Geothermal is rebranding itself.

“Since the first geothermal project in 1905 in Italy, the industry has always positioned itself as baseload and crafted power purchase agreements to maximize that one attribute,” said Paul Thomsen, Ormat Technologies' Policy and Business Director, at a kickoff press conference for the Geothermal Energy Association National Geothermal Summit. “Geothermal shouldn’t be defined by one specific attribute.”

Ormat’s (NYSE:ORA) technology can offer automatic grid control. “It provides inertia, dispatchability, voltage regulation, and reactive power, and can be ramped up and down very quickly,” Thomsen said.

The need for geothermal as a baseload service is growing, Thomsen said. Which technologies can replace the coal plants being retired and nuclear plants going out of service? According to Thomsen, geothermal, hydro and natural gas are the most likely candidates.

But the need for ancillary services to integrate variable renewables like solar and wind is a whole new opportunity, he added. The price of the natural gas that is now often used for grid-firming services is likely to rise, and even if it doesn’t, the pipelines to deliver it are filling, necessitating the construction of costly new infrastructure, he explained.

“Today, the system is not flexible or robust enough to handle large penetrations of variable generation without significant, incremental system expenses,” according to The Value of Geothermal Energy Generation Attributes, a February 2013 study from Aspen Environmental Group.

But the study also found that “improvements in geothermal generation technology currently allow geothermal projects to be designed to meet the needs of today. For example, geothermal projects can ramp up and ramp down electricity generation output quickly so geothermal projects can provide flexibility and ancillary services.”    

Contemporary geothermal binary plants “can have all the benefits of baseload generation but, unlike other baseload sources like coal-fired and nuclear generation, geothermal generators can ramp generation output down very quickly and they can also resume full generation capacity very quickly.”

With the right “contracting mechanisms,” the report continued, “projects can actually be custom-built to provide the services of greatest need to the procuring entity” and can be “tailored to the operating environment and operational needs of the utility or reliability organization.”

Adjusting institutional procurement processes to recognize geothermal’s double-duty potential requires that the full value of geothermal be included in cost comparisons with other generation sources, and that all avoided costs resulting from geothermal either be credited to it as added value or subtracted from projects that impose system costs. 

Depending on the resource and the facility, geothermal already has some load-following capability, though “there is not full turn-down capability,” said Mike Rogers, Calpine Corp. (NYSE: CPN) Geothermal Senior VP. “It comes down to what the market is relative to other sources that supply the same service.”

“If you are trying to store power in a reservoir, geothermal doesn’t fit that description,” Thomsen said. But the Ormat binary technology’s flexible mode ramp rate, using an injection valve, is 30 percent of the nominal power of the facility per minute. “The ramp rate is not the question. The technology is not as important as the economics. And if utilities demanded this, there would be even more innovation -- if the price was right.”

“You have to look at the total costs involved in maintaining a reliable system with a mix of technologies,” said GEA Executive Director Karl Gawell.  “Our total cost of power is very low and we think geothermal energy can play a dynamic role in the evolving U.S. electricity markets.”

“There are real concerns about grid reliability in California,” added Carl Stills, Imperial Irrigation District Interim Energy Manager. By 2020, it is predicted that the California 33 percent renewables grid will have 17,000 megawatt swings in a three-hour period. "That is going to be very hard to regulate. With SONGS [San Onofre Nuclear Generating Station] gone, the system operator is watching this grid like a hawk now. Where are they going to get the energy to pick up 17,000 megawatts?"

“This is all new for geothermal,” Gawell said. “We have always marketed ourselves as baseload power. We are now seeing that the markets are changing, and how far we can go to change with them is still an open question.”