7.1. What does the U.S. geothermal
industry contribute to the economy?
Geothermal energy provides low cost, reliable, environmentally friendly fuel; supplies thousands of quality jobs; boosts rural economies; increases tax bases; reduces foreign oil imports; stabilizes prices; and diversifies the fuel supply.
Unlike coal and natural gas, geothermal incurs no “hidden costs” such as land degradation, high air emissions, forced extinction and destruction of animals and plants, and health impacts to humans.
According to a 2006 GEA publication, "besides the costs expended through the development and construction of a power plant, geothermal developers often make significant contributions to the communities in which they are located, as well as to the local, state, and federal governments under whose jurisdiction they operate. Some contributions come as royalties or taxes, which are mandated by the government, while some come voluntarily from the geothermal company.” (1)
In addition, wages paid to geothermal employees often circulate back through the community. For an example, if New Mexico brought 80 MW of geothermal power on line it would contribute 340 full time jobs/1,280 person*yrs and $1.2 billion economic output over a 30 year period. (2)
7.2. What are some specific examples
of ways in which geothermal energy has contributed to
local economies?
Geothermal activities supply a full 25% of the county tax base in the rural town of Imperial County, California, producing over $12 million in tax revenue. In a town with a high rate of unemployment, the geothermal sector provides stable, well-paying jobs to more than 285 people. CalEnergy, the largest geothermal company in the region, is the single largest taxpayer in Imperial County. (3) Since enactment of the 2005 Geothermal Steam Act Amendments, state and local governments have received substantial revenues from geothermal leasing and production. Six states—California, Idaho, Nevada, New Mexico, Oregon, and Utah—collectively received $27 million for FY 2007 and FY 2008 and 31 counties in those states received an additional $4.3 million in 2007 and $9.1 million in 2008 . (4)
When states and counties receive federal revenue from a lease sales or royalties the legislature of each state can decide how to use the funds provided that they give priority to the parts of the state socially or economically impacted by the development of geothermal resources so that they can plan, construct and maintain public facilities, and provide public services. (5) States use the lease revenue in different ways as can be seen in the following examples. Nevada received $7.5 million in 2008 and put all of the money in a state fund that supports K-12 schools throughout the state. California, which received $9.9 million in 2008, splits the revenue as follows: 40% is redistributed to the counties of origin, another 30% is transferred to the Renewable Resources Investment Fund and the last remaining 30% is available to the California Energy Commission for grants or loans to local jurisdictions or private entities. (6)
Direct use applications installed in schools can also provide huge savings to local communities. At four elementary schools in Lincoln, Nebraska, where geothermal heat pumps have been installed, the heating and cooling savings total about $144,000 yearly, with total energy cost savings of 57% . (7) Money provided from these savings is used to improve schools and revitalize communities.
Boise, Idaho highlights the variety of benefits that can be derived from geothermal direct use applications: the people of Idaho use geothermal resources to operate at least 15 greenhouse; geothermal aquaculture is popular, an injection well for the city’s geothermal heating system works to reduce discharge into the Boise river and replenish the geothermal aquifer the city shares with buildings; Boise’s Capitol Mall, along with 200 other buildings, is heated by a geothermal system. (8)
7.3. Will geothermal energy influence
tourism in my area?
Geothermal power plants can be a tourist draw when students, scientists, or interested individuals visit the site of a power plant, thereby bringing business to the local community. This not only occurs in the U.S. but also in other countries like Iceland. Iceland is unique in that geothermal contributes 26 % of the country's total energy supply through five geothermal power plants. (9) Because of geothermal energy's impact on the country it is not rare for tourism companies to advertise tours of the plants as well as a visit to Iceland's largest tourist destination, the Blue Lagoon, which is a geothermal spa located in southwestern Iceland.
Figure 26: Blue Lagoon, Iceland, Draws Tourists to its Geothermal Hot Springs
Most geothermal power plants do not negatively affect tourism, and may even positively affect this area. Take the example of the power plant at Mammoth Lakes, California, located near an area known for skiing and mountain climbing. Although people initially opposed the project due to worries over tourism impact, the project is now highly regarded among community members and visitors alike. Many people in the town do not even know the power plant exists because it was so expertly engineered to blend into the surrounding environment. (10)
7.4. What types of communities
benefit most from geothermal development?
Most producible geothermal resources are located in rural areas, which tend to suffer from economic depression and high unemployment, and often contain large minority populations. Geothermal development brings jobs to these communities.
For an example, a new plant ready to be built in California’s Imperial Valley will bring a significant number of jobs to the Latino community there. According to the Environmental Impact Statement for the Truckhaven Geothermal Leasing Area, Imperial County, California, 19.8% of residents in Imperial County lived below the poverty level in 2003, and the population was 72.3% Hispanic, 20.2% White, 3.8% African American, 1.9% Asian-Pacific, and 1.3% American Indian. (11)
Besides providing a variety of jobs to individuals in these rural areas, geothermal developers are often the largest taxpayers in the communities in which they produce geothermal energy. The taxes generated by geothermal use can benefit local communities in the U.S., in addition, no money or jobs are shipped overseas.
7.5. How much money does the geothermal
industry contribute to the U.S. economy? According to the GEA 2007 publication, A Handbook on the Externalities, Employment, and Economics of Geothermal Energy, if the U.S. develops 5,635 MW of new geothermal power capacity it will result in 23,949 full-time jobs/90,160 person*years of construction and manufacturing employment. In addition to this, it would create a 30 year economic output of almost $85 billion.
For every dollar invested in geothermal energy, the resulting growth of output to the U.S. economy is $2.50. (12)This means that a geothermal investment of $400 million would result in a growth of output of $1 billion for the entire U.S. economy. (13) This growth of output often benefits rural areas with high unemployment rates and significant minority communities. In addition many geothermal firms develop geothermal projects overseas, and these technology export activities support the U.S. economy and balance of trade.
7.6. Aren't there hidden costs associated with energy development?
Hidden costs, including land degradation, detrimental air emissions, forced extinction and destruction of animals and plants, and health impacts to humans, are virtually nonexistent with geothermal energy production. In contrast, a 1995 study estimates that costs of power generation would increase 17% for natural gas and 25% for coal if hidden costs such as environmental impacts were included. (14) Geothermal incurs none of these hidden costs because air emissions and other environmental impacts are minimal. Instead of hidden costs, geothermal energy often has unrecognized benefits.
7.7. Where can I learn more about the economics of geothermal energy?
You can find out more about the economics of geothermal energy by viewing the GEA report, A Handbook on the Externalities, Employment, and Economics of Geothermal Energy (October 2006).
Next Page: Power Plant Costs