Alberta introduced Bill 36, the Geothermal Resource Development Act, on October 20, 2020. Bill 36 aims to facilitate the development of geothermal energy in the province by capitalizing on Alberta's unique advantages in this emerging renewable energy sector. Bill 36 received royal assent on December 9, 2020 and will take effect on proclamation.

Geothermal resources have been used for heating and electricity generation around the world for decades, but haven't attracted significant attention in Alberta until recently. Bill 36 represents the Government of Alberta's attempt to provide a legislative framework that will encourage new investment and innovation in an industrial sector that is relatively novel in this province.

There are three main types of geothermal projects currently operating or under development around the world, each dependent primarily on the available geothermal resource:

  • Natural Hot Water Reservoir Geothermal Systems (Natural Geothermal) are in use today;
  • Emerging Geothermal Systems (Emerging Geothermal) are technologies and processes currently under development; and
  • Enhanced Geothermal Systems (Enhanced Geothermal) represent a middle ground where some technologies are proven and others are under development.

We have taken a simplified view that geothermal resources have three components: an energy/heat source (the geothermal energy source - a.k.a. 'hot rocks'); the medium for conveying the heat energy (the naturally occurring water resource, or an artificial medium); and the underground geological formation in which the heat energy is absorbed by the medium from the heat source (the porous and permeable formation that is similar to the producing formation in an oil or gas well).

In Alberta, historical challenges to geothermal projects have been greater and more diverse than the lack of a dedicated regulatory system. To assess how Bill 36 may foster the growth of a geothermal industry, we examine the key advantages to developing geothermal energy in Alberta, potential barriers to development and commercialization, the state of the technology, and how geothermal electricity may fit into Alberta's electricity market.

Alberta's geothermal resource potential

Geothermal projects are typically located where there is a high quality geothermal resource, and where either the cost at which geothermal electricity can be produced is less than the marginal cost of electricity or there are government subsidies or regulatory incentives that make the projects economic. Alberta is neither blessed by geothermal resources that would support large Natural Geothermal projects, nor is it burdened by relatively high electricity prices (having an abundance of both renewable and non-renewable fuel sources) that are required to underwrite more expensive geothermal projects.

Although Alberta's potential for Natural Geothermal is limited, the inventory of existing wells with high bottom-hole temperatures, the availability of synergistic industries and skills, and technological advances and innovation in Emerging/Enhanced Geothermal technologies and techniques may create opportunities within the province.

The Canadian Geothermal Energy Association (CanGEA) conducted a study in 2016 of the bottom hole temperatures of all wells catalogued in the Alberta Energy Regulator (AER) well database at the time. The study included producing, abandoned, suspended, and other wells, and found that Alberta has 500 wells with temperatures greater than 120°C, 7,702 wells with temperatures greater than 90°C, and 52,733 wells above 60°C. These wells in aggregate represent about 10% of the total wells then registered in the AER database. According to CanGEA, wells above 120°C are suitable for generating geothermal electricity, those above 90°C are suitable for industrial purposes , and those above 60°C can be used to directly heat homes and greenhouses. The data collected in the CanGEA study will be useful in identifying promising areas for geothermal development and potential brown-field development opportunities, which could reduce project costs and contribute to commercialization.

Where there is high geothermal potential and existing oil and gas wells that have become inactive, there may also be an opportunity for collaboration between geothermal project proponents and the owners of those inactive oil and gas wells. Given the increasing focus on the abandonment and reclamation liabilities associated with inactive wells, repurposing such wells for geothermal projects may benefit both parties. Geothermal proponents may be able to reduce drilling costs, while well owners may be able to sell wells that would otherwise need to be abandoned and reclaimed or otherwise defer abandonment and reclamation obligations until geothermal operations are completed. Until the AER releases rules governing well licences and licence transfers for geothermal projects, it remains unclear how a relationship between geothermal project proponents and well owners may be structured. We expect that the AER would scrutinize such arrangements to ensure that they aren't an improper attempt to avoid or delay necessary abandonment and reclamation obligations.

