Emerging Resources - Geothermal

Updated June 2024

What is Geothermal

Geothermal is a renewable energy resource found in rocks and fluids deep beneath the earth’s surface that can be harnessed for heating and electricity generation. The earth’s thermal energy comes from two sources: residual heat from the earth’s formation and heat from the decay of radioactive elements, mostly uranium, thorium, and potassium. Radioactive decay is the main source of heat in the earth’s crust. 

Geothermal energy is produced and used based on the geothermal system and quality of the resource in place. “A geothermal system is made up of three main elements: a heat source, a reservoir, and a fluid, which is the carrier that transfers the heat.” (Dickson and Fanelli 2003)1. Some geothermal systems are endowed with naturally occurring hot aquifers (a hydrothermal system), whereas other systems create artificial reservoirs by injecting water into hot, dry rock to extract heat (enhanced geothermal system). Geothermal can be categorized into high-, medium-, or low-temperature resources. Medium- and high temperature resources are more suitable for power generation, whereas low temperature resources are suitable for heating and other applications. Alberta geology supports mostly low and medium temperature ranging from 80°C to 170°C.

Some geothermal systems harness the earth’s heat from a few metres underground, while others require drilling deep wells. Based on the geothermal system and technology, there are three possible applications: electricity generation, geothermal heat pumps, and direct-use applications (e.g., industrial or commercial uses of heat).

Regulatory Framework for Geothermal Development

The Government of Alberta (GoA) enacted the Geothermal Resource Development Act (GRDA) in December 2021. The GRDA establishes a regulatory framework administered by the Alberta Energy Regulator (AER) for the responsible development of geothermal resources and related wells and facilities in Alberta. The GRDA covers deep geothermal resources occurring below the base of groundwater protection, while shallow geo-exchanges remain regulated by Alberta Environment and Protected Areas.

In June and August 2022, the GoA released the Geothermal Resource Development Rules (GRDR), and the AER released Directive 089: Geothermal Resource Development. Effective August 15, 2022, the GRDR and Directive 089 set out the conditions and requirements for industry to develop geothermal resources from project initiation to closure.

Alberta has a competitive advantage over many other geothermal producers globally. Alberta has access to innovative drilling technologies, with a highly developed oil and gas skill set and a robust subsurface data set essential to a successful geothermal industry. There is a potential opportunity to repurpose Alberta’s existing wells, geothermal wells can be located alongside oil and gas wells. 

Alberta and Federal Incentive Programs Relating to Geothermal

The provincial and federal governments have geothermal incentive programs to promote geothermal energy development. A few of these programs are listed below:

  • Alberta Innovates (Renewable and Alternative Energy Program): Provides funding and support for projects developing and commercializing clean and sustainable energy technologies. Project funding can range from 25% to 50% of the total project costs and typically does not exceed $2 million per project.
  • Emissions Reduction Alberta (Technology Funding Program): Provides financial support and incentives to promote clean energy technologies, including geothermal in Alberta.
  • Alberta Indigenous Opportunities Corporation (AIOC): The organization provides financial support for Indigenous-led renewable energy projects and capacity building. An AIOC loan guarantee reduces the risks to lenders if an investor fails to meet its commitment to repay.
  • Smart Renewable and Electricity Pathways Program: A federal government program that focuses on advancing renewable energy and smart grid technologies to modernize Canada's electricity systems, enhance energy efficiency, and reduce greenhouse gas emissions.
  • Investing in Canada Infrastructure Program for green infrastructure: A federal government program that funds environmentally sustainable projects, such as geothermal.

Production in 2023 and Forecast

In 2023, an estimated 21.9 gigawatt-hour (GWh) of geothermal electricity was generated in Alberta. We anticipate an average annual growth rate of 21% in geothermal electricity generation throughout the forecast period, with the production expected to reach 116.6 GWh by 2033 (see Figure S9.2). The production forecast involves weighing the likelihood of projects meeting their operational date and production capacity.

Our forecast encompasses the federal carbon tax policy, which increases the costs of fossil-fuel-powered generators while enhancing the economic viability of renewable energy sources. Figure S9.2 is a forecast of electricity generation from geothermal resources in Alberta.

Projects

Several companies in Alberta have announced geothermal projects:

  • No. 1 Geothermal Limited Partnership owns the Alberta No. 1 geothermal energy project developed by Terrapin Geothermics. The proposed project includes an electricity power plant, a district heating system, and several geothermal wells at a depth of four kilometres. When completed, the project capacity will be 10 megawatts (MW) of clean baseload electricity and 985 terajoules per year of heat.
  • The Novus Earth Latitude 53 project is a 4 km deep closed-loop system that proposes to deliver geothermal energy for direct-use heat and electricity generation in Hinton, Alberta. When completed, the project capacity will be 3.1 MW of electricity. 

Numerous companies in Alberta are pioneering breakthrough technologies. For example, Algar geothermal has developed a technology to isolate a wellbore from the surrounding geological formations. The technology uses a pipe within a pipe system to circulate fluid from the bottom of the wellbore to the surface with insulated sections along the inner pipe to effectively retain heat energy for harvest. 

Limitations or Risks to the Outlook

Geothermal energy is not as economically viable as wind or solar. Competition from lower-cost, lower-risk renewable alternatives could slow the pace of geothermal commercialization in the province. According to the 2023/2024 Energy Fact Book from Natural Resources Canada, geothermal has the highest levelized2 cost in Canada.

Learn More

1 Dickson, Mary H., and Mario Fanelli. 2003. Geothermal energy: utilization and technology. United Nations Educational, Scientific and Cultural Organization.

2 Levelized cost is the average price an electricity generator must receive for each unit it generates over its lifetime to break even financially.