Exciting wind energy updates this week! Rosemary’s away, but GE Vernova is tackling quality issues and refocusing its workforce for onshore projects. Short-term pain, long-term gains? Rhode Island rejects Orsted/Eversource PPA pricing for Revolution Wind 2 – project fate uncertain! Brace for a 9% electricity price hike in New York this August – can offshore wind from Maine save the day? Cost increases halt Vattenfall’s British Norfolk Boreas offshore project, raising concerns for others. Will Bill Gates and Richard Branson backed Fervo Energy make geothermal less-expensive? Joel gives a class in drilling holes and making energy. Don’t miss our wind farm of the week – Flat Ridge 1!
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Uptime 176
Allen Hall: Joel RELA the insurance adjusters based in the uk. Just put out that nice little summary of all the types of damages that wind turbines suffer. It was quite, Fascinating to read through that I didn’t realize, you know, gearboxes and some of the other issues are so massive right now.
Joel Saxum: Yeah, man. It’s, it’s really eye-opening to read that report.
Martin Dobson, their technical director over there at RELA puts up, he’s, they’re, they’re always putting out great stuff, but the, the really, really interesting one, if you haven’t looked at it, it’s on the Wind Power Lab, LinkedIn channel but the lightning damages, right? I mean, we’re always talking about lightning.
So weather guard, lightning tech, of course, lightning. Company and Allen, the, the expertise that you bring to that space. When you read through this, this little article that they put out, this little presentation, you see how many damages are related to Lightning? It’s, it’s it’ll blow your mind.
Allen Hall: It’s a hundred million dollars.
I would just quickly add it up back to the envelope is a hundred million dollars. Like, that’s a lot of insurance adjustment to be done. And it, a lot of it’s preventable. It’s, it’s crazy. I know. We, we get requests all the time at Weather Guard here to. Upgrade the Lightning Protection Systems and most wind turbines we can upgrade relatively inexpensively and quickly.
So these, this a hundred million dollars of, of insurance money being spread around should be cut in half easily at this point. And, you know, you, you and I, Joel. We have conversations all the time about how we can inform the industry on what can be done, and we finally decided to put together a webinar.
Joel Saxum: Yeah, absolutely. So here, coming up in, in August you guys can dial on, we’ll of course share it here on the podcast platform and. Through all of our other email platforms as well. But we’re gonna have Morton Hamburg, the chief Blade Specialist from Wind Power Lab, and of course, Alan Hall here.
We’re talking about lightning. So Alan will bring the, bring the physics side and all of his knowledge and, and Morton share the blade side. And we’re gonna have put a webinar together, some live q and a and be able to engage directly with the Audience. Yeah.
Allen Hall: So keep your eyes open for that.
Morton is gonna add a tremendous amount. So if, if you’re not sure what kind of damage you’re seeing on your blade, or why are you seeing some weird things happen in your blade, Morton will know, and it’s a great opportunity to, to, to pick Morton’s brains or to pick my brain about lightning. And it’s all gonna be on LinkedIn.
Joel Saxum: Yeah. And, and to be honest with you, more importantly, to the listeners out there, we’re gonna talk about why, how, what the damages are, what, how it relates to you commercially and economically within your wind farms. But the, the biggest thing is, How can you prevent it? How can we slow down? How can we lower the costs of damages?
And can we monitor for them? Can we retrofit for them? What can we do to save you some bottom line? It’s
Allen Hall:Â gonna be good. So keep your eyes open for that. This week in the news, a lot of things are happening around the world. The Revolution Wind Two Project has been rejected by Rhode Island. Orsted and Eversource are trying to regroup there.
New York high energy prices. You’re just gonna see about a 10% price increase coming up in New York and, and what’s driving that. And then Vattenfall over in Sweden has one of the, is stopping one of the projects that was gonna feed the UK with, with clean renewable energy. So not so good on the offshore front.
Joel Saxum:Â So after talking about the offshore wind in the UK, we’re gonna jump back over to the states to talk about vo geothermal and the breakthrough that they recently had in developing a 3.5 megawatt. Geothermal power plant here in the States and what we think that could do, if we can, if we can scale it up, what that would mean for the energy transition here.
Also GE Vernova put out a little bit of some news kind of what the things they’re doing to increase on quality. So daily meetings and some other cool stuff there, they’re taking on internally. And we also ask Vivic Bait to join the show. But we’re also gonna talk about GE in, in regards to that delaying some deliveries to Wyoming, a project in Wyoming.
And we kind of say our opinions on why we think that’s happening and and why we both believe it’s actually a good thing. And then lastly, the Wind Farm of the week flat Ridge One upgrade for BP Energy. So we’ll chat about that as well.
Allen Hall:Â I’m Allen Hall, president of Weather Guard Lightning Tech, and I’m here with the Vice President at North American Sales for Wind Power Lab.
Joel Saxon Rosemary’s on holiday, and this is your Uptime Wind Energy Podcast.
Rhode Island Energy, the largest utility in Rhode Island, has decided not to proceed with a long-term power purchase agreement with stead and Eversource for the revolution Wind to offshore wind farm. This decision was attributed to high interest rates, increased capital costs, supply chain expenses, and uncertainty around the federal tax credits making the proposed contract cost too expensive for customers.
The proposal didn’t meet the requirements of the affordable Clean Energy Securities Act, which is a Rhode Island initiative. What they’re saying is the PPA price is too high, and Orsted and Eversource are, are providing realistic numbers to Rhode Island. They just don’t like ’em. Joel? Yeah,Â
Joel Saxum: so I mean, we’ve been talking about this for a while now.
