International Geothermal Showcase Wraps Up, while State-side, Focus is on California

The Keynote Speaker at GEA’s International Geothermal Showcase on April 22, 2014, asked participants: Why is geothermal energy, which offers the whole package–low lifetime costs, low emissions, and reliable baseload power–projected by the International Energy Agency (IEA) to add fewer capacity additions than almost any other energy source between 2011 and 2020? Carlos Pascual (Special Envoy and Coordinator for International Energy Affairs, Bureau of Energy Resources, U.S. Department of State) set a proactive pace for the conference, focusing on strategies and solutions being implemented around the world to grow the valuable geothermal share of the market. “The most important reason I’m here today is to reinforce and encourage what you’re doing,” Pascual told the gathered international geothermal industry.

Graph_BaseloadAndLowEmissions_fromPascualPDFApr2014
As shared by Carlos Pascual, U.S. Department of State

Continue reading for this week’s top news from the Geothermal Energy Association (GEA).

*International Ties Strengthened at Geothermal Showcase and Risk Reduction Workshop in DC
*California Legislators Introduce Bill to Require Geothermal Procurement
*First-Ever Geothermal Awareness Month Kicks Off May 5 in Sacramento</strong
*Geothermal Showcase Finds Sector Hopeful, but Industry Needs Early Funding, Risk Mitigation to Thrive
*New GEA Report Details Trends and Substantial Growth in the Global Geothermal Market
*EIA’s Renewables Projections Too Low at 16-27% of U.S. Electricity Supply by 2040
*Anti-Wind-PTC Group Moves to Block Extension

*Enel Green Power: 5-MW Solar Addition to Stillwater Geothermal Facility Expected This Year

International Ties Strengthened at Geothermal Showcase and Risk Reduction Workshop in DC
At the April 22 GEA International Geothermal Showcase, 250 individuals came face to face from 36 countries to discuss the latest geothermal industry trends, present current projects under development, and consider policy options from around the world. By comparison, a similar event by the GEA in 2012 drew participation from 27 countries; it’s easy to see that geothermal energy development and use has been a topic of growing international interest to governments and the private sector.
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The next day, many of the participants returned for the smaller “Best Practices for Risk Reduction Workshop,” a dialogue on current approaches for reducing geothermal risk that was co-hosted by the GEA and the U.S. Department of State. The day’s four sessions looked at different aspects, which will be compiled into a unified report and made widely available: (1) policy, legal, and regulatory structures needed for project success; (2) best practices for successful geothermal exploration; (3) how to conduct geothermal drilling cost-effectively; and (4) best approaches for successful project management. (Presentations from April 23 are now available to GEA members at the Member Access link.)

Here’s what geothermal representatives had to say to reporters on the day of the International Geothermal Showcase about the U.S. Market:

  • “If you go in to oil and gas producing states, the cost of oil and gas is generally low, so the economics are a challenge [for geothermal]. Something else is going to have to shift for those economics to be realized, which would be some kind of government incentives or the continuation of the 30% ITC or PTC.” – John Fox, ElectraTherm
  • “We have seen significant development from our side in 2013, putting a new facility on line in Nevada and selling in to California. I think that there are some challenges in the California market, but there are still opportunities.” – Bob Sullivan, Ormat Technologies
  • “The organization and the industry is working to get its product properly valued in the marketplace, and if we can recognize those additional value contributors that will help us immensely be able to compete better in the U.S. market here.” – Craig Mataczynski, Gradient Resources

And, the International Market:

  • “For as much as you hear about the world market slowing down and the challenges for geothermal, there are huge things happening in East Africa and there’s a lot of funding from JICA and the French development bank and the U.S. AID; a lot of organizations are putting a lot of money and effort into expanding the geothermal business.” – Mike Long, Power Engineers
  • “We’re very excited about the international growth that we see, specifically markets such as Turkey and Indonesia as well as the evolving markets in both the Afghan region as well as Latin America, so I think all of those regions are recognizing the value of geothermal.” – Steve Hummel, TAS Energy
  • “We have international interest and it’s mostly based on feed in tariffs in Italy and Germany and Japan.” – John Fox, ElectraTherm