There are potential advantages to developing geothermal projects in Alberta, including the synergies between the geothermal industry and other more mature industries. The energy industry in Alberta has extensive expertise in drilling and completing wells and in hydraulic fracturing. Such expertise is often an important element in successful Enhanced or Emerging Geothermal projects.

Geothermal projects located in Alberta may also benefit from co-production. Hot water is often produced as a by-product of oil and gas production. Co-production extracts thermal energy from the produced hot water, and uses what would typically be waste heat to generate electricity. This can help to offset carbon emissions from oil and gas production, and the resulting electricity could be used on-site to offset electricity purchases, or potentially exported to the grid at the prevailing market price. The Swan Hills geothermal project, a partnership between Razor Energy Corp., Natural Resources Canada, and the University of Alberta, plans to develop geothermal generation capacity on an existing oil and gas battery. If done successfully, it will be the first project of its kind in Canada.

Geothermal technology today

Natural Geothermal

Natural Geothermal is the classic example of geothermal energy; it occurs where there is the happy coincidence of all three components of the geothermal resource - heat, water, and formation. Underground reservoirs of hot water are accessed through naturally occurring hot springs or by drilling wells. Natural Geothermal has been used to provide heat and generate electricity in places with favourable subsurface conditions, including California, New Zealand, and Iceland. These projects require that water reservoirs be shallow enough to be commercially and technically accessible, and hot enough to have the ability to generate electricity. As is the case with an oil or gas well, the volume of naturally occurring and regenerating water is a potential limiting factor. If accessible reservoirs are not hot enough to generate electricity using current technologies, low-temperature geothermal heat can be used for district and industrial heating and cooling.

Enhanced Geothermal

Where there is a heat source, but there may not be sufficient water or a good formation, there may be an opportunity for Enhanced Geothermal. Enhanced Geothermal employs hydraulic fracturing technology developed in the oil and gas industry to enhance the potential productivity of a formation. Geothermal developers drill wells into the target formation and inject fracking fluids at extremely high pressures, forcing cracks in the formation and creating pathways that are held open by proppants. These hydraulically fractured formations more efficiently heat the water that carries the geothermal energy to the surface. An injection well is used to pump water into the formation where it absorbs heat energy and a second production well is used to pump the heated water to the surface where that energy is used for electricity generation. In this way, Enhanced Geothermal can overcome some geological and resource limitations, provided that there is an adequate heat source at drill-accessible depths. The line between Enhanced Geothermal and Natural Geothermal can be unclear, as each geothermal resource may require varying degrees of stimulation and engineering intervention to create or maintain productivity.

Deep Earth Energy Production Corp. in Saskatchewan demonstrated the promise of Enhanced Geothermal. The company recently drilled and fracked a geothermal well capable of producing 3MW of electricity - enough to power 3,000 homes. Along with the growing capability of Enhanced Geothermal for electricity generation, there is potential to use geothermal energy for industrial heating and cooling.

Super hot rock geothermal

Super hot rock geothermal is an extreme example of Enhanced Geothermal technology. This yet unproven technology uses "super hot rocks" deep below the surface and has significant theoretical potential for generating electricity. AltaRock Energy Inc. is one of the companies currently attempting to prove this technology; it has plans to drill to subsurface formations with temperatures over 400°C at depths from 5 km to over 20 km. At temperatures above 400°C water becomes "supercritical" and, due to changing physical properties, has a greatly increased capacity for generating electricity. AltaRock Energy Inc. plans to develop a test project at Newberry Volcano in Oregon, where extremely hot rocks can be found at "shallow" depths of approximately 5 km. This project is expected to involve two production wells and one injection well, each of which will be stimulated to improve the pore pressure in the formation, and overall electricity generation capacity. This project would be the first in the world to attempt to generate electricity using an engineered geothermal system powered by supercritical water.

