining leases to the coal operators you can't actually then have another party come in and just start drilling holes.

JESS HILL: The Victorian Minister for Resources and Energy Peter Batchelor says coal mining and geothermal exploration can coexist on the same land and has granted access to the entire Latrobe Valley to Greenearth Energy and I believe Hot Rock.

BRAD MULLARD: Well, first of they're brown coal so they're different types of resources. In the Hunter Valley we're talking about black coal, both underground and open cut mining. So you're talking about a totally different type of resource.

JESS HILL: But he says that no matter how deep the coal goes it's not going to be as deep as the geothermal industry wants to access.

BRAD MULLARD: No but you still need to drill through the coal leases.

JESS HILL: But that would be the same in the Latrobe Valley wouldn't it?

BRAD MULLARD: Yeah, but it's a different type of coal, it's brown coal, and basically brown coal mining is actually mining the fairly shallow resources. The Hunter coal field are actually mining much deeper resources, both open cut and underground.

In essence you can go and have a commercial agreement with the lease operators and drill the geothermal hole. But we can't grant a license over an operating mining lease.

JESS HILL: How deep does black coal go in the Hunter Valley?

BRAD MULLARD: Oh, thousands of metres.

JESS HILL: So how deep in a standard open cut coal mine, how deep is the hole?

BRAD MULLARD: Oh well, down to 200 metres, but then the mining in the Hunter Valley goes down to 600 metres.

JESS HILL: If a geothermal company is looking to explore four kilometres below the surface there's very little chance that they're going to interrupt with those mining activities that go only 600 below underground.

BRAD MULLARD: Well, no, there's not because they've got to drill, you can't start drilling at four kilometres; you've got to drill from the surface down to four kilometres. So you're drilling through all of the rocks the coal mining companies want to mine.

JESS HILL: Four companies were recently granted their exploration permits. Two of those companies, Centennial Coal and Macquarie Energy have no previous experience in the geothermal industry.

Tim Flannery says that to meet its potential, Australia's geothermal industry will need significant government support.

TIM FLANNERY: A large nation-building exercise, an investment in Australia's economic future. And we need that sort of investment, because at the moment we are so heavily dependent upon fossil fuels for some of our key industries that we need to be able to shift that.

You know Australia's basically a minerals extraction and processing industry, as well as a service industry at the moment, and some agriculture and whatever else. But in order to do minerals extraction and processing cleanly in the 21st century you need a very large scale source of clean energy, and geothermal is ideal for that.

JESS HILL: And he says that one day, geothermal energy could do much more than just power Australian homes.

TIM FLANNERY: I can imagine a day when Australia has its own Desertec type of initiative. You know, we've seen this in Europe, where the Europeans are putting large solar arrays across North Africa and putting high voltage DC connectors through to Europe.

I imagine a day, perhaps decades from now, when Australia will be doing that and providing energy to South Asia.

(Red Hot Coals sing: "Call it dumb, call it clever, but you get odds forever. That it's all surely better than burning coal, brown coal, bad coal. It's all surely better than burning coal!")

ELIZABETH JACKSON: That was Red Hot Coals ending Jess Hills' report.