Read more content from the GEA’s International Geothermal Showcase in GEA Press Releases and other media coverage:

  • “Geothermal Power Installations Grow Most Since 1997,” by Justin Doom, Bloomberg.com
  • “Global Geothermal Market Saw Huge 2013 Growth, Says GEA,” by Meg Cichon, RenewableEnergyWorld.com
  • “The ‘invisible renewable’ struggles with slow U.S. growth,” by Julia Pyper, EENews.net
  • “Geothermal Energy Association’s Gawell discusses challenges facing industry in U.S.” (Video, with Monica Trauzzi), EEnews.net

California Legislators Introduce Bill to Require Geothermal Procurement
California State Senator Ben Hueso (D-San Diego) together with Assemblymember Manuel Pérez (D-Coachella) have introduced SB 1139, which would require energy retail sellers and local publicly owned electric utilities to procure 500 MW of electricity from baseload geothermal power plants by 2024. This week the Senate Energy, Utilities and Communications Committee approved the bill by a vote of 6-2 and sent it on to the Senate Appropriations Committee.

For years the geothermal industry has known about substantial resources that could be developed in addition to the geothermal already produced in the state. California produces more geothermal energy than any other renewable source in the state, and more of it than any other state. But there has been inadequate incentive or support for the level of development needed to stay competitive, and for the past few years geothermal development in the state stayed flat while wind and solar became preferred for renewable contracts to meet climate goals.

This new piece of legislation, if enacted, could be a catalyst for the level of increased industry momentum that is needed to make geothermal–a unique commodity with values that other resources don’t have–competitive for contracts; especially when coupled with recent efforts of Southern California’s Imperial Irrigation District through the Salton Sea Restoration and Renewable Energy Initiative, which has the ultimate goal to achieve no less than 1,700 MW of new geothermal power production.

The authors of SB 1139 were quoted in a public statement. “This bill is directionally important. The clean electric system of the future has to have more baseload generation. We have abundant geothermal resources in this state that are underutilized,” said Senator Hueso. “California utilities are dramatically increasing their renewable energy portfolios with wind and solar resources, but not effectively increasing the utilization of geothermal power. The long term electric supply portfolio serving Californians should include much greater reliance on geothermal resources to achieve a balanced Renewable Portfolio Standard as we move toward a carbon-free generation supply.”

“Geothermal, with its ability to provide base load power with negligible greenhouse gas emissions, has the potential to anchor southern California’s energy needs, while keeping us on track to achieve our state’s emissions reductions goals,” said Assemblyman V. Manuel Pérez. “Either we are serious about these goals or we aren’t. At the same time, the development of these resources could produce thousands of jobs for our Coachella and Imperial Valley communities while also serving as a source of financing for Salton Sea restoration.”

First-Ever Geothermal Awareness Month Kicks Off May 5 in Sacramento
The first-ever Geothermal Day in California will be attended by members of the geothermal industry, including GEA members (representatives from Calpine Corp., Ormat Technologies, others). They hope to impress Sacramento decision-makers with the importance of geothermal power to the state and to provide them with educational information on the state’s top renewable source.

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For those interested in joining the Geothermal Day festivities, happening May 5 on the West Coast Capitol Hill, events on the agenda begin with morning coffee courtesy of Calpine Corp.; recognition of Geothermal Day and industry members in attendance in both the Assembly and the State Senate; and a brief informational session.

In the evening, the public is invited to a Geothermal Awareness Day Legislative Reception. The invitation from Calpine reads, “Together with Senators Evans and Hueso and Assembly Members Chesbro and V.M. Perez, Calpine Corporation invites you to celebrate at a legislative reception. We will be joined by men and women from around the state who work hard to provide this clean and reliable energy resource to California homes and businesses. We look forward to celebrating geothermal energy’s contribution to our State together!” (RSVP required, geysers@calpine.com, 916-491-3377). Calpine provides further information about California geothermal policy at http://support.geysers.com/.