Super hot rock geothermal technology must solve several difficult engineering challenges. The wells are expected to encounter the brittle-ductile zone, where rock changes from a solid state into a higher energy plastic state. Innovative drilling technology must be developed to handle these challenging conditions, involving significantly deeper wells and temperatures far hotter than those typically encountered in conventional drilling. Engineers must also develop new casing and cement that can withstand extremely high temperatures. The unique physical properties of supercritical water mean that, in theory, three wells on a 400°C project can generate more electricity than 42 wells on a 200°C project, requiring significantly less surface land.

Super hot rock geothermal may be technically feasible in Alberta, as the technology involves drilling to depths that render the specific geology less important to the success of the project. Although theoretically possible, the deeper one has to drill, the more capital intensive and technically challenging the project will become. Because Alberta has no volcanic activity, project proponents would have to drill deeper to access extremely high temperatures than they would at a volcanic site such as the Newberry Volcano. This would make a super hot rock geothermal project significantly more expensive to implement in this province.

Emerging Geothermal

Like Enhanced Geothermal projects, Emerging Geothermal projects are undertaken where there is a heat source, but where there may not be sufficient water or a good formation. However, unlike Enhanced Geothermal projects, Emerging Geothermal projects do not inject fluids or extract heated fluids from the Earth, but rather circulate fluids through a closed loop.

One specific example of Emerging Geothermal technology currently under development by a local company is the Eavor-Loop.


Eavor Technologies Inc. (Eavor), an Alberta company, is the developer of the Eavor-Loop, a closed loop system, which consists of two vertical wells several kilometers apart connected by many horizontal multilateral wellbores. The expertise of Alberta's drilling industry is highly applicable to projects like the Eavor-Loop that require precise drilling. The Eavor-Loop uses these horizontal wellbores as an underground "radiator" and does not require a porous and permeable formation (whether naturally occurring or enhanced through hydraulic fracturing). Due to the unique nature of the working fluids Eavor uses as a medium, it does not employ conventional completion methods, but has invented a proprietary completion technology to isolate the working fluid from surrounding rock (without loss of circulation).

The configuration of the Eavor-Loop allows the fluids to circulate naturally, thus saving the "parasitic" energy costs normally expended to pump the fluids in and out of the formation. The process is called thermosiphoning - the hot fluids in the wellbores tend to rise to the surface and the cooler fluids from which the heat energy has been extracted at the surface tend to sink. The heat energy brought to the surface is used to generate electricity in a specialized generator that operates using lower temperature fluids than conventional generators. Although the temperature of the heat source will decline over time, the decline is slow, allowing for a significant productive term. Eavor Technologies Inc. currently has a demonstration project near Rocky Mountain House, Alberta. The project was designed to prove the critical elements of the Eavor-Loop technology, not its commerciality at this stage.

Eavor-Loop technology is theoretically capable of operating at scale almost anywhere on Earth.

Integration with Alberta's electricity market

The main challenge to commercializing Alberta's geothermal resources may come from the competition geothermal power projects face from lower-cost alternative power sources.

The Alberta electricity market operates on an "energy-only" model - electricity generators are paid only for the electricity that they produce and sell into the wholesale market. Although it has been considered in the recent past, electricity generators are not paid for the "capacity" they keep on call. In the Alberta market, generators bid the price that they will accept for the electricity they generate, and the Alberta Electric System Operator (AESO) creates a merit order of these prices from lowest to highest. The AESO dispatches the lowest-priced generators first, moving up in price until all electricity required to meet demand has been dispatched. The price bid by the last generator dispatched by the AESO sets the system marginal price. Prices are set on a minute-to-minute basis and the minute-to-minute prices are used to determine the hourly settlement or "pool" price.

In order for a geothermal project to be successful, it must be able to compete on these terms. Or, it must find an opportunity to subsidize its costs by selling any "renewable attributes" that it may generate under various provincial and federal programs that incentivize the use of lower carbon energy.

