A few years ago I had the pleasure of swimming in a big, heated pool. Outdoors. In winter. It sounds like an unaffordable luxury, and in most places, it is. But in Iceland, you can swim all year round in geothermal swimming pools. Iceland sits on the boundary of the Eurasian and North American tectonic plates, which are slowly pulling apart, giving it extraordinary geothermal resources. Besides year-round outdoor swimming, this renewable resource provides heat, hot water, and electricity.
According to Iceland's National Energy Authority, about 25 percent of the country’s electricity was generated by geothermal power plants (2008 data). The benefits sound like an environmental fairy tale: pollution is almost nil, operating costs are low, power generation is constant, and it’s completely renewable.
Given that there are geothermic regions all over the world (think Pacific Rim), you’d expect that geothermal power plants would be under construction everywhere. But surprisingly according to Katherine Baragona, an infrastructure finance specialist at the World Bank, geothermal power doesn’t attract as much interest as solar or wind power.In an article in Handshake, a journal on public-private partnerships, she points out that what is preventing more financing in this area are the upfront costs of a geothermal power plant. They are very high, making it hard to attract investors. There’s also nervousness about causing a man-made disaster by triggering an earthquake. Given that potential scale of climate-related disasters (for example, submerging the Maldives or a chunk of Bangladesh), I don’t understand the worry — human activity sets off tremors all the time.
In the article, Baragona is optimistic about geothermal’s prospects. Anyone who’s gone swimming in an outdoor geothermal swimming pool will probably agree. The amount of heat inside the earth is incredible; if we can tap into just a fraction of it, we can use energy without worrying about its impact on the environment.
Recent developments are promising. Last month, Indonesia, which has the world’s largest geothermal reserves, took a step in this direction with support from the World Bank, which agreed to lend $300 million to build geothermal plants there. There may not be much demand for heated swimming pools in Indonesia, but the new power plants will go a long way towards helping the country meet its energy needs in a sustainable way.
It seems to me that every country with geothermal potential should get busy developing it. It may be pricey in the short run, but generations of people will benefit from cheap, clean power with readily available technology. Why wait for solar and wind technology to catch up when you can tap into geothermal resources right now?
This post is the first of a series on PPPs and climate change. You can read more on this topic in the latest issue of Handshake, IFC’s journal on PPPs.