In recent years, the pursuit of sustainable and renewable energy sources has intensified due to mounting environmental concerns and the urgent need to transition away from fossil fuels. Among the many promising technologies, closed-loop geothermal systems (CLGS) have attracted considerable attention as a potential means to harness the Earth’s natural heat without the environmental drawbacks associated with traditional geothermal methods. However, new research now reveals significant challenges associated with the scalability and economic viability of CLGS, especially in regions that lack naturally high geothermal gradients.
The fundamental concept behind closed-loop geothermal systems involves circulating fluid through a sealed, engineered well system that passes through hot rock formations to extract heat. Unlike conventional open-loop geothermal systems, which rely on naturally occurring permeable rock and fluid reservoirs, CLGS are designed to function even in rock formations with low permeability by eliminating the need for fluid exchange with the underground reservoir. This theoretically expands the geographic applicability of geothermal energy generation, but the practical realities are far more complex and limiting.
A detailed study conducted by researchers Tangirala and Vilarrasa provides much-needed insight into the thermal and fluid dynamics that occur within the rock matrix of these closed-loop configurations. By simulating fluid flow through both cased vertical wells and open-hole horizontal laterals over an extended period of one year, the researchers were able to analyze temperature variations within the rock and how these changes impact power production and financial returns.
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One of the most pivotal findings is that high horizontal flow rates in CLGS induce a rapid and pronounced temperature decline in the surrounding rock. This phenomenon arises because the thermal conductivity of typical reservoir rocks is inherently low, limiting the rate at which heat can be conducted back into the fluid stream to replenish the extracted heat. When fluids flow too quickly, the rock matrix loses heat faster than it can recover, leading to an inevitable drop in production temperatures and, consequently, power output.
This temperature drop is not just a minor inconvenience; it has profound implications for the design and operation of geothermal power plants. To counteract the rapid cooling, researchers suggest that operators must reduce horizontal flow rates in the lateral sections of the wells. However, this solution introduces a trade-off, as lower flow rates often mean less fluid volume passing through the system, which can limit total energy extraction. To overcome this limitation, the study recommends drilling multiple multilaterals—additional well branches—to maintain sufficient total flow while keeping individual flow velocities low.
Conversely, operating at low horizontal flow rates does help sustain higher production temperatures in the fluid, which is favorable for power generation efficiency. Yet, this approach necessitates maintaining high total flow rates to compensate for the reduced velocity, requiring a significantly larger overall system with extended horizontal drilling lengths. This adds complexity and cost, raising important questions about the scalability and economic feasibility of such systems.
The economic assessment carried out in the study is striking. Across twelve simulated cases assuming a reservoir temperature of 180 °C, none of the projects showed profitability over a 30-year lifespan when the electricity was sold at a wholesale price of 6.4 cents per kilowatt-hour and lateral drilling costs were set at an optimistic $100 per meter. The financial shortfall ranged from $2.52 million to as much as $8.95 million. These results starkly highlight the difficulty of recovering project costs under typical market conditions, even with relatively low drilling expenses.
Increasing the wholesale electricity price to 12.6 cents per kilowatt-hour does improve the financial outlook, allowing for a projected profit of $21.78 million, or about 30% return. However, this comes at the steep price of an extensive total drilling length of 158 kilometers and an overall project cost of $27.6 million. Such a massive drilling requirement introduces considerable operational risks, technical challenges, and capital expenditure hurdles, which may not be tenable for many developers or regions.
Beyond the economic factors, the study challenges some commonly held assumptions about the universal viability of CLGS. Advocates of this technology often claim it can be scaled geographically to power generation in areas without naturally high geothermal gradients. Yet, the simulations demonstrate that temperature depletion near the production well due to limited heat conduction severely restricts the effectiveness of closed-loop systems outside genuinely advantageous thermal fields. This inherent physical limitation makes widespread deployment at competitive prices unlikely.
Thermal conduction limitations underscore that the energy extracted in CLGS is ultimately bounded by the rate at which the host rock can replenish heat into the circulating fluid. Rocks in typical geothermal reservoirs have relatively low thermal conductivity, meaning sensible heat transfer occurs slowly and cannot sustain high production rates over long periods without significant temperature declines. This physical constraint cannot be overcome simply by drilling more or longer laterals without incurring disproportionate costs.
The interplay of flow dynamics, thermal properties, and drilling economics revealed by the study provides crucial guidance for future geothermal projects. It suggests that in regions with moderate to low geothermal gradients, closed-loop technology should be approached cautiously and contingent upon rigorous site-specific evaluations. The technology might remain viable for direct use applications where lower temperature fluids suffice but is less attractive for large-scale electricity generation in most settings.
From a technical standpoint, the research highlights the necessity of multi-disciplinary optimization encompassing reservoir engineering, thermal hydraulics, and economic modeling. Designing efficient CLGS requires balancing fluid velocity to maintain temperature, total flow rate to maximize power, and drilling geometry to minimize cost. Innovations in drilling technology, materials, and heat transfer enhancement may alleviate some constraints, but fundamental physical principles pose stubborn barriers.
Moreover, this comprehensive study stresses that future research and development into geothermal energy must not overlook the thermal interactions within the rock-fluid system for both open and closed-loop setups. Understanding these mechanistic details is essential to predicting long-term performance and avoiding costly underperformance in operational plants. The insights provided here contribute to a more nuanced and realistic appraisal of geothermal energy’s potential in the global renewable energy portfolio.
In summary, while closed-loop geothermal systems present an intriguing alternative to traditional geothermal exploitation methods, their limitations – primarily due to thermal conductivity constraints and the resulting rapid temperature drops – impose significant challenges. The necessity of managing horizontal flow rates to prevent thermal depletion conflicts with the need for high fluid throughput to generate economically viable power. These competing requirements, combined with the extensive drilling demands and substantial project costs, constrain the economic feasibility of CLGS in many prospective locations.
The research clearly indicates that the optimistic narrative of CLGS as a universally scalable and cost-competitive power generation technology requires reexamination. Although profitable operation is conceivable under certain conditions – such as very high electricity prices combined with substantial investment in extensive multilaterals – these scenarios are unlikely to be widely applicable or sustainable. More modest ambitions for CLGS might focus on niche applications or regions with naturally favorable thermal regimes.
Ultimately, this body of work serves as a critical reality check, tempering expectations and guiding stakeholders towards informed decisions in geothermal energy development. Advancements that improve thermal transfer efficiency or reduce drilling costs could shift the economics in the future, but the fundamental thermal limitations in the rock matrix remain a formidable hurdle that must be addressed through innovation or acceptance of inherent constraints.
As the world accelerates its transition toward low-carbon energy systems, balanced and rigorous assessments such as this are indispensable. They prevent misallocation of resources and help prioritize investments in technologies with genuine promise for scaling renewables effectively and sustainably. The emerging consensus underscores that closed-loop geothermal systems, while impactful in specific contexts, are unlikely to become a widespread solution for electricity generation outside regions blessed with high geothermal gradients.
Subject of Research: Limitations and performance of closed-loop geothermal systems for electricity generation in moderate geothermal gradient fields
Article Title: On the limitations of closed-loop geothermal systems for electricity generation outside high-geothermal gradient fields
Article References:
Tangirala, S.K., Vilarrasa, V. On the limitations of closed-loop geothermal systems for electricity generation outside high-geothermal gradient fields.
Commun Eng 4, 116 (2025). https://doi.org/10.1038/s44172-025-00458-7
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