Like these, some of these PPAs are starting to dissolve. They’re paying penalties along that East Coast. The developers are. But I guess if you’re, you know, I guess the, I guess the one positive thing here is if it. Small enough, Rhode Island doesn’t take up that much shore. So if they don’t like Rhode Island, they can go to Connecticut, they can go to Massachusetts or go to New York.
You could stretch her out and go to New Hampshire or Maine or something like that. But that will raise costs for the developers as well. ’cause they’ll be running some high voltage lines further and further in the water. It’s, it’s frustrating to see now of course, like I said, as we talk about, but that.
There’s just nothing you can do about it, right? At this stage, the, it’s, it’s the capital costs, it’s the financing costs that are just going through the roof supply chain. I, I haven’t heard that much of the actual turbines getting more expensive, to be honest with you, but it’s the, the financing behind it, right?
If you go from when these things were planned and auctioned off at you know, the interest rates were down at three and 3.5%, and now they’re up around seven. That’s three and a half percent profitability in a project. If it’s, if it was completely, you know, a hundred percent financed would go away. I mean that’s, that’s, that’s your on some of these large utility scale things, that’s damn near your margin which is frustrating to see, but it’s the truth.
Allen Hall: I’ve heard more recently operators saying they want between six and 8% return on investment, which would be normal. I think that’s totally
Joel Saxum: reasonable. Say six to 8% return on investment is what you want, and now you’ve just lost. Three and a half percent of that. Well now, now you’re down to two and a half to, you know, that’s just not, that’s, that’s skin of the teeth margins and it’s not you have one, one error or one bad thing happen, one cable break that doesn’t get insured or something like that.
And now the projects it’s just too risky.
Allen Hall: Well, and operators have investors and they have to satisfy the investors. They have stock prices too. They gotta watch both ends of the, of their business. And yeah, it, this makes. Since, you know, I went back and did some research on the revolution wind efforts and looked at sort of early on, like 20 18, 20 19, when they were talking about what the p p A would be with the, the turbines being installed, the transmission lines, the substations, the whole thing and transmission costs.
And they were looking at PPA prices around in the $90 a megawatt hour. So I think that this, for this particular project, they have been around it in the nineties, which is much higher than other numbers I had seen, which I’ve seen a lot of 75 eighties. I, I think we probably we’re talking about a hundred dollars megawatt hour numbers for this p p a after all the costs of interest rates and inflation.
Joel Saxum: Well, I mean, you’re, so, you’re in Massachusetts, Alan, what do you guys pay for power? You’re in the northeast.
Allen Hall: It’s scary. It’s like double what they pay in the
Joel Saxum: Midwest. Okay, so, so let’s let’s, let’s take a step to the side, I guess and see like, hey, if, if Rhode Island doesn’t wanna take this, and then the next state over doesn’t want to take the same p p a price or someone, someone eventually will, but we want something to be efficient.
We don’t want Ted to sit there with this plan and all these things juggling and not have a p p A for offtake because if you don’t have offtake, you can’t reach a final investment decision. So what are the answers? Are the answers a private offtake? Is there anybody that can take that much power privately?
I don’t think so. Not up in the northeast there. Or, or is it an, it it, some kind of crazy idea of an emergency subsidy from a state or a federal government to keep, you know, to, to hit biden’s goals of the 30 by 30 for gigawatts for offshore wind. If the PPAs aren’t in place, these wind farms will never re reach a final and estimate decision and they’ll never get built.
Allen Hall: Just looking at extra numbers online here real quick on Massachusetts electricity prices, of course, there’s different rates and it sort of sit by the state, but it’s in the $75 megawatt hour number seems about right for these coast. Now you thing about revolution win two was. It was expected to bring more than $2 billion in direct economic benefits to Rhode Island and create local jobs and all the port infrastructure stuff.
That, and the ship building and all that was gonna happen. $2 billion is a lot, is a lot of money. It seems like Rhode Island’s really is the one that’s gonna get hurt here, not Ted. Yeah.
Joel Saxum: And if, if I was Osted slash Eversource and Rhode Island, rejected my P P A and basically put my project in jeopardy.
Then I wouldn’t want to be giving them the, the benefits of it. I would wanna, I would switch to Connecticut or New York or whoever else accepts the P P A eventually, I would say, okay, all of my vessels, my port, my people are gonna go over here. So Rhode Island might choose themselves in the foot. They
Allen Hall: totally can do that.
And I hopefully know what they’re doing. You know, there was, when they proposal came in from Sted and, and Eversource that was the only bid for this Rhode Island project. Like, so they were the only one who bid on it. And Rhode Island rejected it. Now we’re Rhode Island. As a state go. If they have renewable energy goals, this is one way to meet them.
It’s not gonna get any cheaper. That
Joel Saxum: state’s not very big. You don’t have a whole lot of places to put other, other clean energy resources or, or exploit any clean energy resources besides offshore wind.
Allen Hall: So here’s what they’re gonna do, right? Let’s just spitball this for a minute. Rhode Island’s gonna kick the can down the road.
As we have seen if they wait two, three years. The Wood McKinsey report we talked about a couple of weeks ago said, if you wait two or three years, it’s gonna be worse because there’s gonna be so much more demand for turbines and people and infrastructure costs, right? That it, your prices are gonna go up.
The best deal is actually happening today. Even with the interest rates the way they are. You’re better to put turbines in the water now than wait till 20 25, 20 28. That’s a mistake, right? Rhode Island’s not thinking long term here right now. Yeah.
Joel Saxum: The only saving grace would be if the interest rates drastically came down, and I don’t see that happening.
