While most of the investment community’s attention stateside remains squarely focused on solar, wind and biofuels, adventurous types in Australia have been dabbling in the nascent, and promising, field of hot fractured rock (HFR) geothermal energy. The pioneer in this sector has been Geodynamics, which is nearing completion of a 50 MW demonstration plant to extract energy from a fracture network 4,200 meters below ground.

This “hot dry rock” technology is used to draw energy from underground areas where geothermal heat is plentiful but water is not. In order to tap into this vast supply, wells are drilled into the rock, and highly pressurized water is injected to create fissures; the resulting water-impregnated fractured rock becomes a geothermal reservoir from which steam of up to 250ÂșC can then be drawn — essentially forming an underground heat exchanger.

The idea is to transfer that water to a power plant, which will extract its heat to produce electricity. The now cool water would then be pumped back into the ground. Because HFR requires the direct injection of water, unlike other geothermal technologies that tap into existing reservoirs of steam or hot water, its costs and associated risks tend to run higher.

Geodynamics completed the drilling of its third well in late January, marking a crucial landmark in its efforts to become the first company to build a commercial-scale geothermal power plant using hot dry rock technology. It is now conducting open circulations tests between its first and third wells to verify the efficiency of the heat-drawing process — cycling hot water piped out of Habanero 3 through a conventional steam generator and then returning it underground through Habanero 1.

The next step will be developing a demonstration 50 MW geothermal power plant, enough to supply roughly 75,000 people, by 2012. Geodynamics plans to produce over 500 MW by 2016. It claims its eventual output will reach 10,000 MW — the equivalent of 10 to 15 coal-fired power plants. CEO Gerry Grove-White recently estimated there could be at least 50-60 years’ worth of energy buried underneath the basin.

Given geothermal’s appeal — zero emissions and little to no water requirements, for one thing — it’s not surprising that other HFR projects are currently underway in France, Germany, Japan and California. The recently enacted energy bill contains several provisions to support advanced geothermal research and development over the coming decades. The DOE has joined the fray, armed with an annual $95 million budget, and is undertaking an ambitious new research program to promote the clean energy source.

It has formed a partnership with several research institutions and companies, including Ormat, GeothermEx and Pinnacle Technologies, to test HFR technologies at a commercial 11 MW geothermal power plant near Reno, Nevada. The Desert Peak facility, which is owned by Ormat, is thought to have the potential to produce over 50 MW of power; the DOE has pledged $1.6 million to support the project. Ormat has several ongoing projects in the U.S., Guatemala, Kenya and Nicaragua. GeothermEx, a Richmond, Calif., startup, has projects in The Geysers, California (which contains the world’s largest group of plants), the Azores Islands, Nicaragua and Nevada.

Despite its promise, geothermal energy can be a tough sell — not only because of its high upfront costs but because, quite simply, it won’t work in most places. Geodynamics, for example, had to delay the completion of its Habanero 3 well after it was forced to abandon Habanero 2 due to technical complications. That failure led to the ousting of then CEO Bertus de Graaf.

As of late last year, geothermal power was still only supplying less than 1% of the world’s energy. And, if specific sites eventually cool down, companies will lose that capacity. Some have also raised environmental concerns, arguing that the construction of HFR plants could disrupt land stability in surrounding regions by injecting water into vast subterranean areas where none was present before.

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