GEA’s leading news and member companies for the week of March 31, 2014

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

*Tax Extenders Bill Passes Committee with 2-Year Extension of Geothermal PTC
*California State and Local Officials Seek Feedback on Geothermal Plans
*Outlook for Renewable Energy in America Jointly Authored by U.S. Trade Associations
*Atlas Copco: Company Listed Among World’s Most Ethical for 2nd Consecutive Year
*Enel Green Power: Work Underway on Two Innovative Power Plants in Chile and USA
*Mannvit Engineering: Theistareykir Project in Iceland Issued Permit
*Ormat Technologies: Sarulla Consortium Signs $1.17 Billion Financing for 330-MW Indonesia Project
*Ormat Technologies: Ormat Sells Heber Solar PV Project for $35.25 Million
*Ormat Technologies: License Issued for Second McGinness Hills Plant
*Ram Power: 2013 Year End Results Announced
*GEA Companies Involved in First Geothermal Project for Malaysia

But first, our Graph of the Week:

*Which Region of the World will have the Most Geothermal Installed Capacity by the End of 2014?

Regional Installed Geothermal Capacity -- early 2014
Source: GEA research

Above: The U.S. leads the world in geothermal installed capacity, with over 3,440 MW, which is around 1,500 MW more than the Philippines in second place.  But when viewed in context of regional totals, the North American region and the Asia-Pacific region are running a tighter race. Our Graph of the Week shows that North America has about 4,447 MW on line, located in the U.S. and Mexico, while the Asia-Pacific region has a comparable 4,754 MW on line in China, Japan, the Philippines, Indonesia, New Zealand, Thailand, Australia, and Papua New Guinea, combined. Many of these countries will see continued growth at strong rates. Indonesia has more planned capacity additions than any other country in the world, and the Philippines has been able to repair most damages to geothermal plants inflicted by Hurricane Yolanda last year. Japan, interested in alternate sources of energy after its nuclear reactor crisis, has reported a new geothermal plant coming on line in the next month. Which region will have the highest capacity of installed geothermal energy in the coming months and years as more geothermal power plants come on line? Where is the new growth happening?  Learn more about international geothermal markets at GEA’s International Geothermal Showcase on April 22 in Washington DC. (w/ Ben Matek) (edited 4/4)

Tax Extenders Bill Passes Committee with 2-Year Extension of Geothermal PTC
The Senate Finance Committee met to markup legislation on April 3 on tax extenders that have expired or will expire at the end of this year (Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act). For geothermal energy, the section 45 production tax credit (PTC) had expired on December 31, 2013; but with today’s committee vote, a two-year extension was passed out of the committee. The next step will be to bring the package to the Senate floor.

“The package includes a two-year extension of the PTC, exactly as it was in place for 2013,” said Greg Wetstone, VP for Government Affairs at Terra-Gen Power, a GEA Board-level member company. “This means that it retains the start-construction framing and the option of selecting a 30% ITC in lieu of the PTC. Projects that begin construction before the end of 2015 will qualify.”

The PTC/ITC extension was added as part of a manager’s amendment by Chairman Ron Wyden. During the markup session the committee considered weakening proposals, including an amendment to eliminate the PTC and one to phase out wind energy tax credits; but, these proposals were defeated.

California State and Local Officials Seek Feedback on Geothermal Plans
California State Senator Ben Hueso and Assemblyman V. Manuel Pérez are hosting a hearing this week in Sacramento that will focus on policies, trends, and transmission issues that affect geothermal energy development in the state. “Despite geothermal contributions to the grid, the use of this power source has been steadily decreasing over time. We need clear answers and a thorough understanding of how geothermal power can be used to advance renewable energy production in California,” said Sen. Ben Hueso in the statement.

California Energy Commission commissioner David Hochschild, executive director of Independent Energy Producers Jan Smutny-Jones, IID’s general manager Kevin Kelley, California Independent System Operator’s executive director Neil Millar, and energy division director for California Public Utilities Division Edward Randolph were expected to testify.

