Australia's Geothermal Potential

Australia is lucky. It has huge geothermal resources in the form of hot dry rocks. These are the hottest sub-terrestrial resources outside volcanic areas. Elsewhere in the world, geothermal energy already is producing clean, green energy in Iceland, California, the Philippines and Indonesia. Australia can do the same.

Geothermal is a well-known, cheap, clean technology. It offers great opportunities for Australia to work with the United States, particularly the state of California, and with Australia's Pacific neighbors, to further research and development into this resource. Everyone will benefit.

Australia's geothermal industry leader, Geodynamics, estimates geothermal resources in Australia can provide up to 30,000MWs equivalent of electricity at prices of about 4.5 Australian cents per kilowatt hour. That's roughly the same amount of power provided by Australia's coal-fired power plants at prices that are roughly the same -- even before carbon penalties are applied to coal.

Hot dry rock geothermal is cost competitive in Australia on a carbon-adjusted basis to conventional power

Source: Geodynamics

What's more, it's a declining-cost resource -- an anomaly among energy resources. In other words, the more of it produced, the cheaper it gets. This is in contrast with fossil fuels, where marginal extra supplies start costing more as oil fields or gas reserves are pushed beyond their optimal field recovery rates.

Hot dry rock geothermal energy in Australia falls in price the more of it that is developed, making it a very attractive energy resource
Source: South Australia Department of Primary Industries and Resources

What's more, a number of companies are already prospecting for hot dry rock geothermal resources and coming up with very promising initial signs of the resource to be exploited. One of those companies, industry leader Geodynamics, is already moving ahead to start producing small-scale energy from its resource near the tiny town of Innamincka as a precursor to scaling up.

A large number of companies are already prospecting for hot dry rock geothermal in Australia
Source: South Australian Department of Primary Resources

Interestingly, much of the resource is located in and around Olympic Dam, which offers huge potential for developing the resource.

A large amount of geothermal exploration is already underway in Australia	One company, Green Rock, is exploring/developing a huge resource right next to Olympic Dam
Source: Australian Geothermal Energy Group Submission to Garnaut Review Issues Paper 4	Source: Green Rock Energy

This could lay the groundwork for establishing both concentrating solar power power plants in the South Australian Outback near Olympic Dam, coupled with geothermal developments, to both serve Olympic Dam's huge expected future energy needs as well as create the rationale for building high-voltage direct current power lines to carry solar and geothermal energy surplus to BHP's needs to eastern electricity markets.

Power lines connecting Olympic Dam and Innamincka to Australia's East coast electricity grid would bring clean, green Outback power to the nation's cities
Source: Geodynamics

If Australia develops its geothermal resources, it can expand partnerships with other countries also active in the field. Germany, the United States, Japan and the Philippines all have active geothermal programs.

Germany, the United States and Japan are large geothermal producers

Source: The Economist

The most promising locations in Australia for hot dry rock geothermal power are located in northeastern South Australia and southwestern Queensland. While far from markets, the resource is large enough that it could justify building dedicated power lines to connect the resources to the Queensland, New South Wales and South Australian electricity grids.

As this exploration and development gets underway, Australia will get a sizeable stake in a sunrise industry that could become a huge source of economic wealth for the country and technology creation that yields important intellectual property. The United States is currently working out how best to exploit its own geothermal resources, which could power the nation.