We just had a fed rate. We’re just talking fed rate hike increase here just yesterday. So if, if that’s the case, that could be that. I would think that that’s the only thing they could be betting on. Or they’re, they’re playing with Colin Bluff on cards, right? To see if Orid will come down, if they, if they get pinched.
But that’s a hell of a bat.
Allen Hall: Hey uptime listeners. We know how difficult it is to keep track of the wind industry. That’s why we read p e s Wind Magazine. P e ss Wind doesn’t summarize the news. It digs into the tough issues. And p e s Wind is written by the experts, so you can get the in-depth info you need. Check out the wind industry’s leading trade publication PS wind@peswind.com.
Well, speaking of high energy prices, new Yorkers are going to face more than a two x increase in their electricity and gas bills by 2025 due to some rate hikes by the state’s public utility regulator. Next month, August ConEd will implement a, a basically a 9% right rate hike as part of a three year rate plan approved by the State’s Public Service Commission.
Now. Holy smokes, Joel. You know, inflation’s really hit a lot of homes pretty hard. A 9% increase in your electricity costs or natural gas costs is a huge problem and it’s not gonna get any less. In fact, they’re gonna be accelerating some of these rate increases over the next couple of years. New York has set up a unique system in a way they’re gonna be powered and their environmental goals.
That are, are raising electricity prices. So you think that on the east coast here, you’d be getting some pushback from the public to have less expensive electricity prices. This is what Rhode Island’s going through, right? Their customers, they’re public, wants staple prices. It has a trade off and it just seems like energy independence for these states is a big problem.
I’m not sure, you know, New York is such a big state with a lot of people. I. How that’s gonna play out for them because they’ve had an exodus of, of particularly businesses and wealthier citizens leaving that state. Over the last two, three years, this is gonna accelerate it, I would
Joel Saxum: think. I mean, nobody wants to pay the taxes, right?
That’s, that’s the big thing. I mean, you, so you do have some, some more generation coming in, right? Of these offshore wind farms. Once they, again, I say final invest that decision. But once they get to that point and they start installing things in the water, they’re gonna get hooked up. There’s going to be some that go to the New York grid here.
So there’s, there’s that power on the horizon there. But if that, no matter what that p p A cost comes in at X amount it can be built into, that’s a pretty easy function to do. Right? A pretty easy bit of, bit of math there. So in this article, it states the utility attributes, a large part of the rate increase to rising property taxes, particularly City of New York property taxes.
So in my mind I’m thinking, okay, then the, then ConEd must have a lot of real estate holdings within the city of New York for the property tax increase to go up. So wouldn’t, I mean, as the state of New York trying to. Do well by their citizens. Wouldn’t you maybe not hit the public utilities with the rate increase for property taxes?
Allen Hall: Yeah, you would think so. If you’ve, we’ve been around New York about 20 years now, so we’ve sort of watched it next door. It’s a stone’s throw from our facility. New York has really broken into two pieces, sort of New York City and everywhere else. What happens in New York City drives the outcome in Buffalo.
It just does. And that’s, that’s, that’s a huge problem for the state, right? It’s a huge state. Lot of people spread all over the place, but yet New York City drives the economy. It drives the direction,
Joel Saxum: like Illinois, right? Chicago controls the whole
Allen Hall: state. Cook County does everything. Right. Exactly the same problem.
Now, you know, I wanna, I wanna relive a conversation you and I had at a C P in New Orleans. I. Which was we predicted, both you and I predicted that some of these offshore projects are gonna be shelved for a little bit. That there’s a big concern about the p p A prices and you and I spitballed at the time, you need to get the states competing with one another.
That’s how you’re gonna drive some of these costs down. You need to, you need to have state to state competition and most recently, the state of Maine. Is becoming more active in offshore wind. In fact, they’re, they just passed a bill I think yesterday that is going to be pushing offshore wind.
Floating offshore wind. It looks like three gigawatts. Yeah. That’s all. That’s a, that’s a lot of energy. And if main planes are cards, right, they’re gonna set up the infrastructure to do it. Have less restrictions to do it. That one of the constraining pieces was the labor. How are they gonna deal with unions?
There’s, there was a bill early on that was gonna require union labor. The governor re vetoed that part of it, or said that she wasn’t gonna sign it and that went back and forth. It seems like now they’re gonna have defined labor rates that are gonna be set by the union. So in and so if you’re a company that has non-union labor, the labor rate’s gonna be set by the union.
So everybody’s gonna be playing on a level playing field. Once that hurdle is done, then Maine, which could generate three eight gigawatts, probably if they really get going. That energy may not stay in Maine. Who’s gonna use all the energy in Maine? In fact, they’re probably gonna ship that south to New York.
To New York. Right. That’s where it’s gonna go. Well, we talked about
Joel Saxum: the possibility of it, some of it going to Canada as well. Sure. Sure. But what it seems like right now with all these p p a battles going on further down the coast is still in northeast of course, but it sound, it almost seems like the states are barring together.
It’s like they’re banding together instead of competing with another. They’re, they’re locking arms. And if you’ve got. Maine that comes in there and says, well, Maine doesn’t really play with New York very well. Right? That’s, they’re not the same. They’re not the same people. So they’re gonna do their own thing.
They’re gonna go, you know what, well, you guys don’t want it. We’re, we’ll, welcome the jobs. We’ll welcome the the offshore wind and you guys can come and play with us. And, and eventually that power will drip down in, into New York. Anyways So, yeah, it almost sounds, and we’re talk, talking Union, union Union.
It sounds like the states in the northeast are banning together almost like a union kind of against the developers to control these p p a prices. And you know, if you, because if you get this, we go back one, right? If we go back to that same revolution to wind farm, if everybody denies or stead never source a p p A, they have no choice but to either.
