BP and Chevron back 'holy grail of power' and it is thanks to convergence

  •   5 min reads
BP and Chevron back 'holy grail of power' and it is thanks to convergence

BP and Chevron, along with venture capital companies, are backing Eavor's geothermal technology that has been called the holy grail of energy; this potentially game-changing technology has partly been made possible by convergence.

Here are the keywords to understand this extraordinary development — "the dumbest idea I'd ever heard in my life," thermosiphon, learning rate, convergence and good old corporate self-interests meeting corporate responsibility.

And I thought it was the dumbest idea I'd ever heard in my life

Eavor is in the geothermal business. It's not a new industry, harnessing the heat that forms naturally underground and occasionally comes to the surface is an idea as old as civilisation. It was a concept the Romans understood — with their hot baths tapping into natural hot springs in places such as Bath, England. But over the last 100 years or so, scientists and companies have been mulling over the idea of taking naturally occurring hot water, which usually occurs in volcanic regions, to generate energy.

There's a problem though, pumping the water to the surface is enormously expensive. However, it seems that Eavor has managed to, as it were, loop its way around the problem using loops, all thanks to  "the dumbest idea I'd ever heard in my life." The Eavor CEO, John Redfern, explains what happened, during a conversation with Paul Cairns, now Eavor's chief business development officer.  

Redfern says: "Luckily for us, my co-founder wasn't an engineer, he wasn't a scientist, he was a finance guy, but a creative one, and so unencumbered by geoengineering knowledge. He said, 'why doesn't low-enthalpy geothermal energy work?' And I said, 'because of the parasitic pump load that uses about 50-80 per cent of the power produced, so little energy is produced'.

"He says, 'well, to get around that, why don't we just drill down two wells and connect them horizontally [below ground] and we'll connect them on the surface and make this big loop — wouldn't that flow better?'  "And I thought it was the dumbest idea I'd ever heard in my life… incredibly inefficient [and] capital intensive."

But it turned out that after floating the idea with Eavor's experts, Cairns' cunning plan was something more cunning than any professor of cunning at Oxford could have come up with. The reason is thermosiphon, "a method of passive heat exchange, based on natural convection, which circulates a fluid without the necessity of a mechanical pump."

https://en.m.wikipedia.org/wiki/Thermosiphon The physics is simple; cold water has higher specific gravity than hot water. So, if you pump water deep down below the surface in locations where the temperature is very high, and then pump cold water down, then by the process of thermosiphon, the hot water is pushed up.

The history of innovation shows that big ideas often develop when individuals with diverse backgrounds come together.

Eavor described the technology thus: "Eavor's technoogy, known as Eavor-Loop™, uses the natural heat of the earth like a giant rechargeable battery. Fluids are heated by the earth and circulated in a closed network of underground wellbores, unlocking a reliable and consistent energy source. Eavor's technology differs from other forms of geothermal in that it is a scalable "go anywhere" solution, harvesting geothermal heat to generate dispatchable power with zero emissions."

Convergence plays a role in this story in three respects. The history of innovation shows that big ideas often develop when individuals with diverse backgrounds come together. So, a finance man, unencumbered with a technical mindset, was able to form an idea that had eluded experts. But it then took engineers to see how the idea could work. There is a lesson here, don't mock people who come up with dumb ideas — if you want brainstorming to work, then encourage ideas that are so ridiculous you could describe them as the 'dumbest idea you have ever heard."

The technology which Eavor has developed involves laying down a system of pipes forming loops deep below the earth's surface — often making use of existing mines —especially mines used for fracking.

That is the second example of convergence, using existing technology and infrastructure to develop something new.  

Now the Company has completed a $40 million fundraising round, with bp Ventures, Chevron Technology Ventures, Temasek, BDC Capital, Eversource and Vickers Venture Partners all chipping in.

John Redfern, said: "The involvement of companies such as BP and Chevron represents a fantastic endorsement of our technology, the progress we have made to date and the promise for its global scalability."  

Felipe Arbelaez, BP's SVP zero-carbon energy, said: "We see Eavor's potential to be complementary to our growing wind and solar portfolios. Our expertise and experience also makes bp well equipped to support Eavor's growth. Technology such as Eavor's has the potential to deliver geothermal power and heat and help unlock a low carbon future."

So there's convergence again, BP and Chevron with their expertise in drilling for oil could support the Eavor project.

Eavor is initially focusing on The Geretsried site in Bavaria, Germany. According to this report in Recharge  the project could be scaled up to 200MW by "drilling more Eavor-Loops underground, at an estimated cost of more than €2.4bn ($2.9bn)." Now that seems expensive. "One MW is equal to one million watts or one thousand kilowatts."

This is roughly enough electricity for 650 homes.  

A quick bit of maths reveals that this works out at roughly $30,000 a home. That seems a tad expensive, but as Michael Liebreich, renewable energy guru, founder of Bloomberg NEF, who is working with Eavor, tweeted: "Affordable where there are high peak power prices, feed-in tariffs for geothermal, or prices set by diesel (islands). And costs will come down dramatically with experience. Plenty of work to do, but no show-stoppers, I can see. 60-year lifetime helps."  

The two important points above are 60 year lifetime, (which brings the cost down to €461 a household a year and "plenty of work to do." And this is where learning rates enter the story. A learning rate describes how the cost of a technology falls with each doubling of output. Moore's Law is an example of learning rates, and wind, solar and lithium-ion batteries have all benefited from learning rates.

Techopia reached out to Michael Liebreich, asking how a learning rate could apply to Eavor technology. He replied: "It will definitely benefit from learning effects in a few ways. 1st and foremost, drilling costs. 2nd, the algorithms that optimise the system against all sorts of physical and price variables. 3rd the ORC generators. 4th, soft costs: permitting, etc. 5th, costs of capital."

Mr Liebreich had previously described the Eavor technology as potentially the holy grail of energy.

And that takes us to corporate self-interests meeting responsibility. As the author argued in iDisrupted published in 2014, let's face it the oil companies have got a significant problem — one could say they are screwed.

The smart companies apply the lessons of Innovators Dilemma and look at ways of embracing new disruptive technologies.

Backing Eavor is a corporately responsible thing to do, as is BP's plan to be carbon neutral by 2050.  But it is also sound business sense — oil companies that do not learn to embrace new technologies and stick with the stranded asset that is oil, will soon appear in the disruptive technology lexicon alongside companies like Kodak and Blockbuster.

The future of energy and why I am not worried about the intermittent nature of renewables

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