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Big Pivots analysis: Growing interest in geothermal includes Vail, Eagle County

June 4, 2024, 9:00 am

Pagosa Springs has long used geothermal energy in its downtown core area.

Colorado’s geothermal story has started to get very interesting. Just look at the diversity and depth of the 35 geothermal projects that are getting chunks of $7.7 million in state grants.

The seeds have been planted broadly across Colorado. In the Yampa Valley, the municipality of Hayden is to get $200,000 to investigate the idea of using geothermal to produce heat for the entire town, as Pagosa Springs already does for part of its business district. Instead of hot water, though, Hayden wonders if the heat in the ground can be mined.

Have you been to Pierce? It’s a town of about 1,100 people about 20 miles north of Greeley, where the irrigated farm country starts turning into grazing land. About 20 minutes more and you’re at the Wyoming border. Gradient Geothermal is to get $100,000 to study whether inactive oil wells can be repurposed to provide direct-use heat of up to 120 to 150 degrees Fahrenheit for a thermal energy network for the community.

Another project near Pierce, at the Longs Peak Diary, is to get $1 million for study of the potential to create generating capacity for.2 megawatts of electricity.

Crested Butte is to get $157,000 to use geothermal for new workforce housing. This was, you may recall, the first jurisdiction to put the kibosh on new natural gas in the town’s remaining unbuilt lots except as may be necessary for commercial cookeries.

Vail and Steamboat Springs both are trying to figure out how to use geothermal to melt snow on sidewalks. Unbeknown to most visitors, an incredible amount of natural gas gets burned to lessen the chance of somebody slipping and falling.

And also in Steamboat is an idea by Pure-Green Colorado, which is getting not quite $300,000 to evaluate how geothermal power can be paired with hydrogen production within an integrated system at the Steamboat Ski Resort.

After the studies and so forth, will all these projects come to fruition? Likely not. But new technology needs to be nurtured. Solar energy didn’t happen on its own. It took time and incentives. Solar became very big in Colorado last year, at times delivering the majority of electricity available to customers of Xcel Energy as has been documented by Boulder’s Ron Sinton.

Allen Best, Big Pivots

Reading descriptions of these grants, I see lots of people and organizations thinking hard about how to make this work, how to mine “the heat beneath our feet,” as Gov. Jared Polis dubbed the technologies in his year-long initiative as chair of the Western Governors’ Association.

Some 12% of the grant money is going to single structures such as at Crested Butte or a house being built with geothermal in Boulder to replace what was lost in the Marshall Fire. Thermal energy networks such as is being planned at Carbondale will get 46% of grant money. The final 42% will go to efforts to produce electricity.

Those involved in assembling this program say they think Colorado is breaking ground nationally with its various incentives and initiatives. The work is being watched closely by other states but also the U.S. Department of Energy.

To be clear, the idea is not particularly new. I think I wrote my first story about geothermal in 2006. I had the “green beat” for a Vail-based real estate magazine. A guy with a ton of money had an outdoor lap pool at his house on a ridge down the valley toward Eagle, and he was heating it with geothermal.

We have also had conversations over the years about tapping the Earth’s heat at various places in Colorado, especially areas around Chaffee County’s hot springs, Mt. Princeton and Cottonwood. Nothing has happened so far, but Mt. Princeton Geothermal is to get a $500,000 grant to support drilling a well that may provide a better understanding of the subsurface hydrothermal resource.

The Colorado Capitol has had ground-source geothermal since 2013, the first state capitol in the nation to be so cooled — and heated. Colorado Mesa University in Grand Junction has very elaborate geothermal heating-and-cooling.

Two different geothermals

Two technologies fall under the heading of geothermal. Both use residual temperatures in the ground. One type taps the year-round temperature of about 55 degrees close to the surface of the ground to provide heat in winter and coolness in summer. It is sometimes called low-temperature geothermal. This is the heat — and cooling — that gets tapped at Colorado Mesa University in Grand Junction. It’s also the heat (and cooling) used by Norbert Klebel at his housing project in Arvada called GEOS. And Delta-Montrose Electric Association had a program for many years led by Paul Bony (who is now with the Yampa Valley Sustainability Council).

The deeper you go underground, though, the hotter temperatures get. Go deep enough and you’ll be amid rocks hot enough that the heat can be used to generate electricity. This is called enhanced geothermal. It can also be called hot geothermal.

