Art Berman is a legendary oil & gas expert. People
listen to what he says. Now, he says enhanced geothermal systems (EGS) are
seriously overhyped. The U.S. is by far the biggest geothermal power producer
in the world, although that power makes up just 0.4% of total U.S. power
output. This power is all produced in the Western U.S. with conventional
geothermal, where there is no need to enhance or create a reservoir.
Berman notes that EGS is one
of the most expensive forms of electricity production ever tried at scale. He
disses a report from The New Yorker that suggests geothermal could make up to
20% of U.S. power by 2050 as sadly misguided nonsense. He is obviously correct
about that.
He explains that EGS drills
into hot, dry rocks that are also very hard, like granite. I worked at wells in
the 90s, where we drilled into granite. It was very slow drilling, and the
feldspars in the granite could kill bits quickly. These wells are drilled
horizontally through the hard granitic rocks. After that, the dry rocks are
hydraulically fractured, creating a fracture porosity system that becomes a
hydrothermal system when water is pumped down and returned to the surface hot
enough to run turbines. Even in conventional geothermal, where the reservoir
and hydrothermal system are already in place, and there is just drilling and
injection, few projects end up economically feasible. That is changing in some
places where the brine is processed to extract valuable minerals that can be
sold as a byproduct. However, he notes:
“…relatively few projects have actually delivered what
was promised on cost, timing, output, or long-term performance. There are
exceptions like in Iceland but they are rare.”
“EGS proposes to do something far more technically
demanding than conventional geothermal, in worse rock, for more money and at
larger scale—despite the fact that the “easy” version of geothermal has
struggled to meet expectations.”
Reflecting on past projects,
he notes:
“The pattern is familiar by now: bold claims, small
projects, marginal output, and silence once the subsidies and patience ran out.”
He disses Fervo Energy's
claims that EGS can produce cheap power as mere hype, as “simply not true.”
While Fervo’s projects can be deemed technical successes, they remain a long
way from being economical successes.
“I created three scenarios that reflect real-world field
conditions: an optimistic case with relatively shallow wells, lower drilling
and plant costs, high output, and a 90% capacity factor; a realistic base case
with deeper, more expensive wells, moderate output and thermal decline, higher
operating costs, and an 80% capacity factor; and a pessimistic case with still
deeper, costlier wells, lower flow rates, strong decline, heavy pumping and
chemical treatment, and only about 65% capacity factor.”
As shown below, his analysis
shows that only in the most optimistic scenario is a breakeven even possible,
with the fastest possible breakeven at 20 years after the start of production
at best. That is hardly the recipe for a boom.
“In realistic conditions, the true breakeven cost is
about 80 cents per kilowatt-hour. That’s roughly ten times the all-in cost of
nuclear power. It’s five times more expensive than even hydrogen.”
He says EGS has all the costs
of shale drilling with none of the payback.
“When something fails the economic test this badly,
there’s only one conclusion: it’s not the right application of technology. Just
because we can do something doesn’t mean that we should.
EGS is a waste of capital and its promoters are being dishonest when they say
it’s working, and is competitive with other forms of energy. It’s not.”
Berman doubts that EGS will
ever be economic, unless energy prices skyrocket. He is mainly saying that
there are many better ways to spend money now than EGS.
Berman goes on to explain the
shale revolution in terms of prices and shows that oil prices were much lower
before shale drilling, although they have come back closer to that pre-shale
level. However, drilling costs per barrel of oil remain high. Thus, it is true
that shale made more hydrocarbons available, but at a significantly higher cost
per barrel. He goes on to show that food prices have risen in tandem with rises
in energy prices, as the graph below shows. This confirms that energy is the
cornerstone of affordability. If energy costs go up or down, so do other costs.
This just confirms that energy and wealth are rather inseparable. He goes on to
say that this is because the economy is not really a financial system but a
physical one.
"Tim Morgan has shown this is backwards. The economy is not
fundamentally a financial system but a physical one. It uses energy to turn raw
materials into the goods and services we call prosperity. We really need to
think in terms of two economies, he writes. First, the real, material economy,
where energy and resources are used to make things. Second, the financial, or
parallel, economy of money and credit. The financial economy is only a
synthetic derivative—a web of claims—of the real one. When these two stay
roughly aligned, we have equilibrium: financial claims can actually be met by
what the material economy can deliver.”
He says the two
are now badly misaligned and the likely result will be a downsizing of our
financial system, where there will be “value destruction” through deflation.
Comparing the situation to EGS, he notes that we need to be realistic and
honest about economic realities, which is not the case regarding innovation of
many sorts, including EGS. Even so, I think we still need to pursue such
projects, understanding and improving them. However, we also need to realize
that most of these will not result in legitimate booms, unless and until they
become economical, and without drastically higher energy prices, things like
EGS, AGS, hydrogen, etc., have no viable path to becoming economical, especially
in the near term.
“Enhanced Geothermal Systems is a scam, but its appeal says
a lot about who we are. When reality scares us, we reach for “solutions.” We
seem either unwilling or unable to see that most of our problems are the direct
consequences of growth. Rather than accept limits, we chase stories that let us
believe we can keep everything we like and solve the rest with innovation.
We’ll try almost anything before we’ll be honest with ourselves.”
It’s a sobering
reality, but one we should pay attention to because, well, that’s the way it
is, at least for now and the near future.
References:
The
False Promise of Enhanced Geothermal. Art Berman. Blog. December 3, 2025. The False Promise of Enhanced
Geothermal | Art Berman
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