Geothermal Showcase Finds Sector Hopeful, but Industry Needs Early Funding, Risk Mitigation to Thrive
GEA Press Release, Washington, D.C. (April 28, 2014)—Last week, the Geothermal Energy Association hosted the GEA International Geothermal Showcase, bringing together 250 participants from 36 countries and representing more than half of all geothermal projects worldwide. Together, these projects could mean over 10,000 MW of new geothermal power and would represent around $45 billion in new investment.

“The geothermal industry is seeing strong global growth as international efforts are working to address the challenges of early funding and risk mitigation,” noted GEA Executive Director Karl Gawell. “The U.S. market remains slow as federal and state governments debate whether and how to support incentives for new development,” he added.

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Geothermal industry participants mingle ahead of the GEA International Geothermal Showcase.

GEA released the results of its new U.S. and International Market Update to event attendees, now available online at http://geo-energy.org/reports.aspx. The “2014 Annual U.S. & Global Geothermal Power Production Report” found almost 700 projects currently under development in 76 countries. The international power market is booming, with a sustained growth rate of 4% to 5%, while stateside growth held steady. U.S. growth was flat because of policy barriers, gridlock at the federal level, low natural gas prices and inadequate transmission infrastructure.

At the Showcase, industry representatives discussed the environment that is needed to foster greater domestic growth, including policy support in Nevada, California and other western states. A priority for GEA leadership is the need to see geothermal properly valued as a baseload source in the marketplace.

Much excitement focused on international markets, where insiders noted robust growth driven by the increasing need for electricity, and the realization that economic well-being is tied to the availability of power at a reasonable price. Internationally, the value of geothermal is recognized, with countries such as China and Japan offering significant feed-in tariffs, as well as explosive sector growth in electricity hungry Asia, Africa and Latin America.

With U.S. export of geothermal technologies and manufacturing expertise on the rise, financial challenges lingered domestically as the industry looked to rectify policy discrepancies for the various renewable technologies. While other renewable resources such as wind and solar can come online within a year and a half, geothermal projects face project timelines of up to seven years, making it more difficult for financiers to utilize programs such as the Production Tax Credit or the Investment Tax Credit. Without consistent domestic policy support, the industry is seeing a lack of investment in research and development in the United States. Stateside, however, Renewable Portfolio Standards have been helpful in driving demand for renewables including geothermal. Showcase attendees also noted that transmission presents a stateside challenge in regions such as the Salton Sea in California.

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“Power Africa” and “Geothermal Energy Association” bling

GEA hosted the Showcase with support from organizations including the U.S. Trade and Development Agency, the Overseas Private Investment Corporation, the U.S. Agency for International Development, the U.S. Department of Energy Geothermal Technologies Office, the U.S. Department of State, U.S. Export-Import Bank, The World Bank, U.S. Department of Commerce, U.S. International Trade Administration, Inter-American Development Bank, Energy Sector Management Assistance Program and U. S. Energy Association.

The following countries were represented at the Showcase: Belgium, Chile, Colombia, Commonwealth of Dominica, Costa Rica, Croatia, Djibouti, Dominica, Ethiopia, Fiji, Germany, Iceland, India, Indonesia, Italy, Japan, Kenya, Mexico, New Zealand, Nicaragua, Nigeria, Pakistan, the Philippines, Romania, Rwanda, Singapore, Spain, St. Kitts and Nevis, Switzerland, Taiwan, Tanzania, Thailand, Turkey, Uganda, and the United States.

The geothermal industry will continue the conversation when they gather for the National Geothermal Summit at the Grand Sierra Resort & Casino in Reno, Nev., August 5-6. For more information on the Summit, please visit: http://www.geo-energy.org/nationalgeothermalsummit/Main.aspx

For information about Summit sponsorships, please contact Kathy Kent Schott at kathy@geo-energy.org. To schedule an interview or request press credentials, please contact Shawna McGregor, The Rosen Group, 917 971 7852 or shawna@rosengrouppr.com.