Cancel the project and lose everything they’ve invested in so far, which would be a cata, which would be just a catastrophic blow to the offshore wind industry, or lower their p p a price and take it in the pants. And I don’t know if they can do that because the financing behind ’em might not let ’em.
So there’s like a, there’s a, there’s a, I guess what we would, you know, the old Mexican standoff there to figure out where this is gonna go. It’s I hope that they, they’ve got quite the, quite
the
Allen Hall: battle going on, right. And they’ve done it to themselves. The states have done it. Set their own environmental standards are looking to, to get to certain energy goals and New York’s essentially gonna be electrified.
That’s where they want to go there. When they set those goals and they make that push and that’s great. When the costs start rolling in, they get scared. You knew that was gonna happen, right? It’s not gonna be easy to make a transition out of natural gas into electricity. That’s gonna be an expensive transition.
You have to know that when you, when you make those goals. And now that the reality has hit them, they, they, they, they’re, they’re panicking and doing nothing. It, it was serious enough five years ago to put renewable energy goals in to help the environment, the whole thing. Great. But now that the industry has met your requirements, it is, is now bringing forth the technology to make some of these things possible.
Now you don’t wanna do it. No. You just can’t have that. And I think the industry’s gonna push back.
Joel Saxum: Hard the industry isn’t, isn’t saying hi, it’s kicking the door in. It’s like, we are here, we’re ready to put steel in the ground and run cables. Like, where are you at? Let’s go. And the
Allen Hall: states are getting weak need, unfortunately.
Yeah. It’s a, it’s a huge problem that I don’t think it’s gonna get resolved this year, but I do think as states start to break off on these pacs, like you were talking about, Joel, we’re gonna, we’re gonna crack this problem. So over in, over in Sweden, Joel, that falls run into a problem because. They’re going to halt the development of the 1.4 gigawatt Norfolk Boreal Boreas offshore project.
Now this, this is not so much Vattenfall, but you’ve seen more and more of these, not just the United States, but even in Europe, where projects are being installed. There’s another one, this the, this morning up from Sweden saying they’re gonna put it on hold. And it really comes down to some environmental concerns.
In Europe. It’s mostly environmental concerns with all the environmental. European Union regulations, it seems like everybody’s trying to do the best that they can. And some of these projects even though the developers say they meet all the requirements, the, the countries are coming in and they oversight the bureaucracies saying, Hey, you, you, you probably do, but it’s sort of marginal.
We wanna hold off. And even Vattenfall has made some changes to the way. They’re doing projects, so like putting fewer turbines in, but larger turbines to kind of get to the same power output it to create less environmental impact for sure. It’s still running into difficulty. And this Norfolk Boreus offshore project is one of them.
I mean this, this one, this Norfolk Boreus project was, was designed to power out one and a half million homes. Right. And they had won a contract for different In an auction last year, right? And guaranteeing a minimum price of 37 roughly 37 pounds from megawatt hour in 2012 prices, which is equivalent to about 45 pounds of megawatt hour today.
Right? So this, this whole project was gonna power the UK so, you know, fat and Fall, which is a Swedish utility is, is trying to help out the uk and, but the, the economics aren’t working and everybody’s starting to get, get scared again. You can’t do that now. Right. It takes industry years to get to the point where they’re ready to go ahead and do this and get all the financing in place and make these projects happen.
Developers are gonna go somewhere
Joel Saxum: else. Yeah. I mean, the UK has a, they’ve got some offshore wind goals, 50 gigawatts is their goal, right? Up, up from 14 gigawatts that they have now. Now they have, they are the leaders or among the leaders in the RC there of course, of the. S and the Germans and Dutch and whatnot, and everybody’s got some offshore wind there, but they’re among the leaders of offshore wind.
They’re the people that have had it in the long longest and that group of com countries, and they still want to charge forward. Now, the problem with the UK has is for a long time, or Britain in a long time, they had a moratorium on onshore wind. They weren’t allowed to build onshore wind, so they’re building offshore wind touting this, you know, the green energy transition and all these things.
And they, you know, Siemens CESA opened up a new. Factory there in Hull just in the last year, and a lot of things going on there. But then the same thing, right? It’s P, the p p a price, it’s exact, it’s a carbon copy of what’s going on here, except for instead of getting denied the p p A price, the Vattenfall is just going, well, this is what we’re gonna get.
So screw it. We’re not gonna build it because it’s not gonna make money for us. But it’s project costs, inflation, interest rates. So it, it’s almost looking to the point of federal governments may have to step in here and help these guys out if they wanna meet their goals. If they want to meet fif 50 gigawatts of offshore wind, eh, well, in the private, pure private play here, it does, doesn’t meet that yet.
Right. The, the economics don’t work out. So if you wanna have it, you may have to finance it. Yes, finance subsidize it. Somehow you gotta do something or may have to do something. Like I say, you got to or you have to, but you may have to. Do something to hit those
Allen Hall: goals. Well, a lot of the operators are reaching out for credit financing right now.
You see ’em getting you see, you see news articles about how they’re trying to restructure, or they’re trying to get more financing, more credit available to them. And the, the reason they’re doing that is because inflation, they’re doing it because the rising costs, the whole thing. The states are gonna have to step in and, and back that.
Right. Put a bond behind it. As we talked to Phil Tara about this, there needs to have some state backing. You can, you can negotiate with an operator. On some level, if it provides stability for the operator, they’re more likely gonna take maybe a little bit tighter crunch on the operating profit if there’s a certain more certainty to it, right?
You, you are willing to negotiate that certainty for, for income on some
Joel Saxum: level. I mean, we, we’ve seen governments step into bailout industry regularly. Right. 2008, 2010 in the us they, they jumped in to bail out the car industry. We’ve bailed out banks, we’ve bailed out all kinds of people. Bailed out airlines, right?
