GEA Leading News and Member Companies for the week of February 24, 2014

The Geothermal Energy Association brings you this week’s leading news and member company headlines.

Geothermal Potential in California Still Largely Untapped, Industry Group Tells CARB
Global Geothermal Leaders to Convene in Washington on Earth Day 2014
Latest Public Utility Commissions’ Rulemakings Could Open New Doors for Geothermal Power
Renewables Provided 99% of New U.S. Power in January
Alternative Earth Reports Results for Quarter Ending December 31, 2013
Enel Green Power to Expand in East Africa
Ormat Technologies Reports 2013 Fourth Quarter and Year End Results
US Geothermal Announces Final Ownership Interest at Neal Hot Springs

But first, our Graph of the Week.

Northern California Geothermal Resource Area
Northern California geothermal resource areas are indicated by geyser icons. A green “2″ indicates two adjoining geothermal resource areas. Data from USGS and GEA research.


Above: Our Graph of the Week shows the locations of a total ~1,800 MW geothermal resources in northern California as estimated by USGS. However, inadequate transmission infrastructure is a factor that is hindering development. Geothermal developers report that congestion on the Pacific AC intertie that connects California, Oregon, Washington and Canada as well as the Pacific DC intertie that connects Oregon, Washington and California blocks potential development that could be exported to surrounding states if transmission issues are resolved. Inadequate transmission also stymieing the development of geothermal power in Siskiyou and Mono Counties, developers say.

Geothermal Potential in California Still Largely Untapped, Industry Group Tells CARB
GEA Press Release (Sacramento, CA) February 20 ~ As the California Air Resources Board is examining their new scoping plan for implementing the state’s ambitious climate law, AB 32, the leading geothermal industry group has issued a status report on the state’s geothermal resources that says they are still largely untapped.

Geothermal power is “a viable, cost effective, and plentiful renewable energy option to meet California’s climate goals,” GEA told CARB. Utilizing the Golden State’s geothermal resources can help achieve “carbon reductions with the least total cost and highest power system reliability,” GEA reports. In brief, the status report shows that:

  • geothermal power generated 4.4% of total system power in California in 2012, but could have generated substantially more;
  • geothermal power produces some of the lowest life-cycle emissions when compared to almost every other energy technology and even some renewables;
  • depending on the resource characteristics and plant design, geothermal power plants can be engineered to provide firm and/or flexible power;
  • even with high upfront capital costs, geothermal power is a competitive renewable energy source;
  • about half of California’s identified geothermal resources are still untapped, and significant resources may remain undiscovered;
  • geothermal power is key to achieving an expanded renewable power portfolio at the lowest total cost;
  • new technology will reduce geothermal power risks and can expand the supply curve to make more resources commercially available;
  • the Salton Sea Known Geothermal Resource Area (SSKGRA) is considered by many to be the best opportunity for growth in California in the near term;
  • distributed generation geothermal power and heating projects have potential in a number of areas, but are not eligible for the type of support provided other distributed generation projects;
  • challenges to growth of utility scale plants include weak demand, inadequate transmission, permitting delays, and a lack of coordinated policies.

The full report, entitled REPORT ON THE STATE OF GEOTHERMAL ENERGY IN CALIFORNIA, is available at www.geo-energy.org.

Global Geothermal Leaders to Convene in Washington on Earth Day 2014
GEA Press Release (Washington, D.C.) February 19 ~ Leading figures in geothermal power development will be participating in the GEA International Geothermal Showcase in Washington, D.C. on Earth Day, April 22. This includes speakers engaged in projects in Kenya, Tanzania, Switzerland, Romania, Turkey, Italy, Japan, Indonesia, Guatemala, El Salvador, Nevis, Colombia, the United States, Iceland and more.

“With over 30 speakers already confirmed, the Showcase will present participants a view of the tapestry of geothermal developments around the world,” commented Karl Gawell, GEA’s Executive Director. To emphasize the clean energy attributes of geothermal power, the program is being held on Earth Day. Ali Zaidi, Deputy Director for Energy Policy, White House Domestic Policy Council, will present keynote remarks and Senate Majority Leader Harry Reid (D-NV) will present a video opening greeting to attendees.