GEA Executive Director Karl Gawell was in California to provide testimony (see GEA’s recent “Report on the State of Geothermal Energy in California“).  Gawell’s statement begins, “California is a global leader in geothermal power. If California was an independent nation it would rank second (behind the U.S.) with about 2,700 MW of installed nameplate capacity. These 2,700 MW generated 4.4% of total system power in California in 2012, but could have generated substantially more. Mistaken perceptions about the state of geothermal power in California have stymied growth so that only about half of California’s identified geothermal resources remain undeveloped.”

Imperial County officials, also collecting information in preparation for geothermal plans, held a public meeting on March 27 to get feedback on updating the county’s General Plan for Geothermal/Alternative Energy and Transmission goals, including mapping and identification of the area, with funding from a CEC Renewable Energy and Conversation Planning Grant.

In light of the ongoing state and local process, an Imperial Valley Press editorial this week says lithium coproduction from geothermal is “the ultimate X factor” making geothermal more valuable to California in coming years.

Outlook for Renewable Energy in America Jointly Authored by U.S. Trade Associations
ACORE Press Release (WASHINGTON) March 31 ~ The American Council On Renewable Energy (ACORE) today announced the release of The Outlook for Renewable Energy in America: 2014, jointly authored by U.S. renewable energy trade associations from the power, thermal, and fuel sectors. The Outlook assesses the renewable energy marketplace and forecasts the future of each renewable energy technology sector, from the perspectives of each of the associations, and provides a list of policy recommendations by the respective associations that would encourage continued industry growth.

DCacoreevent_march2013
GEA’s Executive Director, Karl Gawell, and other speakers at ACORE’s National Renewable Energy Policy Forum on March 28. Photo via Twitter user @ACORE

“ACORE applauds the unity of the renewable industry community and this united front as reflected in The Outlook for Renewable Energy in America: 2014,” said ACORE President and CEO, Michael Brower. “The report demonstrates the many public and private sector opportunities that exist at the national, regional and local levels for continued industry advancement and investment; however, they are not one-size-fit-all solutions for every renewable technology. The articles in the report detail specific market drivers for the biofuel, biomass, geothermal, hydropower, solar, waste, and wind energy sectors.”

“The financial markets have responded to greater American consumer interest in renewable energy with increasing levels of private sector investment,” said Jeffrey Holzschuh, Chairman of Institutional Securities at Morgan Stanley. “Spurred by growing individual as well as business demand, private sector investment in the U.S. clean energy sector surpassed $100 billion in 2012-2013, stimulating significant economic development while supporting hundreds of thousands of jobs.”

The trade associations who participated in the Outlook are: Advanced Biofuels Association; American Wind Energy Association; Biomass Power Association; Biomass Thermal Energy Council; Energy Recovery Council; Geothermal Energy Association; Growth Energy; National Hydropower Association; Ocean Renewable Energy Coalition; and the Solar Energy Industries Association.

The industry-specific authors of the Outlook forecast renewable energy’s growth to continue, driven by increasing cost-competitiveness with conventional generation, technology advancements, and acceptance by Americans to embrace clean and renewable technologies.

Linda Church Ciocci, Executive Director, National Hydropower Association commented, “Certainty is integral to hydropower’s continued growth over the next five years. Doubt surrounding the extension of tax incentives and the possibility of a drawn out licensing process are the main deterrent for developers that Washington must address.”

“Wind energy is now among the largest sources of new electric power in the U.S.,” said Tom Kiernan, CEO of the American Wind Energy Association. “Technology innovation and U.S. manufacturing have reduced its average cost by 43 percent in just four years. The economic benefits are reaching communities and consumers all over America, with an average of $15 billion a year in private investment and savings on electric bills also now in the billions a year. We’re on track to generate 20 percent of the electricity in America from wind by 2030, and already produce over 25 percent in Iowa and South Dakota.”

“The U.S. is a world leader in geothermal power generation,” said Karl Gawell, Executive Director of the Geothermal Energy Association, “but to sustain that role, we need the kind of collaboration shown at ACORE’s recent National Renewable Energy Policy Forum to reach state and federal leaders so they will recognize the value of achieving the full potential and diversity of renewable energy.”