So we’ve done things in the, in the, the federal governments have bailed out entities in the sake of, it’s good for the whole country. It’s good for the, the, the group of people. It’s good for our, our constituents. Well, if you want to, if you’re serious about your tran energy transition goals, then this is also good for your people as a whole.
So maybe there’s there’s, there’s definitely some play that can happen there. I guess we’ll see what happens coming up on election cycle if something does, but,
Allen Hall: and touching on the, the labor us, competitiveness, US factory building, boy, when these projects get rejected, Europe or the US doesn’t really make any difference.
It really puts all those projects and, yeah, why would I build a factory if I’m not sure the developer is actually gonna go forward? This is, again, going back to the conversation with Phillips Tara, what is that critical? It’s the f i d, right? If they’re not gonna make an F I d, I’m not gonna start putting steel in the ground in my factory.
That’s just not gonna happen. So it is really creating a big problem that Wood McKinsey’s been talking about of. You can’t delay it because you’re just not gonna be able to do it. If you start delaying it, you need to do it now.
Joel Saxum: Yeah. I mean, ge we, we talked about this in an episode not too long ago. GE saying, Hey, we’ll build a blade factory.
We’ll build in a cell factory up on the Hudson, not too far from where you’re at. If, if to, to fulfill these, you know, the order book that could be coming from this, all of these wind farms offshore in the northeast part of the United States. They don’t come. Oh, there it goes. Those jobs, there goes that investment.
It’s tough.
Allen Hall: It’s hundreds of jobs. Thousands of jobs locally. It’s a big deal. Wind turbine blade damage occurs every day all around the world. And finding knowledgeable engineers to get your blades back in service is a serious problem. And as we know, operating with damage blades is really, really risky.
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Connect with the global blade experts at Wind Power Lab by visiting wind power lab.com. Joel Geothermal is making a, a comeback in the United States F Rvo energy a company developing a quote unquote, next generation geothermal energy technology claims that tests have confirmed its commercial viability.
Woo-hoo. The technology uses horizontal geothermal drilling techniques from the oil and gas industry to access previously inaccessible markets for renewable energy. They’ve been down in Nevada and they had a 30 day test in Nevada show that the VOS system achieved a 63 liter per second flow rate at high temperature, allowing for 3.5 megawatts of power production, setting the records for flow and power output from an enhanced geothermal system.
So Google and a number of others have, I think Bill Gates has invested in this company. And I watch a number of YouTube videos about it. I’ve been reading up about this for a while. Joel, what they’re doing is they’re truly drilling vertically down and then making a 90 degree turn and drilling horizontally.
They’re doing that twice, right? So they got a pressure side and high pressure and low pressure side, essentially, and they’re pushing fluid through that connection. So if you drill, maybe Joel, correct me if I’m wrong here, the way. The simple way to do this, you just drill two vertical holes and then it would leach from hole one to hole two.
You pressurize one and the water leach over the hole two and get warm as it’s running through the ground and then come back up as hot water, right? The problem with that, as I understand it, is when you drill those two holes, you may not have a lot of flow between the two. You end up with a quote unquote dry hole.
You just don’t know.
Joel Saxum: And there’s ways to com combat
Allen Hall: that, but go ahead. But, so what they’re doing now is as they drill vertically down and they take a right angle and they get two parallel holes such that they’re, it’s easier to control the flow between the two. So you can basically drill a bunch of vertical holes and turn right angles, draw horizontal holes at the end, and get that flow rate consistently and pull more energy out of the earth.
That’s. Sounds like where they’re headed. Does that make
Joel Saxum: sense to you? Yeah, absolutely. So I can give a, a couple minute long geophysics and drilling lesson here. The majority of everything that f Rvo is doing, and everybody else that has, is pioneering in the geothermal energy production space is completely 110% piggybacked off of oil and gas drilling techniques, right?
Even all the way down into the exploration phase. So when you go to an oil field, the first thing you do is you’d say like, okay, brand new oil field. Or We believe, you know, by the surface geo geophysics, this is what, what could be below us? Well, we’ll do a seismic test. So a seismic testing basically is like when you take an m r I of your knee, say like you, you’re riding your horse and you fall off.
Knee goes bad. Okay. We gotta take an m r I to see what’s bad in there, that m r i, they do the study and then they can slice it up, right? They can go like slice, slice, slice, slice, slice. So we can see at what level the inside of it looks like. Well, a seismic basically exploration study of an area will do the same thing.
You’ll, you’ll end up with a, a cube. Basically of data and that cube you may have been when you did your testing on the surface, which includes sending energy down by vibrating or blowing off dynamite and listening with a lot of microphones. When you get all those returns, you can start to develop this picture of the subsurface, right?
So you, you, you can start to see where things are dense and where they’re not so dense and where there may be a gas pocket or a oil pocket or a water pocket, or if it’s a a, a cap rock. A cap rock is something really, you know, like a shale where you can’t really get through it. Or shale, I guess you can get through it’s porous, but, or you may have like sandstone, limestone, granite that I just.
These are general things, right? But the, it looks like a layer cake, almost like a, like if you’ve got a, a German chocolate cake that had a couple different layers in it, but the frosting layer, the frosting layer will be like the, the pay zone, right? That one frosting layer that’s 10,000 feet below the surface, that may only be 20 feet thick.