New GEA Report Details Trends and Substantial Growth in the Global Geothermal Market
GEA Press Release, Washington, D.C. (April 22, 2014) – A new report from the Geothermal Energy Association (GEA), released today at the organization’s International Geothermal Showcase in Washington, D.C., reveals the international power market is booming, with a sustained growth rate of 4% to 5%. The “2014 Annual U.S. & Global Geothermal Power Production Report” finds almost 700 projects currently under development in 76 countries. Threats caused by climate change and the need for a renewable energy source that can satisfy both firm and flexible grid needs are among the key factors driving the international community to invest in geothermal power.

International geothermal market growth was up, while stateside growth held steady; 85 MW of the total global 530 MW of new geothermal capacity in 2013 was in the U.S., according to the new GEA report. U.S. growth was flat because of policy barriers, gridlock at the federal level, low natural gas prices and inadequate transmission infrastructure.

“While there was a modest downturn in capacity additions, the Industry Update also underscores the tremendous untapped potential for geothermal energy,” said GEA Executive Director Karl Gawell. According to the report, the geothermal industry was working on 977MW of new capacity (Planned Capacity Additions or PCA’s) at sites that hold over 3,092MW of power potential in eight western states, the GEA report indicates (see Figure 7).

U.S. additions in Utah, Nevada, California, and New Mexico kept the industry on the map domestically in 2013, and future growth looks promising. “The geothermal resource base is still largely untapped,” noted Ben Matek, GEA’s Industry Analyst. “With new initiatives in Nevada, California and Oregon moving to recognize the values of geothermal power, we are optimistic that state policies could spark another period of growth in geothermal power over the next decade,” he added.

In 2013, 25 pieces of legislation in 13 U.S. states were enacted specifically to address geothermal power and heating systems, creating a foundation for the environment needed to foster geothermal growth in these states. Past evidence shows successful policy initiatives have translated into growth; in Nevada, for example, which leads the way as one of the most business-friendly environments, the number of developing projects (45) more than doubles that of California (25).

The Salton Sea Resource Area is a new initiative of California that could be a significant source of growth for the U.S. geothermal power industry if several policy barriers are overcome in the near term. The Imperial Irrigation District has pledged to build up to 1,700 MW of geothermal power by the early 2030’s at the Salton Sea. If successful, this initiative could increase the nameplate capacity of the U.S. by 50% over the next 20 years.

Elsewhere in the U.S., the Public Utility Commissions in Nevada and Oregon recently created potentially beneficial opportunities for geothermal power, while the Washington State Assembly clarified confusing legislation. New Mexico debuted its first geothermal power plant in 2013, with work by Cyrq Energy, and the state showed legislative support for future projects when it passed H.B 85. The legislation matches federal royalty rates and requires geothermal resources be managed as renewable resources. In Alaska, the City of Akutan is supporting a promising project, which may lead to the state’s first utility-scale geothermal power plant.

Some myths have surfaced that geothermal power is reaching its potential capacity in states like California and Nevada. These states still have a significant amount of known untapped potential that could be used domestically or exported to surrounding states. Overall, GEA estimates about 50% of California’s known resources, 60% of Nevada’s, and 60% of Utah’s are still untapped.

Globally, significant geothermal development growth is expected over the next few years. In East Africa, Kenya and Ethiopia are building power plants greater than 100 MW. For comparison the average size of a geothermal power plant in the U.S. is about 25 MW. South American nations such as Chile, Argentina, Colombia and Honduras have significant potential, but are in the early stages of identifying their resources. The GEA estimates that Chile is actively developing 50 projects and prospects.

These are only a sampling of the vast increases globally; looking at the numbers in Figure 2 of the new GEA report, there could be a time in the near future when the United States is no longer the world leader in geothermal energy production. For instance, the U.S. has about 1,000 MW in the pipeline and 3,400 MW nameplate capacity for a total of 4,400 MW. Meanwhile, Indonesia has 4,400 MW of planned capacity additions announced in the pipeline alone.

