BP and Chevron on Tuesday made a groundbreaking expansion into geothermal energy, betting on a new technology that could turn out to be the world’s first scalable clean energy from a constant source: Earth’s natural heat.
The two major oil companies have put in a $ 40 million round of funding into a Canadian geothermal energy company called Eavor. Based in Calgary, Eavor has pioneered a new form of technology that can be deployed in many places around the world.
The investment marks an important step into an area otherwise ignored by energy companies, who have largely looked to wind and solar energy projects in their efforts to diversify away from fossil fields.
It is the first investment in geothermal energy for BP BP,
and a return to the field for Chevron CVX,
which sold its geothermal assets in 2016.
Eavor has previously only accepted angel investments and venture capital. The $ 40 million injection will be used for further research and development to help scale the energy system to be price competitive.
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“We see Eavor’s potential to complement our growing wind and solar portfolios,” said Felipe Arbelaez, senior vice president of zero carbon energy at BP. “Technology like Eavor’s has the potential to provide geothermal energy and heat and help unlock a low-carbon future.”
Eavor has developed a new type of geothermal technology that creates, in very simple terms, an underground “radiator”.
The Eavor “Loop” consists of a closed loop network of tubes typically installed 3 kilometers to 4 kilometers below the Earth’s surface, originating from and terminating in the same above-ground facility. The pipes are installed using advanced drilling techniques that have been perfected in the oil field.
Fluid flows in the above-ground facility’s plumbing through the hot underground environment, before naturally recirculating back to the top of the loop. The hot liquid is then converted into electricity or transferred to a district heating network.
A major advantage of this type of energy is that it is constant and provides a base load of electricity to a grid system without the need for challenging battery solutions of intermittent wind and solar energy.
Recordings of a virtual tour of Eavor’s full-size prototype.
Photo courtesy of Eavor.
Unlike hydroelectricity, which relies on large sources of constant water flow, it is designed to scale, and Eavor envisions installations installed under solar panel fields and in areas of limited space like Singapore.
Geothermal energy has been around for decades and boomed in the 1970s and 1980s, before falling largely out of the spotlight in the 1990s. It relies on heat beneath the Earth’s surface and has long been an attractive proposition for oil and gas companies, which have core expertise in underground exploration and drilling.
The problem is that conventional geothermal technology relies on finding super-hot water sources underground, making them expensive, risky and rare. More recent developments have their origins in the shale oil boom and use fracking techniques to create the underground reservoirs needed to generate energy. But this can pose a problem from an environmental and sustainability point of view.
Eavor’s solution does not require the exploratory risk of traditional geothermal energy or disturb the Earth the way fracking-style geothermal energy does.
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John Redfern, the president and chief executive of Eavor, told MarketWatch that the predictability of the system, established in field trials in collaboration with Royal Dutch Shell RDSA,
is repeatable and scalable, making it resemble wind and solar installations.
“We are not an exploration game like traditional oil and gas or traditional geothermal energy. We are a repeatable manufacturing process, and as such we don’t need the same return, ”said Redfern.
“Before we even build the system, unlike an oil well or traditional geothermal energy, we already know what the output could be. Once it’s up and running it’s super predictable, ”said Redfern. “That’s why you can finance these things just like wind and sun, with a lot of debt at very low interest rates.”