That’s where all the oil is. And so when you drill down, you want to get into that layer and when that, then you can pump the oil out of that. And when you pressurize that layer, the rock above it and the rock below it create kind of like a fence. And that’s what pressurizes. So, so when you’re drilled into there and you pressurize that spot, just the thing, just the oil or the gas or whatever material trying to get out of there will will flow from that area because below it, There may be a cap rock above it, but there may be a cap rock and you can’t get anything through.
So what they’re doing here is use, they’re using that exact same technology, and the majority of these geothermal wells are done in areas where they’ve already been drilling for oil and gas forever. I. So they have like, like the company t g s we’ve talked about a bunch of times getting into offshore Norwegian company.
Their entire business model for the last 40 years has been on well data. So they have a library of this well data of literally like in the United States, like every well that’s ever been drilled, they have the lithography that the layer cake of the whole thing, plus all the seismic data and everything that you can join together.
So they have one of the best libraries you could ever imagine. For a company that would be going out to do geothermal, they’ll go, we wanna do geothermal near Dallas, Texas. Okay, we can get onto this lease. What does the data look like? What does their subsurface look like? Everything, they’ve got all the data already.
They can drill down. They know that they need to drill down vertically to 10,612 feet, and they’ll do that. And then they’ll turn that drill bit 90 degrees. And that’s just done by Basically centrifugal force. And then, and there’s an inertial measurement in the unit, and you can drill it, blah, blah, blah.
Turn that one sideways. Turn this one sideways. And once you, wait, wait, wait. How,
Allen Hall: how do you, how do you get a drill bit to go sideways? I’m trying to understand how they make that magic happen.
Joel Saxum: So, to, to turn a drill bit sideways. And my buddy Jared Addie he’s a horizontal driller out for Midland. I’ve sat around.
He is Midland, Texas. And he, he’ll tell you, and he loves Midland. Don’t ever talk bad about Midland when Jared Addie is around. ’cause he’ll tell you all about it. I’ve been to Midland. Yeah. Yeah. And I’ve had, I’ve had some beers with him and we’ve talked about how this works. But basically it’s the same concept of like if you’re spinning, spinning a top right and then, and then you put weight on one side of it, it will eventually spin down the table in that direction.
So if you, when you have a drill bit and it’s, you use centrifugal force, To change the direction of the drill bit. And it’s surprisingly accurate where they’re getting to the, they can drill, they’ll drill right along a lease line, like so the surface, if you have a 40 acre lot a parcel, they’ll go right down two miles down and then turn that drill bit sideways and go right along the property line two miles down.
It’s pretty impressive how accurate they can be. So, so, so back to like how the geothermal’s working, you get down into that pay zone. So you have the fence above you and the fence below you. So the, so when you start to pressure it up, the water has nowhere to flow, but into the pipe, the pipe becomes the least point of resistance, right?
Because it doesn’t want to just keep going left and right because I mean, it can, eh, but if it finds a seam to go into that, the other pipe, it’ll go into that pipe. So if you do that, and then you just put, think about if you took two straws out of your McDonald’s cup and then bent them 90 degrees and then put them into the ground and just kind of laid them over the top of each other, and then they’re perf.
They’re perfed as well. So those, those pipes, once they drill ’em, they put explosive charges down in them and then boom, blow ’em off and it will push holes in the casing of the pipe and then so the water can flow into the soil or the rock formation and out of it into the pipe. So you pressure, high pressure, low pressure.
Allen Hall: That makes sense to me. Right? So you’re, you’re, you have a perforated pipe and you one side’s pressurized. You’re running it through the earth, and then the other side is receiving the pressurized water back warmer than when
Joel Saxum: it went in. That’s the crust right there, right? Is that What people don’t understand is when, when oil comes out the ground, it comes outta the ground, depending on where you are, somewhere between 120 and 140 degrees Fahrenheit.
And that’s just because that’s how hot it is down in the earth’s core down there.
Allen Hall: Okay. So let, let’s play this out a little bit. If FBO is right, they’re, they’re using oil and gas techniques to, to basically drill parallel holes and pull up then let’s say 3.5 megawatts of power production. Okay? So let’s use Texas, like a lot of where West Texas, where a lot of wind turbines are.
There’s also a ton of oil wells. You’ll see wind turbine oil, oil rigs, like all over the place. Yeah. So if I am an operator in Texas and I have a bunch of wind turbines on the top side, why wouldn’t I drill a megawatt hole everywhere I could
Joel Saxum: for geothermal? If I, if I was, if I was to do that, I would go to someone who had a lease.
That is not producing many barrels per day or has dried up because what, what happens is though, there’s a work over rigged to, it’s like, so you may have drilled a hole in 1980 and that thing produced well, well until 1995. And then it’s just been slowly, and then in 2005, prices back went back up in the market dollar per barrel.
So you went and worked that hole over and then pressurized it again and you got a bunch more out of the ground. But now you’re getting to the point where, ah, well we’ve, we’ve worked that hole over three, four times. And it’s been in, it’s been in production for 40 years and we’re just not getting that much out of it.
And maybe time to retire that asset, well that might be time for FGO Energy to step in, use your hole that is not, not necessarily a dry hole, but a, a pseudo dry hole that’s not producing what it could be or, or has been in the past. They’ll use that same hole, boom, punch it right down, and now you just gotta turn it, turn it sideways a little bit.
And they’ve now reduced their costs of setting up the geo geothermal plant.
Allen Hall: Oh yeah. By a factor of 10. That’d be my guess. And
Joel Saxum: you could drill holes. You could go over a 500 acre area and punch a bunch of these holes in the ground and have one central plant and run it all back to that plant, 3.5 megawatts out of that.
I don’t, I don’t think that would be, it’d be pretty easy at all because it’s just a, basically when they bring it to the surface, so they’re running it through a, a, like a turbine, like a, like a steep steam jet turbine. They’re spinning
Allen Hall: a turbine. That’s all they should be. Pretty simple, right? So existing wind operations in the right parts of the country.