In addition to examining geothermal power projects around the world, panels will present leading market analysis discussing the state of the geothermal sector, a top level expert discussion of geothermal project risk reduction, and presentations from leading financial institutions including the World Bank, the Export-Import Bank of the U.S., and the Overseas Private Investment Corporation.

The event will also mark the release of GEA’s 2014 Global Market Update. In the 2013 report, over 70 countries were identified with geothermal power projects or prospects. “We expect 2014 to be an exciting year, with new projects coming on line every month,” noted Ben Matek, GEA Industry Analyst.

GEA is pleased to be holding the Showcase with support from the U.S. Trade and Development Agency, the Overseas Private Investment Corporation, the U.S. Agency for International Development, the U.S. Department of State, the International Trade Administration, U.S. Energy Association, Export-Import Bank of the U.S., and the U.S. Department of Energy Geothermal Technologies Office.

Latest Public Utility Commissions’ Rulemakings Could Open New Doors for Geothermal Power
After several months of deliberation, on February 18th Nevada Public Utilities Commission has ruled in accordance with Nevada S.B. 123. Nevada S.B. 123 required the retirement of no less than 300 MW of coal-fired electric generating capacity on or before Dec. 31, 2014, and not less than 250 MW of coal-fired electric generating capacity on or before Dec. 31, 2017. These retiring coal generation facilities will be partially replaced with renewable resources prescribed in 100 MW RFPs in increments for three years beginning in 2014 in addition to the acquisition or construction of 50 MW owned and operated by NV Energy.

It’s expected geothermal power will win a portion of these 100 MW RFPs, but it will be competitive. This law could be a bridge for geothermal energy development until the state RPS is revised in 2018. The first RFP will be issued no later than December 31st, 2014, the second Dec. 31st, 2015, and the last by December 31st 2016. The response date for the first round of RFPs is expected to be in February 2015. Earlier versions of the rulemaking did not clarify the schedule with which Nevada PUC must issue these RFPs concerning some geothermal power developers. No company wants to bid on a RFP if they don’t know if they won the preceding RFP. However, the final PUC rulemaking includes business friendly language that ensures each RFP will not be issued until previous rulemaking is complete.

On February 12th, California Public Utility Commission released their rulemaking authorizing Southern California Edison Company (SCE) and San Diego Gas & Electric Company (SDG&E) to each procure between 500 and 700 MW by 2022 to replace the retiring San Onofre Nuclear Generation Stations. SCE must purchase at least 550 MW of preferred resources and 300-500 MW of any resource while SDG&E must acquire 175 MW of preferred resources and 600-800 MW from any resource. Preferred resources are energy sources such as renewables and storage that do not emit greenhouse gases. The rulemaking goes into substantial detail about the requirement for the procurement of new resources that must include “provisions designed to minimize costs to ratepayers by procuring the most cost-effective resources consistent with a least cost/best fit analysis” and “an assessment of projected greenhouse gas emissions as part of the cost/benefit analysis.”

A new report in California, published by E3 and sponsored by SDG&E, SCE and others, found that that as the integration of intermittent solar resources increases to meet, a 30%, 40%, or 50% RPS requirement, a threshold is reached where substantial overgeneration raises electricity rates. E3 found that a diverse renewable energy portfolio, or one that “meets a 50 percent [RPS] in 2030 by relying on a diverse portfolio of large, utility-scale resources, including some solar thermal with energy storage and some out-of-state wind,” shows a substantially lower impact on rates of electricity rates rather than other scenario forecasts where solar is a predominant source of electricity.

The values geothermal power brings to California’s electricity grid as a firm and sometimes flexible resource with near zero greenhouse gas emissions with a substantially lower levelized cost when compared to many other energy technologies will hopefully position geothermal power to win many of the new RFPs in California to replace the retiring San Onofre power plant.