“The world has witnessed a sea change in the drivers of energy production and demand,” commented Michael McAdams, President, Advanced Biofuels Association (ABFA). “ABFA believes these issues can be an opportunity and driver for advanced and cellulosic biofuels and we welcome the opportunity to participate with ACORE and the renewable energy community to help support the development and deployment of all renewable technologies.”

ACORE advocates that an America powered on renewable energy and renewable fuels is a stronger, more secure, cleaner, and more prosperous America. The Outlook for Renewable Energy in America: 2014 shows the potential of America’s renewable energy economy to extend beyond one fuel choice or pipeline, to provide the country with an unparalleled opportunity to reinvigorate the U.S. economy while protecting our environment.

Atlas Copco: Company Listed Among World’s Most Ethical for 2nd Consecutive Year
Atlas Copco Press Release, April 3 ~ Atlas Copco was named one of the World’s Most Ethical Companies by the Ethisphere Institute for the second consecutive year. The prestigious ethical ranking, presented at the Global Ethics Summit in New York, recognizes companies that demonstrate leadership in ethics, corporate responsibility, sustainability and governance.

“Atlas Copco emphasizes a value-based culture that prioritizes long-term, ethical and sustainable business development, not only because it is the right thing to do, but because it also makes good business sense,” said Jim Levitt, president, Atlas Copco North America LLC. “We are honored to be recognized by the Ethisphere Institute for our dedication to ethical practices.”

Ethical business practices are a key element in Atlas Copco’s operations. It starts with a culture of compliance to a clear policy governing business practices, including a zero tolerance policy against corruption, a comprehensive education program for employees and an extensive evaluation of the company’s suppliers and their safety, health and environmental practices. Atlas Copco also provides an annual corruption-awareness training program in which thousands of employees have participated, and employees and managers are expected to adhere to the company’s Business Code of Practice.

As part of the company’s dedication to business ethics and standards, Atlas Copco is a signatory to the UN Global Compact, a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption.

Enel Green Power: Work Underway on Two Innovative Power Plants in Chile and USA
EGP Press Release (Rome) April 1 ~ Enel Green Power has started work on the construction of two innovative facilities: in Ollagüe (Chile), on the Bolivian border and in Nevada, USA.

In Chile, the renewable company will construct a plant comprising photovoltaic power, a mini-wind turbine generator and a co-generation system for producing both electricity and hot water for the village school. The plant is expected to have an installed capacity of 232 kW as well as generating approximately 460 MWh/year, equivalent to the electricity consumption of 150 households. The power plant will be stand-alone, in other words, it will not be connected to the national grid and will also include a 520 kWh electro-chemical storage system. Said system will be capable of meeting all the technical needs of the network. Thanks to this project, local residents will finally be able to enjoy electricity 24 hours a day.

In Nevada, USA, Enel Green Power North America has started works on the construction of a solar thermodynamic power plant to operate alongside the existing Stillwater geothermal power station, which is already paired with a 26 MW photovoltaic facility.

This is the first hybrid plant in the world able to combine the continuous generating capacity of binary-cycle, medium-enthalpy geothermal power with solar thermodynamic.

The Stillwater geothermal plant, with a total net installed capacity of 33 MW, will be integrated with a 17 MW solar thermodynamic facility. The linear parabolic mirrors of the new thermodynamic plant boast reflecting surfaces capable of concentrating solar radiation, raising its potential some 75 times, inside receiver tubes filled with demineralised water under pressure.

The solar thermodynamic plant will be capable of generating approximately 3 million kWh/year, to be added to the power currently being generated by the existing hybrid plant.

The energy produced will be sold to NV Energy, through the existing 20-year Power Purchase Agreement (PPA).

Thanks to the innovative technology that will enable the use of the sun’s heat to raise the temperature of the geothermal fluid extracted from the wells, it will be possible to improve the cycle’s yield and increase its electricity output.

Combining several renewable sources at the same location is one of the guidelines along which the Enel Green Power innovation strategy is being developed. Combining several renewable power generation technologies also increases zero-emission output as well as making it possible to rely on the same infrastructures, such as electrical interconnection lines, thereby further reducing environmental impact.

