Geothermal Power Heats Up in Germany

With oil prices on the rise, investment in this alternative energy plant outside Munich may pay off sooner than expected

In a small town outside of Munich, a major investment in a pioneering new type of geothermal energy looks like it may pay off sooner than expected. With oil prices on the rise, Unterhaching's plant could be a model for others worldwide.

The geothermal energy plant in Unterhaching, Bavaria, is Germany's biggest and most modern. Beginning in mid-June—one year later than planned—the plant will begin supplying power from deep within the Earth's crust to the German energy network.

The plant is only the second in the world to make use of the so-called Kalina system, which uses a combination of water and ammonia to maximize the amount of power generated by the massive turbines. "This is the most effective way to get electricity out of geothermal energy," says Reinhard Galbas, the plant's technical manager.

As oil prices worldwide soar, experts say geothermal energy's time has come—even in places like Germany, which is hardly known for volcanic hot springs or spurting geysers. As a result, the small town's efforts are being closely watched. The plant is capable of generating 3.4 megawatts of electricity—or enough to power 10,000 homes, the company claims. That's more than any other German geothermal plant. "Unterhaching's doing pioneering work," says Benjamin Richter, whose firm Rödel und Partner is handling the business aspects of the plant.

Geothermal energy has one big advantage over other forms of renewables. Since it uses the heat of the Earth's deep crust to heat water for power, it is available around the clock—unlike solar and wind energy. The Unterhaching plant's heart is the pump house. Here, a thousand liters of 120 degree (248 degrees F) water is pumped up from more than 3,350 meters (11,000 feet) below the surface of the Earth per minute. There's no waste: a second pump sends the water straight back where it came from, to prevent the super-heated underground reservoir from emptying out.

The system wasn't cheap. when the project was planned, drilling the holes Unterhaching needed cost €1,000 per meter. Because of sharply rising steel prices and other factors, Unterhaching paid €1,800 ($2,790) per meter for its drill holes, almost double what they originally planned. In the end, the two holes cost close to €20 million, and had to be completed by American firms with other demands on their resources. "Geothermal drilling competes with oil and natural gas drilling," explains Rolf Katzenbach, an expert in geothermal energy at Darmstadt Technical University. Katzenbach says Germany needs to develop its own drilling capacity to make itself truly energy-independent.

Unterhaching's planners say the environmental and economic benefits of the new plant will be worth the price. First is the non-electrical benefits: Generating electricity leaves surplus heat, which can be used to warm local communities. Two thousand households in Unterhaching have been using heat generated from the plant for a year now. Just keeping those houses off the heating grid has kept more than 7,000 tons of carbon dioxide out of the atmosphere.

The benefits go beyond the environment. With oil prices high, switching from oil heating to centrally-produced geothermal heat pays off quickly. "For many customers who are heating their home with oil, switching over pays off within one to two years," says Erwin Knapek, a former mayor of Unterhaching who began the effort to build a geothermal plant in Unterhaching in the 1990s.

Knappek has been trying to make the case for geothermal energy for decades. Sharply rising oil prices have made his job a lot easier. In the 1990s, when he first floated the idea of a geothermal plant in the town, oil cost less than $20 a barrel. At those prices, a multi-million dollar geothermal plant made no sense. Knappek had to fight hard with sceptical local citizens and with the Bavarian economic ministry alike to keep his vision alive. Even in 2004, when drilling began, oil cost a bargain $40 per barrel.

Today oil costs more than triple that. Knappek suddenly looks like a visionary, and the €80 million Unterhaching invested in the geothermal plant doesn't look like not so much money after all. "Those costs should be amortized in less than 20 years," Knappek says. If oil prices rise any more, the plant could pay itself off in much less time than that.

So far, geothermal power has supplied just one percent of Germany's renewable energy. But "that could change with higher oil prices," Katzenbach says. Twenty years from now, Germany could be producing enough energy from geothermal sources to power the equivalent of two to four nuclear power plants. Already, Germany has an estimated 150 geothermal plants in the works, 90 of which are located in Bavaria. Richter, the energy expert responsible for the Unterhaching plant's business plan, says that could mean €6 billion worth of investment in Bavaria alone over the next 10 years.

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