In terms of established nameplate capacity, the U.S. (with a total in 2013 of 3,442 MW) still outpaces the Philippines (1,904 MW in 2013) and Indonesia (1,333 MW), the world’s second and third ranked geothermal energy producers.

EIA’s Renewables Projections Too Low at 16-27% of U.S. Electricity Supply by 2040
SUN DAY Campaign Release (April 29, 2014) Washington DC – Low End Does Not Pass the Laugh Test; Upper Bound Probably Still Too Conservative ~ Today, the U.S. Energy Information Administration (EIA) released its renewable electricity generation projections as part of its “Annual Energy Outlook – 2014” [AEO2014] (see: http://www.eia.gov/todayinenergy/detail.cfm?id=16051).

For the AEO2014 “Reference case,” EIA notes: “Renewable electricity generation in the United States is projected to grow by 69% from 2012 to 2040…, including an increase of more than 140% in generation from nonhydropower renewable energy sources. … Although nonhydropower renewable generation more than doubles between 2012 and 2040…, [renewable energy’s] contribution to U.S. total electricity generation is still just 16%.”

Two other scenarios offered by EIA – the Low Economic Growth and the High Oil and Gas Resource cases – suggest even lower penetration rates by renewables.

In the view of the SUN DAY Campaign, these projections do not pass the laugh test.

However, EIA also offers several other scenarios – including the No Sunset and CHG25 cases – in which “renewables account for 24% and 27%, respectively, of total electricity generation in 2040. … In fact, renewable penetration of electricity supply in both cases meets or surpasses 16% by 2020, which is the level attained in the Reference case by 2040.”

Significantly, these latter projections are higher than those presented in the past by EIA. However, while more credible, these scenarios will also almost certainly prove to be unduly conservative.

In fact, based on the actual growth rates for renewable energy sources (i.e., biomass, geothermal, hydropower, solar, wind) over the past decade, multiple other studies, and even analyses from EIA itself, it is likely that renewables will comprise a much larger share of the nation’s electrical generating supply by 2040 — perhaps two, three or more times higher than the Reference case level forecast by EIA.

There are multiple grounds for challenging EIA’s “Annual Energy Outlook” projections – particularly the Reference Case:

** EIA’s own published data for the 11-year period January 1, 2003 through December 31, 2013 reveal that the percentage of the nation’s net electrical generation represented by renewable energy has expanded from less than 9% in 2004 to nearly 13% in 2013 – i.e., within a decade. Given the relatively consistent growth trends of the past decade or longer for most renewable energy sources and  their rapidly declining costs, it seems improbable that it will require another 27 years to grow from 13% to 16%. (see the February 21, 2014 issue of EIA’s “Electric Power Monthly,” available at http://www.eia.gov/electricity/monthly.  See, in particular, tables 1.1, 1.1A, ES1.A, and ES1.B)

**To reach 16% by 2040 from 13% in 2013, renewables would only need to expand their current share of the electrical-generation supply by roughly 0.1% per year (e.g., 13.0% in 2013 to 13.1% in 2014 to 13.2% in 2015, etc.). In reality, renewables have expanded their share of the electrical generation supply by an average of 0.4% each year for the past decade. Even EIA’s most recent “Short-Term Energy Outlook,” issued April 8 with projections for the next two years, suggests an expansion rate closer to 0.3% annually (i.e., 13% in 2013 to ~13.3% in 2014 and ~13.6% in 2015). (see: http://www.eia.gov/forecasts/steo/report/renew_co2.cfm)

**An analysis issued on April 15 by the SUN DAY Campaign suggests that if the trends reflected in EIA data from the past decade continue, renewable energy sources could increase to as much as 13.5% of net U.S. electrical generation in 2014, to 14.4% in 2015, to 15.3% in 2016, and reach or exceed 16.0% no later than 2018 — i.e., within five years and not the 27 years forecast by EIA. Moreover, dozens of other recent analyses suggest that, in light of rapidly dropping costs for renewables and the need to address climate change, an even faster growth rate for renewables is both possible and probable. (see: http://www.nirs.org/alternatives/sundayforecast414.pdf)

