California, Nevada lead the way in U.S. geothermal growth

There are 144 new geothermal projects currently under development in 14 U.S. states, representing as much as 7,100 megawatts of new base load capacity, according to a new report from the Washington, D.C.-based Geothermal Energy Association (GEA).

The report’s author Research Associate Dan Jennejohn told the Cleantech Group today that when added to 3,100 MW of existing capacity, 10 gigawatts of power from geothermal resources is feasible.

Steady growth in geothermal development continues, with the number of projects up 50 percent and megawatts under development nearly doubling in the past two years. The organization puts out an industry update twice a year offering a snapshot of the development landscape, including a state-by-state breakdown.

GEA’s report shows California and Nevada leading the way with the most geothermal projects under development and having the most megawatt potential. California has an installed capacity of 2,600 MW, with Nevada trailing in second place at 450 MW, Jennejohn said.

However, Nevada currently has 64 projects under development with the potential for nearly 3,500 MW, while California has 37 projects underway with the potential of 2,400 MW.

The report indicates base load power from the 144 new projects could be enough to supply about 20 percent of California’s total electric power in 2008—or enough to meet the power needs of about 7.2 million people.

A recent report from New York University indicates that geothermal has surpassed wind as the most efficient alternative energy technology (see Report says geothermal is leaving wind, solar in the dust).

Jennejohn said despite the sector's growth, there’s been a decline in projects in phase four, or under construction. He attributed this to difficulty obtaining financing because of the recession and also receiving final permits.

“Geothermal is inherently risky, especially up front because you need to prove your resource—geothermal fluid underground,” he said. “That’s very difficult to do until you have drilled a full size production well.”

The process can be capital intensive, with an average well costing $2 million to $5 million.

Jennejohn said he’s hearing that financiers are now requiring two-thirds of a developer’s steam field to be proven, which requires more exploration work and drilling, in addition to permitting, compared to a previous one-third.

He said state and federal agencies are being slowed in the permitting process by a deluge of renewable applications, not just from geothermal but from solar and wind projects as well.

The Bureau of Land Management is looking to appoint one renewable energy representative per state to help process these applications, but Jennejohn said that’s not going to be sufficient.

He said it’s also taking longer than expected for grants, loan guarantees and $400 million in stimulus funds, allocated by the U.S. Department of Energy’s (DOE) Geothermal Technologies Program, to flow into the industry.

“Investors are basically waiting to see who is going to get DOE funding,” he said. “They are more reluctant to invest in geothermal projects until the DOE funding comes out.”

One of the first awards so far went to Enel Green Power, a division of Italy's largest electric utility Enel, which received $60 million for its Fallon, Nev.-based geothermal plants that use stillwater and salt wells.

Enel Green Power, which includes its North America subsidiary, implements renewable energy projects in Italy and worldwide in the wind, solar, geothermal, hydropower, and biomass sectors (Italy’s largest PV plant goes live).

The GEA is also seeing an emphasis on emerging geothermal technologies, such as enhanced geothermal systems (EGS) and geothermal hydrocarbon co-production.

According to the report, the term EGS typically refers to any resource that requires artificial stimulation and includes resources that have to be fully engineered, or ones that produce hydrothermal fluid, but sub-commercially. Jennejohn said EGS is still a young and not fully proven technology.

About $90 million of $400 million in stimulus funds is expected to support 10 EGS projects, with the capacity to generate 50 MW for five to seven years.

“We’re not looking at large-scale power production yet,” he said.

Geothermal hydrocarbon co-production uses geothermal fluids often found in oil and gas production fields as well as certain mining operations. Jennejohn cited three new projects being developed using this technology in Mississippi, Louisiana and Florida.

Some of the leading companies contributing to the sector’s growth include Ormat Technologies and Calpine, as well as Ram Power and Nevada Geothermal Power (see Ormat buys geothermal rights in Alaska and Nevada Geothermal in startup mode for 49.5 MW Blue Mountain plant).

Over the summer, GTO Resources, Polaris Geothermal, Western GeoPower and Ram Power announced plans to merge to raise C$100 million ($90 million) in a private placement to fund geothermal power projects (see BRIC’s eyes on hydro as sector draws $600M).

Upon completion of the agreement, Polaris, Western and Ram are expected to become subsidiaries of GTO, which intends to change its name to Ram Power.

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