This article was written by CBC News by Paula Duhatschek on April 20, 2025.
Newfoundlander Steve Nowe has spent the bulk of his career as an international nomad in the oil and gas industry, chasing jobs across nearly 50 different countries.
The latest gig has plunked him down in the middle of a Bavarian forest — unusual given Germany isn’t exactly known for its oil and gas industry.
But this time around, he’s not looking for fossil fuels. Instead, he’s building a massive geothermal system, a type of renewable power project that harnesses heat from below the earth. Once complete, the project will heat homes in two nearby communities and pump clean power into the German electricity grid.
“[This] is one of the most complex drilling projects in the world, and I really wanted to be a part of that,” said Nowe, drilling manager with Eavor, a Calgary-based closed-loop geothermal company.
Geothermal is the second least-used clean energy source in the world, after ocean energy, according to the International Energy Agency. But it also notes geothermal has major untapped potential, and that as the technology improves, it could meet up to 15 per cent of global electricity demand growth by 2050.
The industry is also seeing an unexpected boost of attention south of the border. While U.S. Republicans have slammed the Biden administration’s emphasis on renewables like wind and solar, some see a place for geothermal as part of the U.S. push for “energy dominance,” thanks in part to how it uses similar skills and technologies to the oil and gas sector.
Eavor says its technology, developed in the heart of the Canadian oilpatch, hits a sweet spot — more versatile than traditional geothermal and cleaner than fossil fuels — that could help geothermal become a bigger player in the overall energy mix.
The advantage, the company says, is that it doesn’t need a source of hot, underground water to work. It just needs hot rock, which is available deep under the earth pretty much anywhere.
The project site in Geretsried, about 44 kilometres south of Munich, was chosen in part to prove this point. It’s been drilled for traditional geothermal before and failed.
“We wanted to be able to say, ‘look, this is scalable, it does go anywhere,’ ” said CEO John Redfern.
But it wasn’t just about proving a point. Eavor’s decision to set up shop in Germany was about dollars and cents.
Because while the company has received kudos and funding in Canada from both the provincial and federal governments, using the technology here is seen as an uphill battle due to tough competition from cheap natural gas and hydroelectric power.
Eavor has its roots in the oil and gas crash of 2015. That's around when Redfern got a call from a buddy who hoped to start a business out of the ashes of the downturn.
Geothermal, they thought, had plenty of advantages. It’s renewable, and it can work in any type of weather so why wasn’t it more widely used?
Part of the problem, he says, is that traditional geothermal generally creates electricity by using hot water from an underground reservoir to power a turbine.
Looking for that hot water underground is a bit like drilling for oil, says Redfern. In both situations you’re trying to find the right underground reservoir, which he says is a “hard, hard job.”
But whereas the high price of fossil fuels can make the exploration risk worthwhile for the oil and gas industry, he says that isn’t necessarily the case with traditional geothermal.
Eavor’s hope is that its technology will work reliably enough to eliminate that risk, because it doesn’t need that elusive reservoir at all.
At the Gerestried site, two drilling rigs emerge from the landscape about 400 metres apart. The wells drill five kilometres deep and about three kilometres horizontally. They split off into two sets of 12 lateral wells, which are connected to create a closed loop.
To extract heat, a water-based drilling fluid is circulated throughout the loop where it's warmed by the surrounding rock, then rises to the surface to generate clean power and heat for homes, sort of like how a car’s radiator absorbs heat from an engine.
“It's very exciting because it pushes the boundaries of the geothermal technology,” said Daniel Mölk, the company’s executive vice-president of European operations, standing in front of a power plant between the two rigs.
Why Germany?
The technology was first piloted near Rocky Mountain House, a small community about 215 kilometres north of Calgary.
But to make it work for the first time on a commercial scale, Redfern says, they had to go where the economics made the most sense. That place happened to be Germany.
The country aims to be climate-neutral by 2045 and is putting money on the table to make that happen.
There’s a feed-in-tariff program that guarantees a stable price for clean power, including geothermal, over a 20-year period, and funding available for clean district heating projects. The project has also received a major grant from the EU Innovation Fund and a loan from the European Investment Bank.
In Germany, moving away from fossil fuels isn’t just about environmentalism. It’s also pragmatic.
Almost half of German households heat their homes with natural gas. That’s become pricier in the years following Russia’s invasion of Ukraine, an event that also highlighted the riskiness of relying on energy imports from other countries and ramped up interest in geothermal.
Jan Duehring, head of the local utility for Geretsried, says moving away from fossil fuels might be an easier sell in his country.
We have no oil, we have no gas, but we have geothermal energy.
Jan Duehring, head of the Geretsried utility
On a sunny Tuesday afternoon, shoppers walking around a car-free pedestrian zone in the Geretsried downtown told CBC News they were supportive of the project.
“I think it's a good idea, because you have a new opportunity to get energy,” said Verena Kubis, 38.
“It depends, I think, on the ground and how much heat that can be extracted,” said Emanuel Bauer, 41. “But generally I think it's a good idea.”
Economics a barrier
For Eavor’s technology to become mainstream, experts are watching to see if it can drive costs down enough to make closed-loop geothermal competitive with other sources of energy.
“I have no doubt that from a technical, competent point of view, drilling a radiator in the ground, we can do that,” said Marit Brommer, CEO of the International Geothermal Association.
“The issue is, at what cost will it be delivered?”
Building closed-loop geothermal is expensive because it’s so new, and because of how much drilling is involved. Eavor expects the Geretsried project will cost somewhere between $309 million and $540 million Cdn, though it couldn’t give an exact figure.
Economics are a particular challenge in Canada, where options like natural gas and hydroelectric power are relatively inexpensive and abundant.
"Geothermal energy always has to compete with other energy sources, and that's a tough competition in Canada because we have very cheap energy," said Maurice Dusseault, a professor emeritus of engineering geology at the University of Waterloo.
Still, Brommer says cost shouldn’t be the only part of the calculus in determining what sources of energy to pursue. Geothermal is particularly valuable, she says, because it can provide a clean source of heating.
With the right support, the IEA says new forms of geothermal could follow a similar path to electric vehicles and solar panels, becoming less expensive and more competitive over time.
Redfern also notes that tech companies are signing major contracts for clean power to feed AI data centres, which he expects will spur more demand for geothermal on this side of the pond.
"If you want a future that's greener than natural gas, then I think that's where we come in," he said.
Going forward
For now, though, Redfern says the focus is on Europe, with the company’s next project set to break ground in Hanover, Germany, later this year.
Japan, which is also trying to pull off the complicated manoeuvre of decarbonizing while improving its energy security, is also eyeing the technology, and one of its major utilities, CHUBU Electric Power Co., has acquired a stake in Eavor.
Yuta Kano, a general manager in the utility’s global business division, says his hope is to bring Eavor’s technology to other parts of the world and, eventually, to Japan.
“Japan needs to be more renewable, and then we need more stable renewable,” said Kano.
The Geretsried project is expected to deliver its first power onto the grid later this year, with home heating expected sometime after that. Duehring, the head of the Geretsried utility, expects the plant will be able to meet nearly half of the town’s heating demand once complete.
Nowe, the Canadian drilling manager at Eavor’s German site, says he’s under no illusion that geothermal will suddenly replace fossil fuels.
But he hopes the technology will become more common.
“I have two sons, one is 17 and one is 19, and one of the things that I think about a lot is ‘What is the state of the planet that our generation is leaving for him and his future children?’ ” said Nowe.
“Geothermal systems, I think, can play a very important role.”