Enel Green Power’s efforts in the renewable sector are focused on the performance of existing technologies (hydro, wind and geothermal), improving their availability as well as mitigating the effects associated with intermittency. The company is also working on renewable sources not utilized so far, to secure higher levels of energy supply, also in remote areas.

Mannvit Engineering: Theistareykir Project in Iceland Issued Permit
In Icelandic news this week, the National Energy Authority of Iceland issued a permit for utilization of groundwater in the proposed geothermal energy project at Theistareykir. Icelandic National Power Company (Landsvirkjun) is leading the 90-MW project and GEA member company Mannvit Engineering is providing services.

Ormat Technologies: Sarulla Consortium Signs $1.17 Billion Financing for 330-MW Indonesia Project
Ormat Press Release (RENO, Nev.) March 28 ~ Ormat is the supplier of $254 million equipment under the supply contract and holds an equity stake of 12.75% ~ Ormat Technologies, Inc. (NYSE: ORA) announced today that members of the Sarulla Consortium comprising of Medco, Itochu, Kyushu and Ormat signed $1.17 billion project financing agreements to finance the development and construction of the 330-megawatt (MW) Sarulla geothermal project in Tapanuli Utara, North Sumatra in Indonesia.
Closing is expected in the second quarter of 2014 subject to fulfilment of certain conditions. Upon closing, the consortium is expected to begin construction with the first phase to commence operation in 2016. The remaining two phases are scheduled to be in commercial operation within 18 months of the first phase.

Ormat will supply its Ormat Energy Converters to the power plant and will add the $254 million supply contract to its product segment backlog once Notice to Proceed is issued, concurrently with the closing of the financing. According to the current project plan Ormat expects to recognize revenue from the project over the course of the next three to four years starting in the third quarter of 2014. In addition, Ormat, through its subsidiary Ormat International, Inc., holds a 12.75% equity stake in the Sarulla project.

These financing agreements were signed with the Japan Bank for International Cooperation (JBIC) and the Asian Development Bank (ADB), who serves as the lead structuring banks, six commercial banks (the Covered Lenders), as well as ADB in its capacity as implementing entity of the Clean Technology Fund and the Canadian Climate Fund.

The Sarulla project will obtain construction and term loans under a limited recourse financing package of direct loans from JBIC and ADB, as well as loans from the Covered Lenders backed by political risk guarantees from JBIC.

The project will be developed and implemented under a 30-year energy sales contract with Perusahaan Listrik Negara, the national electricity utility company, a 30-year joint operating contract with Pertamina Geothermal Energy, and a 20-year guarantee from the Ministry of Finance.

Dita Bronicki, chief executive officer of Ormat Technologies, said, “We are pleased to achieve this significant milestone as scheduled and look forward to continue execution on this exciting new development. We are appreciative for the hard work of the many parties that were involved in getting these agreements signed. We will continue the effort to close this financing and ultimately, supply clean, reliable electricity to the Indonesian market.”

Ormat Technologies: Ormat Sells Heber Solar PV Project for $35.25 Million
Ormat Press Release (RENO, Nev.) March 26 ~ Ormat Technologies, Inc. (NYSE:ORA) today announced that its wholly owned subsidiary, Ormat Nevada, Inc., signed an agreement with RET Holdings, LLC to sell the Heber Solar project in Imperial County, California for $35.25 million. Ormat received the first payment of $15 million with the remainder expected to be paid in the second quarter of 2014, subject to fulfillment of certain milestones. As a result of the sale, Ormat will record a pre-tax gain of approximately $7.0 million.

The project, which started development in 2011, has a 20-year power purchase agreement (PPA) with the Imperial Irrigation District (IID) for 10 MW of solar photovoltaic (PV) energy.

