Updated May 2022
What is Geothermal
Geothermal is a renewable energy generated and stored in rocks and fluids deep beneath the earth's surface that can be harnessed for heating and electricity generation. The earth's thermal energy comes from two main sources: leftover heat from the earth's formation and heat resulting from the decay of radioactive elements, mostly uranium, thorium, and potassium. Most of the heat in the earth crust originates from radioactive decay.
Geothermal energy is produced and used based on the geothermal system and resource quality in place. “A geothermal system is made up of three main elements: a heat source, a reservoir, and a fluid, which is the carrier that transfers the heat.” (Dickson and Fanelli 2003)1. Some geothermal systems are endowed with naturally occurring hot aquifers (a hydrothermal system), whereas other systems create artificial reservoirs by injecting water into hot, dry rock to extract heat. Geothermal can be categorized into high-, medium-, or low-temperature resources. Medium- and high‑temperature resources are more suitable for power generation, whereas low‑temperature resources can be deployed for heating and other applications.
Some geothermal deployments harness the earth's heat a few meters beneath the surface, whereas others require drilling deep wells. Based on the geothermal system and technology, there are three distinct applications: electricity generation, geothermal heat pumps, and direct-use applications, such as indoor heating and cooling through direct heating systems, food dehydration, and large-scale snow melting.
Regulatory Framework for Geothermal Development
The Government of Alberta passed Bill 36, the Geothermal Resource Development Act (GRDA) in December 2021. The GRDA establishes a regulatory regime administered by the Alberta Energy Regulator (AER) for the responsible development of geothermal resources and related wells and facilities in Alberta. The GRDA covers deep geothermal resources occurring below the base of the groundwater protection, while shallow geo-exchanges remain regulated by Alberta Environment and Parks.
Alberta has a competitive advantage that is not available to many geothermal producers globally. Alberta has access to innovative drilling technologies, with a highly developed oil and gas skill set and a robust subsurface data set, which are essential to a successful geothermal industry. There is a potential opportunity to repurpose Alberta's abandoned wells or coproduce oil and gas wells alongside geothermal wells. The potential synergies could reduce costs and significantly improve the economic viability of geothermal projects.
Production in 2021 and Forecast
Based on the geothermal projects delivery timelines in our forecast,16.4 gigawatt per hour (GWh) of geothermal electricity was installed in Alberta in 2021. We expect on average a 19 per cent annual growth rate in installed geothermal capacity and electricity generation throughout the forecast period, reaching 269.4 GWh by 2031 (see Figure S9.2).
Our forecast assumptions are supported by the federal carbon tax policy that imposes higher costs on fossil fuel power generators while making renewables economically attractive and Alberta Electric System Operator's most recent long-term outlook on geothermal.
Several companies in Alberta have announced geothermal projects:
- No. 1 Geothermal Limited Partnership owns the Alberta No. 1 geothermal energy project that is being developed by Geothermics. The proposed project includes an electricity power plant and a district heating system five geothermal wells at a depth of four kilometres. When completed in 2025, the project will produce ten megawatts (MW) of clean base load electricity and 985 terajoules per year of heat.
- FutEra Power has proposed the Swan Hills 21 MW cogeneration geothermal and natural gas electricity project. There are 84 existing wells producing geothermal energy. When completed in 2022, the project will produce 6 MW of electricity.
There are a few Alberta companies developing new innovative geothermal technologies. For example, Eavor Technologies has designed a geothermal system by connecting two vertical wells with many horizontal multilateral wellbores, creating a closed buried-pipe system. The system circulates a working fluid in a completely isolated closed-loop system, relying on heat conduction from the environment.
Limitations or Risks to the Outlook
In terms of project economics, geothermal energy is not as economically viable as wind or solar. Competition from lower-cost, lower-risk renewable alternatives could slow the pace of geothermal commercialization in the province. According to the recent Energy Fact Book from Natural Resources Canada, geothermal has the highest levelized2 cost in the country.
Although technological advancements in the upstream oil and gas industry can be leveraged to accelerate geothermal energy development in the province, the two sectors differ in one important aspect—oil and gas technologies are not designed to withstand ultra-high heat. Technological hurdles still need to be addressed to leverage oil and gas technologies fully.
1 Dickson, Mary H., and Mario Fanelli. 2003. Geothermal energy: utilization and technology. United Nations Educational, Scientific and Cultural Organization.
2 Levelized cost is the average price an electricity generator must receive for each unit it generates over its lifetime to break even financially.