Could easily add 50%, a hundred percent to the output of that wind farm by putting some geothermal with
Joel Saxum: it. Yeah. And they could use their inter, their existing and grid interconnects and existing and, and existing transformers. Right.
Allen Hall: I guess that’s why Google and Bill Gates have invested in these things.
Jeff Bezos is in, Richard Branson’s in, and here’s a couple
Joel Saxum: things too. This is, this is the, the thing that isn’t talked about in this article. This is immediately dispatchable power. That’s, that’s the, that’s the, the big ploy, or not ploy, but the big knock against solar and wind is they’re not immediately deployable.
They’re only deployable when the wind is blowing and the sun is shining unless you have battery backup. Right? So, but even long-term battery storage services is not, not quite there if this works or it is working. But if this can be deployed at scale, this is immediately deployable power. Just like a gas turbine plant.
You just close the valve and open the valve and you got power.
Allen Hall: Right. You got that stability on, on the grid, which is what Rosemary talks about all the time. Having stability on the grid is key to being with renewables. You need that stability. Maybe geothermal is gonna fill that void. That would be remarkable.
Am I, am I way offline here? Just extrapolating out 10 years from now is Texas is full of geothermal
Joel Saxum: wells. It’s, it depends what happens to the dollar per barrel of oil or
Allen Hall: California, Nevada, Arizona.
Joel Saxum: Well, here’s, here’s the other thing too. If you’re, if you’re looking at doing this, deploying this technology at scale as quickly as possible, Texas and New Mexico and Oklahoma are the best places to do it.
Why experienced drillers and drill rigs of plenty, also Pennsylvania, a lot of holes? Well the Pennsylvania has a ton of good drill hands. North Dakota, like all these places where the oil field has been plentiful. If this technology. Is ready to scale. You’ve got drillers, you’ve got work overhands, you’ve got all the equipment, you’ve got all the people you’re
Allen Hall: ready to roll.
It’s just the energy provided by this one hole, three and a half megawatts of power production seems really high. I was thinking they begin the a hundred kilowatt range, but what if they’re really in the megawatts? That’s impressive.
Joel Saxum: So let’s look at like at economics again, here’s the economics again, the thing we gotta think about.
Three and a half megawatts. If that was a three and a half megawatt wind turbine, that at the megawatt per million per megawatt, that costs three and a half million dollars to do. You’re not drilling deep horizontal wells that cheap. They’re expensive to drill. How
Allen Hall: much Well that would, that would, that would put it in perspective, right?
If I can put a three and a half megawatt machine out there on this piece of property, it’s gonna be about three and a half, $4 million to get up and running and producing power. What do I, what do I match it with in a geothermal? Is it even in the same ballpark? Is it two x three x of you know, a ge ge wind turbine?
Joel Saxum: So, so, and, and with the three and a half megawatt, we don’t know if that’s two holes. Is it just two? Is it five? Is it seven? Is it a spider web? Did they use existing stuff? That’s gonna be the key if you can use existing holes, because if you can run down and just clean out a hole, Rather than drilling a fresh one.
Oh man, the cost difference is huge.
Allen Hall: Ge Ver Nova’s onshore wind business is implementing a focus on quality and lean management to improve efficiency and profitability. You know, two, two areas that GE has needed to focus on for a little while now. The, the company is committed to using higher quality components and wind turbines, and is encouraging employees to stop the line if they have concerns about quality.
Now, that to me is old ge. That’s all ge. GE would totally do that, at least the businesses I was involved with. So it’s good to see some of those, that cultural shift back to what GE has made itself famous with. The business aims for zero defects in manufacturing and focuses on high performing workhorse products to streamline its portfolio.
The Fleet Performance Management Team more recently. Is looking at sort of components that are failing and stop replacing them with components that fail, right? They know components that have historically had problems. They’re saying, look, we’re not gonna put a bad component chasing a bad component.
We’re gonna stop doing that. We’re gonna put a better product out there and get rid of some of these quality issues. So the continuous improvement that is being emphasized at GE now daily with a lead with quality initiative and meetings is really. They’re trying to change that business. Now. More recently, GE Renova Vivic Abate, who’s running the onshore Part of that business is really trying to simplify the operations, improve quality, and also at the same time expanded since foreign markets for growth.
So this, this is, this is really good for ge. I think obviously it’s painful to go through that process, but it, it all makes sense, right? It just seems so obvious, like, Get the quality right, the customers will come back.
Joel Saxum: Yeah. It seems like you know, they ge there for a while, you know, in the last few years was kind of like a, a wild horse off running.
Like kind of knows what it’s supposed to be doing, but it’s just running. And now they got vi abate sitting on this in the saddle with his hand on the reins, kind of dialing it back in, like calming it back down and making it go. Like, I really like the, the, the bullet here in the article about focusing on the high performing.
Workhorse products to streamline its portfolio. Now we’ve been following what’s had happening at T P I lately, T P I, in one of their articles that I read today. Said, You know, our, our customers are streamlining their portfolios, and that’s the same thing it says here, right? We know GEs a big customer.
They signed that big deal with T P I not too long ago. So I think what’s happening here is we’re starting to see this collective voices, right? We’ve heard it at Vestas, we’ve heard it at Siemens. We now we’re hearing at GE like, Hey guys. Too many different models, too much going on. Let’s, let’s kind of rein it back in and focus on doing some, some things well and then we can move forward.