“Our goals in the development of the Heber Solar project were to benefit from the synergies between our existing geothermal assets and solar development, to apply our development and experience as engineering, procurement and construction contractor in utility scale solar plants and to develop profitable projects. The development up to this point and the transaction that we have just concluded with RET Holdings allowed us to accomplish all three goals,” said Dita Bronicki, chief executive officer of Ormat. “The Heber Solar project, Ormat’s first PV project in the U.S., was developed in a cost-effective way. We plan to continue monitoring the solar market and pursue opportunities for developing PV plants in locations where we can offer competitively priced power generation.”

“RET is pleased to acquire this high-quality asset and looks forward to growing its business with new and existing asset partners,” said John A.
Bohn, Chief Executive Officer and Chairman of RET.

Ormat Technologies: License Issued for Second McGinness Hills Plant
Ormat was in the news this week, having been issued a license by the Bureau of Land Management Battle Mountain District for construction of a second power plant at McGinness Hills Geothermal Project in Nevada. The BLM press release summarizes the site’s history: “In 2011, Ormat was authorized to construct two geothermal power plants and completed the first in 2012. The second power plant, nearly identical to the first, is a binary air-cooled operation capable of producing approximately 45 megawatts. The previously analyzed surface disturbance totals about 16.5 acres and includes a substation used to transform generated low voltage to the higher voltage required for a transmission line. A 9-mile long, 230 kV overhead transmission line connects the site to the existing NV Energy Frontier substation.”

Ram Power: 2013 Year End Results Announced
Ram Power Press Release (RENO, NV) March 31 ~ Ram Power, Corp. (TSX: RPG), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, is pleased to announce its operating results for the fiscal year ended December 31, 2013. This earnings release should be read in conjunction with Ram Power’s financial statements, and management’s discussion and analysis (“MD&A”), which are available on the Company’s website at http://www.ram-power.com and have been posted on SEDAR at http://www.sedar.com.

San Jacinto-Tizate Project:
• The San Jacinto-Tizate Power Plant generated 423,998 (net) MWh resulting in revenue of $46.2 million for the year ended December 31, 2012 (an increase of 65% over 2012) and EBITDA (as defined below) of $30.5 million in 2013 compared to revenue of $28.1 million and EBITDA of $9.7 million in 2012;
• Well SJ 12-3 was placed in commercial operation following an extensive thermal recovery period in late February, 2014. Well head temperature and pressures continue to oscillate since being placed into production, but will stabilize over time and the well is currently producing between 7-10 MW.
• Well SJ 9-3 continues to be in thermal recovery. The Company has made four attempts to tie in the well into the plant after nine weeks of thermal recovery. SJ 9-3, when achieving well head pressure necessary for the operating pressure of the plant, has demonstrated a production output between 7-10 MW. The well continues to show improved thermal recovery of temperature and pressure, but will continue to be shut in for periods of time over coming weeks to allow for complete stabilization.

Corporate Update:
• The Company entered into a letter of intent on January 14, 2014 with an interested party for the purchase and sale of the Geysers Project. The Company is in the final stages of negotiating a purchase and sale agreement, and intends to execute an agreement in the immediate future. The Company anticipates an expected close and funding of the sale by April 30, 2014.
• The Company continues to work with Dundee Securities on the strategic process, and expects letters of intent from interested parties by mid-April 2014.
• The Company continues the process of selling and / or disposing of all non-core assets to focus its efforts on maximizing the cash flow and profitability of the Company’s producing assets in Nicaragua. Accordingly, the Company has made the strategic decision to close the Reno, Nevada office effective May 31, 2014.

GEA Companies Involved in First Geothermal Project for Malaysia
The first geothermal power project in Malaysia is moving forward. This week, Tawau Green Energy announced it had awarded several supply contracts for the project, including contracts with GEA member companies Power Engineers, Atlas Copco, and GeothermEx. “Atlas Copco is looking forward to develop a strong collaboration and partnership with TGE to successfully construct the first geothermal power plant in Malaysia. Choosing and trusting Atlas Copco as an important partner to design and construct the first ORC-plant in Malaysia also showcases our gained expertise and know how when acting as EP or EPC in the geothermal business,” Lárus Eliasson, General Manager of the Geothermal Competence Center of Atlas Copco was quoted in a statement.

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