Renewables Provided 99% of New U.S. Power in January
SUN DAY Campaign News Release (Washington DC) February 21 ~ According to the latest “Energy Infrastructure Update” report from the Federal Energy Regulatory Commission’s Office of Energy Projects, non-hydro renewable energy sources (i.e., biomass, geothermal, solar, wind) accounted for more than 99% of all new domestic electrical generating capacity installed during January 2014 for a total of 324 MW.

Solar led the way last month with 13 new “units” totaling 287 MW followed by geothermal steam with three new units totaling 30 MW. Biomass added three new units totaling 3 MW while wind had one new unit with an installed capacity of 4 MW. In addition, there was 1 MW added that FERC defined as “other.”

Renewable energy sources, including hydropower, now account for 16.03% of total installed U.S. operating generating capacity: water – 8.44%, wind – 5.20%, biomass – 1.36%, solar – 0.70%, and geothermal steam – 0.33%. This is more than nuclear (9.26%) and oil (4.04%) combined.

“The trends are unmistakable,” concluded Ken Bossong, Executive Director of the SUN DAY Campaign. “Renewables are the energy growth market of the future with solar – for the moment at least – the leader of the pack.”

Alternative Earth Reports Results for Quarter Ending December 31, 2013
Alternative Earth Press Release (Vancouver, B.C.) February 26 ~ Alternative Earth Resources Inc. (formerly Nevada Geothermal Power Inc.) (TSX.V: AER) today announced results for the three and six months ended December 31, 2013. The Condensed Consolidated Interim Financial Statements and Management’s Discussion and Analysis (MD&A) are available at http://www.sedar.com and on the Company’s website at http://www.alternative-earth.com.

As at December 31, 2013, the Company’s assets (consisting primarily of cash and cash equivalents of $1.5 million and resource property interests carried at $1.5 million) exceeded its liabilities (consisting primarily of asset retirement obligations) by approximately $3.1 million.

On April 2, 2013, the Company changed its name from Nevada Geothermal Power Inc. to Alternative Earth, and completed a five for one share consolidation, which leaves the Company in a position to maintain and develop its current geothermal project portfolio (consisting of the Crump, North Valley, Pumpernickel, and New Truckhaven projects) and pursue other opportunities.

Enel Green Power to Expand in East Africa
Enel Green Power is looking to expand its geothermal work in East Africa. CEO Francesco Starace told Reuters, “Mozambique, Tanzania, Kenya and Uganda will be a priority and we plan to develop wind, solar and geothermal.” He said, “East Africa has relatively good political stability and good resources and will help drive development over the next 5-6 years.”

Ormat Technologies Reports 2013 Fourth Quarter and Year End Results
Ormat Press Release (RENO, Nevada) February 25 ~ Ormat Technologies, Inc. (NYSE: ORA) today announced financial results for the fourth quarter and full year ended December 31, 2013. Highlights for the year and recent developments:
• Total revenues for the year increased 6.3% to $533.2 million;
• Record revenues in the product segment: 8.9% increase to $203.5 million;
• Record adjusted EBITDA for the year: 22.3% increase to $227.1 million; Fourth quarter adjusted EBITDA increased 45.8% to $51.4 million
• Gross margin increased from 25.7% to 30.0%;
• Electricity generation increased 7.9% to 4.3 million MWh, driven by contributions from Olkaria III Plant 2, McGinness Hills, Jersey Valley and Tuscarora;
• Net income attributable to the company’s shareholders of $41.2 million or $0.91 per share;
• Declared dividend of $0.06 per share for fourth quarter 2013;
• Completed 58 MW expansion of the Olkaria III geothermal complex in Kenya bringing the complex’s total generating capacity to 110 MW;
• Completed the 16 MW Don A. Campbell geothermal power plant in Nevada;
• Completed the acquisition of the Platanares project in Honduras and released McGinness Hills phase 2 for construction; and,
• Secured Purchase Agreements (PPAs) for Heber 1 in California and for Mammoth G1 and G3 to replace the Standard Offer Contract No. 4 (SO#4), which are tied to natural gas prices, with fixed-price contracts;

Dita Bronicki, chief executive officer of Ormat, stated: “We are very pleased to deliver strong financial results marking our return to earnings growth while making significant progress developing a geographically balanced portfolio of geothermal projects. During 2013 and early 2014, we added 70 MW of new generating capacity from three new geothermal power plants bringing our total portfolio to 626 MW.