One such program, the Renewable Electricity Program (REP), was undertaken in 2017 and 2018 by the province. The REP had the goal of increasing the market share of renewable electricity in Alberta. In the three rounds of the REP, the province selected a number of wind projects for development. The province and the developers of the selected projects entered Renewable Electricity Support Agreements (RESA) under which the developers received a fixed unit price for energy (through a contract for differences mechanism) and the province received the renewable attributes generated by the project. However, the province has since adopted a more market-driven approach and on June 10, 2019 the REP was terminated. Energy Minister Sonya Savage said at the time that Alberta will welcome "market-driven" renewables that can compete with other forms of power production.

In addition to the REP, a number of other arrangements have been announced. These arrangements are typically similar to the RESA: a large electricity consumer offers a contract for differences to a renewable electricity developer. The consumer ensures that the developer gets a fixed unit price for the renewable electricity it produces, and in return the consumer receives the renewable attributes generated by the renewable project. An example of this arrangement is Keyera Corp.'s recent partnership with Samsung Renewable Energy Inc. On December 15, 2020, Keyera Corp. announced that it had entered into a 15-year power purchase agreement with Samsung Renewable Energy Inc. for a 25 MW capacity solar generation facility in Alberta. The contract will provide Keyera Corp. with fixed electricity pricing over the contract's term, and more than 28,000 tonnes of annual carbon emission offsets. Given the structure of the Alberta electricity market, we expect that this arrangement is financial in nature and there is no direct physical delivery of electricity between the parties.

Other initiatives are being led by varying levels of government. The federal government released a Request for Information (RFI) in April 2020 regarding power purchase agreements for new renewable electricity in Alberta. The new installations described in the RFI would generate between 200,000 and 280,000 MWh per year to power federal government buildings in the province, and an additional 240,000 to 360,000 MWh of renewable energy credits to displace emissions generated by federal buildings outside of the province. Similarly, the Edmonton Municipal Government has launched its "Road to Renewables" plan, an effort to power city operations with 100% renewable energy by 2030. It is currently unclear which renewable sources Edmonton may draw on to achieve this goal, but it would likely involve at least one major fixed contract to develop renewable electricity capacity within the province. These initiatives follow a similar model to the REP/RESA arrangements.

These bilateral commercial arrangements may present an opportunity for geothermal projects, provided that geothermal can be price competitive with other renewables. Indeed, a price competitive geothermal project may be more attractive than another renewable project because geothermal projects have a high capacity factor - they can generate electricity 98% of the time - making them suitable as baseload electricity suppliers. Unlike renewables such as wind and solar, geothermal does not suffer from intermittency and is dispatchable - it can be turned on and off to meet market demand. The ability to provide both baseload and dispatchable electricity are attractive economic characteristics. Although the AESO concluded in a 2018 study that dispatchable renewables were not necessary for the reliability of Alberta's electrical system before 2030, the province's opinion of the desirability of geothermal electricity may have changed given its recent show of support.

Another opportunity for geothermal energy in Alberta may be to supply power through distributed generation. Distributed generation refers to small-scale electricity production (less than 5MW) at or near where the electricity will be consumed. Distributed generation can be used to self-supply power to remote communities or industrial sites, and can export excess power to the grid under an exception set out in Alberta's Micro-generation Regulation. The Greenview Geothermal Plant (Alberta No. 1) is proposed to be the first "large-scale" geothermal facility in the province, with a 5MW capacity. It is scheduled to be completed in 2023.


The introduction of Bill 36 has signalled the Government of Alberta's support for the geothermal industry, emphasized by a recent $50 million investment of Technology Innovation and Emissions Reduction Regulation (TIER) generated funding into the province's clean tech sector in which the government explicitly identified geothermal projects as a category of potential investments. Although geothermal projects have not historically been an investment opportunity in Alberta, in the new paradigm of increased focus on Canada's transition to cleaner energy sources, these projects are expected to receive more attention and investment.

Bill 36 provides more certainty to geothermal project proponents in Alberta, however there will surely be unexpected challenges in navigating the legislation and the AER's forthcoming rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.