I had long understood that Colorado didn’t have the best geology for enhanced geothermal. Better by far than Iowa, but not nearly as good as Nevada. That may still be the case, but evidence has started to emerge that enhanced geothermal might play a role in electrical production for Colorado.

Auditions for still key roles in this energy transition remain open. We have figured out cost-effective technologies and systems to shift from coal, in particular, but also natural gas. That path to 75% to even 90% emissions-free energy has been well defined by wind, solar, existing storage technologies.

That last 10% to 15%, though, remains problematic. Every tool remains on the table, ostensibly even nuclear. The potential role of geothermal in solving this puzzle has been elevated in the last several years.

Colorado’s geothermal story essentially started in 2019. Polis had taken office after putting renewable energy at the center of his campaign. Legislators promptly passed greenhouse gas reduction goals that in many places of the country would have been seen, at best, as hopefully naïve. Some Colorado legislators, even those who were open to climate change as a risk, dismissed the goals of 50% economy-wide reduction by 2030 and 90% by 2040 as unrealistic. (The latter has been upgraded to 100% net)

Despite the skepticism in some quarters, legislators and the Polis administration have delivered dozens of bills that collectively push and pull Colorado’s economy into this big pivot. (Just had to use it). Some – most notably the Environmental Defense Fund –think the Polis administration and Democratic legislators are disingenuous by not playing hardball with the oil and gas industry. That’s a longer story.

As regards geothermal, legislators in 2022 appropriated $12 million for geothermal grants and staffing at the Colorado Energy Office to administer the program. That was HB22-1381, (You’re correct: more than $4 million for grants in another round in the coming year).

In 2023, two more bills followed. HB23-1252 adopted a goal of reducing greenhouse gas emissions from Colorado’s four gas-distribution utilities 22% by 2030.

That same law also created a regulatory pathway for gas utilities to develop thermal energy networks, such as geo-exchange, and forgo natural gas.

That same session, legislators adopted HB23-1272, which provides support for geothermal electricity through an investment tax credit for exploration, drilling, and development of new wells; investments in geothermal electricity production; and production tax credits.

Two documents released earlier this year speak to the potential role of geothermal in helping Colorado achieve its energy transition goals in the next 15 to 25 years.

In “Colorado Clean by 2040,” an analysis commissioned by the Colorado Energy Office, the consultant Ascend Analytics found that geothermal was among the most likely technologies able to help Colorado achieve a near emissions-free electricity system by 2040 even as demand for electricity grows by 50%.

One modeled scenario sees geothermal achieving 2% of total electrical production by 2034 and growing to 10% by 2040.

The updated Colorado Greenhouse Gas Pollution Reduction Roadmap 2.0 that was released this winter gave a sneak preview of what was announced in late May. It said the program has received 42 applications for over $13 million in requests and called out the initiatives proposed by mountain communities for thermal energy networks.

The Roadmap said this round of grant applications “highlights the strong emergence of the geothermal market, providing benefits of substantial energy savings over the lifetime of these investments, enhanced grid resiliency, and supporting decarbonization of our heating and power sectors.”

Growing prominence

One thing that has puzzled me has been where this growing prominence for geothermal has come from. And very specifically, why did Polis choose geothermal as a place in the energy field where he applied his gubernatorial prestige— and time, too? In addition to the various forums sponsored by the Western Governors’ Association, Polis visited Colorado Mesa University and then added a tour of Utah projects.

I assumed that one of his staff members had advised Polis that this was a good technology to get behind. I interviewed him at one point, and I left thinking that this was not something he had personally embraced. (But I also think I didn’t have the best questions).

I have now been told twice that no, I have it backwards. For whatever reason, Polis had concluded this was a technology he wanted to embrace. And you have to respect his judgment. After all, he’s a guy who figured out how to accumulate $400 million in wealth, at least according to reports I have read.

Other things have been happening, too. For instance, Fervo Energy had raised $244 million as it builds a 400-megawatt project near Delta, Utah. Sarah Jewett, vice president of strategy at Fervo Energy, told a noon-hour audience at the Colorado Rural Electric Association annual conference in October 2023 that the project in Utah had reduced drilling time significantly.

“The market for geothermal power is about $65 to $85 a megawatt hour. We’re finding that these projects can easily fit into that cost structure. Now we are finding there is a higher willingness to pay coming out of California because they’re in a little bit of dire straits, but we envision a world where we’re able to easily sell these projects $65 to $85 a megawatt hour.”

