Eavor CEO John Redfern at the company's headquarters in Calgary on Jan 9, 2023.Gavin John/The Globe and Mail
In the rich green forests of Bavaria, Germany, two of Europe’s largest rigs drill side-by-side at the heart of a project that Canadian company Eavor Technologies Inc. hopes will change the face of the geothermal energy sector.
The massive investment in Geretsried, south of Munich, broke ground in 2022, and officials including German Chancellor Olaf Scholz attended the site’s inauguration in August. The project aims to generate approximately 64 megawatts of heat and 8.2 megawatts of electrical power by 2027, through a new technology called the Eavor-Loop.
While global growth in geothermal mostly stalled in 2022, according to the International Energy Agency’s 2023 renewables report, the Paris-based energy watchdog says that’s likely to change, driven by a mix of market interest and government policy. And it’s where Canada has a unique opportunity to repurpose existing oil and gas skillsets, as the world pivots to cleaner energy.
Conventional geothermal energy production draws fluids from deep and hot underground reservoirs, using the resulting steam to drive turbines that generate power. But it’s expensive, and because sedimentary basins have to be between 80 and 150 degrees for utility-scale electrical generation, its application is geographically limited.
As a result, interest in geothermal has lagged behind wind and solar, which can be easily scaled up to take advantage of plentiful above-ground renewable resources. Venture funding followed the same path, essentially hovering around zero for the last couple of decades.
But companies are now exploring new ways to tap the earth’s heat. And for geothermal to make a real dent in climate goals, it needs to be implemented at a similar scale to the oil and gas industry.
That’s where Eavor’s unique technology comes in. The Eavor-Loop is a sealed-off, closed-loop system that doesn’t require a permeable aquifer. It’s like a vehicle radiator, which circulates fluid in a closed loop to remove heat from a gasoline engine. That means it can be placed almost anywhere, making it more scalable. It also eliminates much of the risk associated with relying on aquifers, by essentially creating a huge, predictable radiator below the ground that extracts heat.
Last year the Calgary-based company secured a €91.6-million ($134-million) grant from the European Union, raised $239-million in equity capital and secured a $3.5-million contract with the U.S. Air Force to explore the potential for Eavor-Loop development at a base in San Antonio, Tex.
If the German Geretsried project works, it will become Eavor’s first commercial proof of concept.
“As long as we can complete that project, get power into the grid roughly on time and roughly on budget, we’re golden,” said John Redfern, the company’s chief executive, in an interview.
Geretsried builds off Eavor’s first demonstration project, drilled in 2019 near the small Alberta town of Rocky Mountain House. More than 1,000 people have visited the site – Mr. Redfern good-naturedly calls them “groupies” – to see the new technology for themselves.
“We had the ability for people to put on an Oculus headset anywhere in the world and virtually tour it, but they still all had to go out into the middle of nowhere and put their hands on it,” he said.
“Reimagine that as this massive project in this nice Bavarian forest. They’ll be able to go there after the end of this year, and they’ll see a functioning power plant putting power into the grid at the same time.”
One wall of Eavor’s Calgary head office is crammed with circular orange and black plaques. Each represents a patent secured by the company somewhere around the world, with the inventors’ names recorded in white.
About five years before Eavor started in 2017, tens of thousands of patents were being listed for solar and wind energy. But geothermal listings were virtually stagnant, and none of the patents were related to the company’s approach, Mr. Redfern said.
“We had these vast open whitespaces. Every time we asked a question and got a solution, it would turn out to be a not patented solution. So we patented it.”
It underscores just how rare of an energy company Eavor is. Where most other geothermal companies operate more like traditional oil and gas players to provide and run a service, Eavor assembled the pieces of a new technology and owns them. Hence, it can license its proprietary tools and techniques to whoever wants to build an Eavor-Loop system.
“No one owns fracking, per se, or horizontal drilling. It’s just a bunch of incremental know-how that has built up over time, as people do more and more of it. But by doing it this way, we get much better leverage,” Mr. Redfern said.
The company isn’t resting on its laurels. It’s working on what he describes as “a whole pipeline of opportunities” around the world, including a swath of research and development projects to find ways to drill deeper and faster into the earth.
The growth of geothermal will feed on itself, Mr. Redfern said. Indeed, a few geothermal plays are in development in Western Canada, including DEEP Earth Energy Production Corp. in Southern Saskatchewan and the Tu Deh-Kah project in British Columbia.
And in the northwestern corner of Alberta, the small town of Rainbow Lake hopes to be the first Canadian municipality powered and heated by geothermal. Interest in the idea was prompted by a Canadian Geothermal Energy Association study, which concluded that the area’s geology holds significant such potential, said Dan Fletcher, the town’s chief administrative officer.
Last year, Rainbow Lake announced a partnership with Calgary-based E2E Energy Solutions, which is developing a technology that upgrades the temperatures of existing saline aquifers to the point where they’re commercially viable.
The subterranean heat around the town is “a goldmine.” Mr. Fletcher said in an interview. “That’s everything that we were looking for – an advantage that gives us an opportunity to enter a realm nobody else can, or at least not as easily.”
Rainbow Lake has done various feasibility studies on heating the town with geothermal, but he said the ultimate goal is power generation.
E2E aims to start engineering on the project later this year, which will identify the best site for the pilot, said Nick Daprocida, the company’s CEO. Ultimately, he hopes Rainbow Lake will be powered by geothermal in 2028.
Mr. Daprocida and Mr. Redfern both say that while interest in geothermal has exploded over the past year, the technology will require government support to make the economics more appealing and reduce investment risks. Alberta and Ottawa are already on board, driven by the technology’s green credentials and the fact it can provide reliable baseload power akin to natural gas.
Along with creating blue collar rigging and installation jobs, Canada has the opportunity to dominate geothermal and corner the global export industry, Mr. Redfern said, by designing new tools that will allow the sector to drill deeper and faster.
“This is our shot,” he said. “If we move now, Canada can be a world-leader in geothermal energy.”