The energy sector accounts for 60% of global greenhouse gas emissions and the world has been advocating for an effective and urgent transition to renewable energy to prevent the severe threat of climate change. Last year, clean energy produced more of the world’s electricity than coal with Europe leading the way.
Russia’s invasion of Ukraine this year has roiled the energy markets, driving oil and gas prices sky high and forcing many countries to reconsider their energy supplies in the face of Russian sanctions. Russia is the second largest exporter in world energy markets behind Saudi Arabia. Europe, the largest importer of oil from Russia, is particularly vulnerable.
Running counter to climate change goals, the near-term responses from the war has been to lean even more on oil, gas and coal in the scramble to fill the gaps from Russian sanctions. UK’s then Prime Minister Boris Johnson advocated in March for new oil and gas drilling in the North Sea and US President Joe Biden tried to ask Middle Eastern countries to produce more oil.
Despite the near-term responses, the war may have provided the needed momentum to accelerate the adoption of clean and renewable sources of energy which is the inevitable long-term goal. The UK published its Energy Security Strategy in April 2022, which reiterated the aim of achieving independence from foreign energy sources and decarbonizing the UK’s power supply, with increased targets for offshore and nuclear energy in 2030 and 2050 respectively. Germany also announced that it would bring forward its deadline to abandon fossil fuels and to supply all its energy needs from renewable sources by 2035 instead of 2040 (Bloomberg article). German Finance Minister Christian Lindner has referred to renewable power sources as "the energy of freedom".
Multiple factors in recent years have also been driving the growth of renewable energy. Falling costs has been a big factor in the adoption of renewable energy. Since 2010, the cost of solar photovoltaic power has fallen 80%. Offshore and onshore winds have also dropped a third in price. Both renewable sources are now cost-competitive with fossil fuel electricity.
Policy support has also been crucial for the growth of renewable energy. Tax credits, subsidies, feed-in tariffs, and competitive auctions have all helped to reduce costs and spur development. The US, China and Europe have become leaders in solar and wind through policy support and many countries worldwide have targets to increase renewable energy.
As renewables grow in popularity and expand their political influence, they attract more financing from governments and institutions that spur technological advances and innovation. According to a report by the International Energy Agency, global energy investments is set to increase by 8% in 2022 to reach USD$2.4 trillion. This is driven by investments in the clean energy sector. Rising public support for sustainability has pushed interest in early emerging technologies in clean energy. Large companies are keen to demonstrate that they are responsible corporate citizens and sourcing clean energy for their operations. Even traditional oil majors are investing in renewables in their bid to position themselves for an energy transition (Energy Strategy Reviews). As a result, many start-ups have raised record funds, for promising energy storage, hydrogen, and renewable energy technologies.
As the world tries to fix the energy emergency, climate change isn’t going away. So, the long-term picture is that clean, low-carbon energy generation will play a central role in powering the global economy of the future which will provide real energy security, stable power prices and sustainable employment opportunities.
Investing in energy for the future
Renewable energy sources provided by the sun, wind, water, and heat from the earth are replenished by nature and emit little to no greenhouse gases or pollutants into the air.
In the process of thinking about energy solutions, we mapped out what an ideal power source should look like. In addition to having a minimal environmental impact and being unaffected by fuel supply shocks, the power source should be stable (“baseload”), can be easily adjusted (“dispatchable”) and have a small land footprint.
All currently available renewable energy sources have disadvantages that make them less than ideal. Although solar and wind are most developed, power generation is unreliable and intermittent, and require large tracts of land. Hydropower is ecologically disruptive, un-scalable, and subject to physical risks in the now-more-frequent periods of sustained heat and droughts. Nuclear fission produces nuclear waste and is politically challenging. Conventional geothermal has specific geologic needs and poses various environmental concerns.
Our search for breakthroughs in the energy space led us to Eavor Technologies, an advanced geothermal systems (AGS) company headquartered in Calgary, Alberta.
Eavor’s solution, the Eavor-Loop is a completely closed-loop system that circulates a benign fluid in a massive subsurface radiator. This radiator simply collects heat from the natural geothermal gradient of the Earth via conduction in common and drilling accessible geology. This produces baseload power that is emissions-free with a small surface area and can be deployed virtually anywhere without the problems of traditional geothermal, such as fracking, earthquake risks and contamination risks Eavor-Loops are versatile and can be used to create a decentralized grid that can be paired with other clean energy sources. (Learn more with this video on Eavor’s Technology).
Eavor has built a demonstration facility, the Eavor-LiteTM, in Alberta, Canada, that was completed in 2019. The prototype de-risks their technical feasibility as well as validates their thermodynamic modeling. (Eavor-LiteTM Virtual Tour). Eavor has also secured approval from Germany to develop a geothermal project using their closed-loop system in Bavaria. Because of the promising technology, the company has attracted investments from many strategics, including global energy majors like BP and Chevron (CNBC article), and drilling service providers like H&P and Precision Drilling.
Historically, geothermal energy has been acknowledged as an attractive energy source for its round-the-clock baseload and carbon-free power. However, many investors were deterred by high upfront costs and high levels of risk - about 40% of conventional geothermal projects failed in the exploration phase because it sought specific geological features. Eavor overcomes this as they are not restricted by location and can design their loops to fit the geology and obtain the required heat gradients to work. Furthermore, without the need for a pump to circulate fluid due to their thermosiphon effect, all the energy from Eavor-Loops is sellable, unlike conventional geothermal systems that need almost half the energy produced to power pumps.
As Eavor’s technology is still new and in development, the costs to build an Eavor-Loop are not the cheapest. However, with further R&D, technological improvements and building experience, costs are expected to come down by a factor of 4-5x. Importantly, the world is also recognizing that there is a need to price in the externalities of energy sources like coal, which are “cheaper” but comes with a cost to the environment and health.
Because energy is key to our society, it is imperative to diversify energy sources to provide longevity and security. We need to invest in many technologies that can provide power while reducing our carbon footprint. Geothermal will play a large role in the world’s clean energy future, but it will need to be coupled with solar, wind and nuclear. Powering the future will have to be an all-encompassing strategy.