And it sounds like GEs doing it now through, through this with Vic. T p I was is just talking about doing it themselves. Right now, they’re a little bit more beholden to what the OEMs are gonna do because they’re kind of like, like Phil was telling us a, a build to print model, but you heard Vestas talking about it not too long ago, saying like we need to slow down to speed up.
And then Siemens, of course, with the, in the things that they’ve got going on internally, they’re, they, you’re gonna hear the exact same thing come out of there. We’re gonna want, we want to dial it back, get things right, and then we can move forward. So it sounds like every o e m, all the major Western OEMs, I should say, and I could say every oem, the major Western OEMs are all kind of singing the same tune.
As they’ve been singing the tune of, Hey, we’re not profitable. We’re not profitable, all those all along. So in the last few years. So some collective changes by that by all of the OEMs. It looks good. I think it’s good on the industry. It’s gonna, in a, in a few years, it shakes out. I think this is gonna be a, like we, you said, I think last week, Alan, this is an inflection point.
Mm-hmm.
Allen Hall: Definitely is. And GE has. Obviously is pausing some projects and one of them is out in Wyoming, so the Rock Creek two Wind Project in Wyoming, which is gonna have a capacity of 590 megawatts. So that’s a pretty big project, will be delayed by a year due to problems with the, the blade, well the turbine manufactured ge now I, it that from things I hear, it has to do with the blades.
So they’re talking about delaying 30 of the 66 turbines in a portion of the transmission line construction because of this delay that GE has put into their schedule. Pacific Corp. The owner of the Wind Farm has submitted notification of change in the construction schedule to the, you know, local people, basically telling ’em, Hey, we’re gonna be slowed down here.
So it looks like ge, which is having problems in a supply chain, particularly with Blaze. And it sounds like T P I is part of that. They’re saying we are not gonna deliver most likely. Joel, you and I talked about this earlier today, most likely the blade manufacturer, which most likely is T P I. Has already built these blades to go out to Rock Creek two.
It’s, it seems like this would be the case, right? The timing seems like it would be this way that they have built these blades and somebody said, yeah, we’re not super confident in these blades. Let’s not put bad product after bad product. Let’s stop it. Get the blades right and then finish the project.
Yep. I think
Joel Saxum: that’s a good move. That seems like a vico
Allen Hall: bait top leadership in GE stepping in and saying, stop the bleeding. What are we doing to ourselves? Yeah. It’s painful.
Joel Saxum: Yeah. Don’t, don’t make another problem for us tomorrow. Right. That that’ll be a problem for a year, 2, 3, 4 years continuing to see these mounting losses.
Right. They just released, what was it, 350 ish million in loss last quarter. Which is better? Which is better than last year. Yeah, better than last year. It’s still a staggering number. But is that as it, hopefully that number continues to trend back towards, back towards zero. I know that sounds like a weird thing to say, to see it have a loss trend or a, a, a profit trend towards zero.
But that, that would be positive for them. I, I’d, I’d love to hear di you know, ideally in a great world, I’d love to hear directly more from vi. Right. Like, what are you guys doing to, to make this change? So I guess that that’s my vic bait. Come on the podcast, come talk to us. Tell us, tell us what GE ISS doing.
Tell us what you guys are, what, what your focus is on these new meet and these new quality meetings and stopping the line. All these things that sound fantastic. That could, can, can turn around and have the possibility of turning around GEs profitability, ge reva’s profitability here. We’d love to hear it.
Allen Hall: I think they’re making the noise internally at the moment. I think that’s where it has to start. And then, Almost simultaneously, just soon after that, they could be talking to customers about what’s happening and why it’s gonna happen. And if I’m a customer, there’s, I’m not gonna be happy about a year delay, certainly not.
But I’m thinking long term here. I am certainly happy they’re gonna have a better product for the 20 years I’m operating this farm. With a slight delay than 20 years of problems,
Joel Saxum: happy that the company’s still gonna be around in 10 years to be able to solve any problems that you do have.
Allen Hall: Oh, sure. Right.
I, I think GE can point to Siemens g MEA at the moment and say, Siemens G mea put out a whole bunch of products that are having a problem. Now they’re talking about 30% of the blades and certain platforms having problems. GE knows it does not want to be in that situation because it’s gonna be standup of its own company at the end of the year.
It can’t have that. It has to stop those problems from being out in the field. It can’t. Take a billion dollar write down, it won’t be possible in a year. BP wind energy is upgrading its Flat Ridge One wind farm in Kansas with new Vestas wind turbines. To generate more power efficiently and reliably, the upgrade is expected to provide 2220 5% gain energy production across the wind farm.
Joel. Wow. That’s a lot. The project reflects Yeah, the project reflects BP’s commitment to renewable energy and its goal to become a Net zero company by 2050. BP is replacing the 19 decades old units, and I I did look this up, Joel. I’ve never forget what kind of turbines they’re like, oh, they’re, they’re a clipper.
They’re replacing clipper turbines with new vestus turbines, so, oh, really? Yeah. Those are old turbines, right? It’s gonna be, I. The guys working at that site are gonna be super impressed with those vestus turbines of all the bells and whistles that come along with the, with the new turbine. But BP is also planning to recycle the fiberglass blades off those clipper wind wind turbines keeping about a million and a half pounds of fiberglass out of the landfill.
So, nice job there. So this week, flat Ridge one is our Wind Farm of the week. Congratulations to BP and everybody at Flat Ridge. One. That’s gonna do it for this week’s Uptime Wind Energy podcast. Thanks for listening. Please give us a five star rating on your podcast platform and subscribe in the show notes below to Uptime Tech News, our weekly newsletter.
And check out Rosemary’s YouTube channel Engineering with Rosie. And we’ll see you here next week on the Uptime Wind Energy Podcast.
