Public Investments in Energy Technology

Public Investments in Energy Technology

Michael P. Gallaher, Albert N. Link and Alan C. O’Connor

Escalating energy demand may be the most important issue facing the United States and the world today. There is little disagreement that research and development (R & D) is needed to develop new energy technologies for the future; however, there is less agreement over the specific research agenda to be pursued and how that agenda is funded. This book addresses the social importance of new energy technologies, illustrates policy-relevant applications of evaluation techniques and proposes new perspectives for a US energy investment strategy.

Chapter 6: Investments in Geothermal Technologies

Michael P. Gallaher, Albert N. Link and Alan C. O’Connor

Subjects: economics and finance, energy economics, public finance, public sector economics


INTRODUCTION Geothermal energy systems tap into hydrothermal energy in the earth to produce electricity. Geothermal energy has the advantage of being a clean, renewable energy source without the variability of other renewable sources, such as wind and solar. It is also a viable alternative for traditional fossil fuel (e.g., coal) base-load generation, particularly coal and natural gas. Resources of geothermal energy vary in quality and accessibility due to differences in depth of reservoirs, rock formations, and water content. Historically, geothermal power plants have been built under ideal conditions for energy production. This is usually where the reservoir is close to the surface, the host rock is permeable and porous, and the ground fluid saturation and recharge rates allow having economically feasible operation. The relative scarcity of such ideal geothermal sites has been a barrier to widespread geothermal energy use (DOE, 2008c). The DOE initiated the Geothermal Technologies Program (GTP) in the late 1970s and has conducted a wide range of research targeted at the long-term goal of making geothermal energy a cost-competitive power production alternative. For example, before research efforts by the GTP, little commercial geothermal power was generated in the US from the predominantly liquid-dominated hydrothermal resources.1 Only four plants were installed from 1971 to 1979 (as compared with 16 plants from 1980 to 1985). The US currently leads the world in online megawatt capacity of geothermal energy and electric power generation (Glitnir, 2008). However, the net electricity generated from geothermal power in the US in 2008 was 14,...

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