Market Snapshot: Geothermal Power is stable and low carbon, but what is its potential in Canada?

Release date: 2023-05-31

Geothermal energy has a small environmental footprint and is one of the few renewable energy sources that is always available, has low greenhouse gas (GHG) emissions, can operate at high capacity factors,^Definition* and requires minimal land and fresh water.^Footnote 1 However, resource exploration risk and capital costs for geothermal plants are high.^Footnote 2 In 2021, the capacity cost for a geothermal power plant was estimated between US$4,500 to $6,050^Footnote 3 per kilowatt (kW) of capacity, higher than most solar applications, coal, and natural gas, but lower than nuclear. In terms of the levelized cost of energy,^Definition* geothermal energy costs US$56 to $93^Footnote 4 per megawatt hour (MWh), which is competitive with coal, nuclear, and some solar applications.^Footnote 5

Almost all current geothermal applications in the country provide heating for hot springs, buildings, agriculture, or industry. The only commercial geothermal power plant in operation in Canada is the Swan Hills Geothermal Power Project in Alberta, commissioned in January 2023.^{Footnote 6Footnote 7} Several other proposed geothermal power projects in British Columbia, Alberta, and Saskatchewan^Footnote 8 could follow later in the decade (Table 1).

The federal government is providing support for geothermal energy under several programs like Natural Resource Canada's Smart Renewables and Electrification Pathways (SREPs) program and Canada's Emerging Renewable Power Program, in addition to geoscience research programs. Alberta,^{Footnote 9Footnote 10} British Columbia,^Footnote 11 and Nova Scotia^Footnote 12 created regulatory frameworks for geothermal energy development, with Yukon actively developing regulations.^Footnote 13 Saskatchewan works within existing regulations to regulate geothermal development while is providing support to the DEEP geothermal demonstration project through the Innovation Saskatchewan Advantage Innovation Fund.

Where is Canada’s geothermal potential located?

In Canada, most geothermal resources are in western Canada, but a small amount exists in eastern Canada. Outside major volcanic belts in the west, the Canadian Cordillera^Definition* shows large variability in heat flow from the Earth, indicating great potential for geothermal resources. Abundant thermal springs signify areas with good geothermal potential. In addition, Canada is covered by extensive sedimentary basins containing a great deal of warm to hot fluid in porous rocks. In regions of northeastern British Columbia, northern Alberta, and southern Northwest Territories, temperatures that exceed 150°C are known at depths as shallow as three kilometres, which have the potential for electric generation.^Footnote 14

What is geothermal energy?

Geothermal energy is heat generated from the Earth’s crust, stored in the rock and fluids that fill the fractures and pores within the Earth’s subsurface.^{Footnote 15Footnote 16} Geothermal energy can be used in areas with high-temperature geothermal resources. These are generally located alongside the edges of tectonic plates^Definition* or in regions where hot rock is relatively close to the Earth’s surface or in volcanic regions. Geothermal energy can be used to provide hot water and heating (direct use) or for power generation^Footnote 17 (Figure 1).

Figure 1: Geothermal energy and its uses

Source and Description

Source: US Department of Energy, “Geovision: Harnessing the Heat Beneath our Feet,” Chapter 2, Figure 2-7. Adapted by the CER.

Description: The diagram shows the different uses of geothermal energy, broken down by direct use for heating (space heating, agriculture, and industrial facilities) and power generation. Temperatures are reported in Celsius and Fahrenheit degrees.

History of geothermal applications and current global use

Geothermal energy from hot springs has been used for centuries to heat public baths and buildings. In 1913, it was used to generate electricity in the first commercial geothermal plant in Larderello, Italy.^Footnote 18 The world’s geothermal energy capacity in 2021 was 15,854 megawatts (MW), equivalent to 11% of Canada’s total electricity capacity. The United States accounts for 3,794 MW, followed by Indonesia, the Philippines, Turkey, New Zealand, Mexico, and 18 other countries.^Footnote 19 (Figure 2).

Figure 2: The top ten countries using geothermal energy in 2021

Source and Description

Source: Think Geoenergy

Description: The bar chart (left) shows the top ten countries in 2021 with geothermal power by installed geothermal capacity in megawatts (MW).

Date modified:

2023-11-24