** Renewables are dominating new electrical generating capacity. According to the Federal Energy Regulatory Commission (FERC), renewables provided 47% of new electrical generating capacity in 2012 and 2013 combined (see: http://www.ferc.gov/legal/staff-reports/2013/dec-energy-infrastructure.pdf). For the first quarter of 2014, FERC reports that renewables accounted for 92% of new electrical generating capacity (see: http://www.ferc.gov/legal/staff-reports/2014/mar-infrastructure.pdf). Further, SNL Financial recently reported that renewables now make up more than 56% of the new generation capacity under development (see: http://www.snl.com/InteractiveX/Article.aspx?cdid=A-27651127-13356).

** Other recent EIA reports and statements regarding near-term renewable energy growth appear to be inconsistent with the AEO2014 projections – especially the Reference Case. For example, on Earth Day, EIA reported that over the past four years alone U.S. solar capacity had increased by 418% and now accounts for almost 1.13% of total U.S. electric generating capacity (see: http://www.eia.gov/electricity/monthly/update). The following day, an EIA official noted that 15 gigawatts of additional wind capacity is projected to be added by the end of 2016 – that is roughly a 25% increase (see: http://www.bna.com/incentives-watch-sharp-b17179889819). EIA’s most recent “Short-Term Energy Outlook” report, issued April 8, also forecasts an  increase over the next two years of 2.6% for hydropower, 2.7% for geothermal, and  1.0% for biomass (see:http://www.eia.gov/forecasts/steo/report/renew_co2.cfm).

** Even the Secretary of the U.S. Department of Energy Ernest Moniz implicitly disagrees with EIA’s renewable energy projections. In a March 2014 interview, he was quoted as stating ” In the last four or five years, we have seen a doubling of wind and solar. We expect another doubling over the next several years. … we are looking by 2030 to having a very, very large fraction of our capacity in wind, solar and other renewables …  30 percent, 40 percent.” (see: http://hereandnow.wbur.org/2014/03/04/ernest-moniz-energy)

“Unrealistically low forecasts provide ammunition for those arguing that investments in renewable energy are not cost-effective and that new fossil fuel and nuclear construction is necessary because renewables cannot meet the nation’s future energy needs,” warned Ken Bossong, Executive Director of the SUN DAY Campaign.” As such, EIA’s projections can have multiple adverse impacts on the renewable energy industry as well as on the nation’s environmental and energy future.”

The SUN DAY Campaign is a non-profit research and educational organization founded in 1992 to promote sustainable energy technologies as cost-effective alternatives to nuclear power and fossil fuels.

Anti-Wind-PTC Group Moves to Block Extension
The American Energy Alliance was the lead in a combined letter that was delivered this week to the House Ways and Means Committee, asking that the wind Production Tax Credit not be extended. The committee is preparing to examine a tax extenders bill. Their position reads, “What is so dangerous about the wind PTC is not only that we are choosing to throw away money on a technology completely incapable of keeping the lights on, but the PTC is designed to harm reliable sources of energy like nuclear and coal through predatory negative prices that the PTC enables. The PTC is so large that it allows wind producers to pay the electricity grid to take their electricity and still make money.” The full letter is available here.

Enel Green Power: 5-MW Solar Addition to Stillwater Geothermal Facility Expected This Year
Enel Green Power’s Head of Innovation Scouting and Selection, Fabrizio Bizzarri, recently commented on the parabolic trough solar field being integrated into the heating loop of the company’s Stillwater geothermal power plant in Nevada. “We are …integrating thermodynamic solar power into a geothermal plant, using the Sun to increase heating of geothermal fluid. The solar field adds about 17 thermal megawatts, equivalent to five megawatts of additional electric capacity,” Bizzarri said. Kelly Beninga, SkyFuel’s Chief Commercial Officer was quoted: “Enel’s choice of our technology is the best validation SkyFuel could ask for . . . SkyFuel’s ability to offer Munich Re insurance coverage for our thermal performance warranty provided Enel with additional confidence to select our innovative design.” The system is expected to be operational by the end of 2014.

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