“In the product segment, we’ve received a robust flow of orders for our unique power solutions resulting in record revenues of $203.5 million. During 2013 and the first part of 2014, we successfully completed nine power plants with approximately 270 MW of gross generating capacity. The plants, which we completed for our clients and for our own portfolio, significantly contributed to the growth of the geothermal industry. Our strength in the market and appetite for continued growth will continue to support our backlog currently standing at $165.0 million, excluding the Sarulla project supply contract. With growing demand for geothermal energy across the globe and financial incentives in place to foster its development, we continue to be optimistic about Ormat’s future growth.”

Bronicki added, “We expect our 2014 electricity revenues to be between $370 million and $380 million and our product segment revenues to be between $170 million and $180 million, including $36 million revenue from the Sarulla project.”

US Geothermal Announces Final Ownership Interest at Neal Hot Springs
US Geothermal Press Release (BOISE, IDAHO) February 24 ~ U.S. Geothermal Inc. (TSX:GTH)(NYSE MKT:HTM), a leading renewable energy company focused on the development, production and sale of electricity from geothermal energy, announced today that it has finalized the strategic and financial partnership with a subsidiary of Enbridge Inc. (NYSE:ENB)(TSX:ENB). The Neal Hot Springs Geothermal Plant, located near Vale, Oregon, was developed and is being operated by USG Oregon LLC, a subsidiary of U.S. Geothermal. Enbridge, a North American leader in delivering energy, acquired an equity position in the project, which achieved Final Completion on August 1, 2013. The Enbridge equity investment, along with a loan guarantee from the U.S. Department of Energy (“DOE”), funded the remaining construction costs. Total investment in the development and construction of the project by U.S. Geothermal was USD $14 million.

Following the receipt of the previously announced Section 1603 Federal Investment Tax Credit (ITC) cash grant payment, and the Oregon Business Energy Tax Credit funds, and after the receipt and disbursement of all remaining construction reserve funds, which was finalized on January 27, 2014, the final ownership interest in the Neal Hot Springs project was calculated in accordance with the terms of the partnership agreement. Ownership interest in the project is final with 60% for U.S. Geothermal and 40% for Enbridge. As a result of the final agreement, U.S. Geothermal has received a USD $6.2 million cash distribution from the partnership.

“Our strategic partnership with Enbridge has proved beneficial for both parties, allowing for the successful construction and operation of the Neal Hot Springs geothermal project,” said Dennis Gilles, Chief Executive Officer of U.S. Geothermal Inc. “We look forward to a long and successful partnership with Enbridge on this and potentially other geothermal projects in our portfolio of quality geothermal resources.”

“As an energy delivery company, Enbridge is proud of its growing list of renewable and alternative energy projects,” said Chuck Szmurlo, Vice President, Alternative and Emerging Technology, Enbridge Inc. “Over the past decade we’ve invested more than $3 billion in a variety of green power projects, creating a strong base of assets which now includes interests in wind, solar and waste heat recovery facilities that, together, have the capacity to generate over 1,700 megawatts of emissions free energy. Neal Hot Springs represents our entry into geothermal energy, which we believe will play an important role in North America’s shift toward a greener energy production mix. We look forward to our relationship with U.S Geothermal and the potential to find further opportunities to partner together.”

The Neal Hot Springs facility was the first geothermal project to obtain a loan guarantee under the DOE’s Title XVII loan guarantee program, which was created by the Energy Policy Act of 2005 to support the deployment of innovative, clean energy technologies. The project deployed the first of its kind binary cycle process, utilizing a supercritical cycle that uses R134a refrigerant as the working fluid, and an innovative air-cooled condenser, as well as pre-fabricated, modular construction of major plant components.

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