The $40 Million Investment in the Geothermal Business
Each major oil company announced a combined investment of $40 million in Eavor, a private Canadian-based geothermal energy startup business. This investment from each company in the geothermal startup business may come as a surprise as very few large oil corporations have invested in cleaner energy sources. This is the first investment in a geothermal energy business for BP, and Chevron is re-entering the field.
BP’s Senior Vice President of Zero Carbon Energy, Felipe Arbelaez, said, “We see Eavor’s potential to be complementary to our growing wind and solar portfolios.” He added, “Technology such as Eavor’s has the potential to deliver geothermal power and heat and help unlock a low carbon future.”
The investment in the geothermal startup company comes from the different approach to renewable energy the startup business has taken. According to the geothermal startup company website, the business is able to differentiate itself because of the “Eavor Loop.” The Loop circulates fluids through an underground system of pipes and enters into a subsurface “radiator.” The radiator is then able to collect Earth’s natural geothermal heat, and that heat is converted into electricity. This method of energy production does not require any exploratory risk of traditional geothermal energy, as the system is a completely closed loop.
The combined $40 million investment from each oil company will be used to further research and development to help scale the geothermal business.
About the Geothermal Market
The International Renewable Energy Agency, or IREA, describes geothermal energy as “heat derived within the sub-surface of the earth.” The global geothermal power market has substantially grown due to years of research. This market was worth $1.403 billion in 2019 and is expected to reach $1.649 billion by 2027 — a CAGR of 2.72%.
Although this type of energy is relatively inexpensive, National Geographic states several disadvantages to this type of renewable energy, including that building the equipment and infrastructure to get the energy is extremely expensive. On the other hand, there are many uses and benefits of implementing this type of energy technology. For example, the US Energy Information Administration, or EIA, states that geothermal energy is much better for the environment as geothermal energy power plants emit 99% less carbon dioxide emissions than traditional fossil fuel plants.
While it may be expensive for the company to get the geothermal process started, the environmental impacts are undeniable, as well as the overall benefit to using a more sustainable energy resource as opposed to burning limited fossil fuels for energy.
About the Author
McKenzie Carpenter is a graduate of Central Michigan University with a B.A.A. in Integrative Public Relations and French. McKenzie has previously worked for small businesses and nonprofit organizations.