She talked about subsurface development, which is responsible for about 50% of the cost, and above-ground development costs behind the other half. These costs of subsurface work have been bending down, and her company thinks cost reductions can also be delivered above ground.

Her bottom line? Further cost reductions.

Afterward, I heard a Colorado state senator – the one probably most knowledgeable about this energy transition – exclaim to me: Did you hear those numbers!

Utah State Sen. Nate Blouin may have been referring to this project when he was on a White House panel in late May devoted to transmission. Asked to summarize what made him excited as he looked into the future, he said it could be summarized in one word: Geothermal.

Geothermal is the hottest thing in clean energy. Here’s why” wrote Canary Media in a March posting.

That being said, Duane Highley, chief executive of Tri-State Generation and Transmission, described geothermal as still having significant cost, about on par with nuclear.

Might we someday also see housing developments in Colorado using district heating systems, such as can now found at Geos in Arvada and at Colorado Mesa University? That will be the real break-through. I have to think that will happen sooner, not later.

To get a full grasp of the diversity of these seeds in the state grants, see the full list here. But just a few more:

  • Pueblo is to get $270,000 to support the development of geothermal heating and cooling at three new fire stations.
  • The Urban Land Conservancy is to get $72,500 to study whether the existing hot-water heating loop (heated by natural gas) for 13 affordable housing buildings can be converted to geothermal at the Mosaic Community Campus located along Montview Boulevard in Denver.
  • Rico, the town in southwestern Colorado between Telluride and Dolores, is to get $100,000 to study whether a thermal energy network could work. It has a hot springs on the edge of town, free to anybody who wants to tip his or her pinky into the warm water that now slops over into the Dolores River.
  • In Boulder, Pearl and Foothills District Development is to get $100,000 to investigate application of an energy storage system in combination with air-source heat pumps and photovoltaic thermal hybrid collectors to balance seasonal loads.
  • Snow Mountain Ranch workforce housing complex at the YMCA of the Rockies between Tabernash and Granby is to get $84,000.
  • A Girl Scouts ranch near Bailey is to get $85,000.
  • The amount of natural gas burned to keep sidewalks free of snow and ice is a concern in Vail. It takes a lot of natural gas. The town is to get $250,000 to explore moving forward on a project that involves the public library, Dobson Arena, and the wastewater treatment plant.
  • The Steamboat Springs Redevelopment Authority is to get not quite $250,000 to study a geothermal heating district as part of the redevelopment of the Gondola Transit center. Can this also support the heating for nearby multi-family, mixed-use and commercial buildings? Snowmelt is also a target, as it would otherwise pose a demand for up to 4.6 megawatt of electricity at peak times.
  • In Carbondale, the Clean Energy Economy for the Region has been working for some time on an advanced thermal energy system using an Ambient Temperature Loop. Test drilling was done last autumn. Aspen and Pitkin County see geothermal being part of their airport redevelopment plans.
  • Eagle County is also to get $250,000 to push along a project that its buildings’ officials have been thinking about and investigating for several years. It’s still a heavy lift to make the economics work, says one official, but one that is now a little closer.
  • In Southwest Colorado, the Florida Mesa Geothermal Project near Durango is to develop an enhanced geothermal system that will blend existing coalbed methane recovery infrastructure with advanced technology and data analytics. It is projected to offset 20 megawatts of electricity demand but scale up to 55 megawatts.
  • The University of Colorado-Boulder will get $665,000 to conduct feasibility and design studies for two interrelated geothermal projects exploring the co-generation of geothermal electricity and heat. These projects could enable on-site geothermal electricity production that co-generates heat for a thermal energy network connecting more than 12 million square feet of conditioned space across the university’s three campuses in Boulder.
  • A company, Geothermal Technology, is to get $250,000, to identify hot sedimentary aquifers suitable for electrical production in northeastern Colorado’s Denver-Julesberg Basin.

All this, to me, says a lot of exciting exploration, a lot of noodling. How much of this money will come to  something?

I’d guess half these projects will go forward. Somebody close to the program thinks expects only a few to fall off and most will go forward. The goal of the grants is to leverage, to help excite private and other capital with the interest not only of reducing emissions but producing long-term cost savings.

Editor’s note: Allen Best is a Colorado-based journalist who publishes an e-magazine called Big Pivots, where this post first appeared. Reach him at allen.best@comcast.net or 720.415.9308.

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