Leading news: Congressional Decisions and Upcoming Events Help Shape the Geothermal Future

This post brings you the week’s “Top news for geothermal development and GEA members,” including news on renewable tax credits, the Ex-Im bank reauthorization, the upcoming Geothermal Energy Expo, the California geothermal market, and more.

Cost_of_SaltonSea_Inaction2014
“In the figure, the higher estimated inaction costs appear in red, while the lower estimates appear in orange. These estimated costs provide an initial basis for comparison with the estimated project costs of revitalization or mitigation, shown in black, to demonstrate that the costs of inaction are not zero.” – Pacific Institute

The visual above is from a new Pacific Institute report, “Hazard’s Toll.” The report looks at what the costs will be if issues at the Salton Sea area, including water and air quality decline, are not revitalized or mitigated. Many people assign the cost of inaction to be $0, but the report finds this isn’t the case. “Even at the low estimate, the long–term social and economic costs of a deteriorating Salton Sea could approach $29 billion, well in excess of the project cost of the state’s revitalization plan,” according to the report. The Imperial Irrigation District has proposed the Salton Sea Restoration and Renewable Energy Initiative, which uses geothermal development as an economic catalyst in the sustainability-minded plan.

Click below to keep reading “This week’s top news for geothermal development and GEA members.”

*Senator Reid Calls for Vote on Renewable Tax Credit Extension
*Ex-Im Bank to Cease Lending if Congress Doesn’t Act
*GEA Geothermal Energy Expo: Open to the Public on October 1 in Portland, Oregon, USA
*California Takes Steps Toward a New Policy Structure for Renewable Power
*CEC Names Four Geothermal Grant Awardees
*Alternative Earth Resources Completes Sale of Geothermal Projects to Ormat
*USTDA Supports Dewhurst Group Geothermal Power Plant in Colombia

Senator Reid Calls for Vote on Renewable Tax Credit Extension
Senate Majority Leader Harry Reid (D-Nev.) was quoted today (September 4) that he will bring legislation to extend tax credits for renewable energy sources to the Senate floor by the end of the year. “Efforts to renew these incentives are being blocked by Republicans in Congress,” Reid said. “Letting these critical incentives expire is not an option. I’ll bring them to the floor before the end of this year for a vote.” The Senate returns from recess September 9 for a two week session.

The legislation would extend the tax credit for geothermal, wind, and other renewables for two years. Under current law, taxpaying providers are able to claim a 2.3 cent per kilowatt hour production tax credit (PTC) for renewable electricity produced for a 10-year period from a facility that commenced construction by the end of 2013. The taxpayer could also choose to take a 30 percent investment tax credit instead of the PTC. The bill extends these provisions through December 31, 2015.

Reid said, “Tax incentives level the playing field for energy . . . They help make renewables more affordable for consumers and more attractive to investors.”

Ex-Im Bank to Cease Lending if Congress Doesn’t Act
If Congress fails to act by September 30, the Export-Import Bank of the United States (Ex-Im) will cease lending. Ex-Im produced a $1 billion profit for the Treasury on its guarantee and other fees last year; however, some Republican members as well as entities such as the Koch brothers have framed the bank as extravagant government support for big businesses. Ex-Im has geothermal programs that have fostered industry growth at home and abroad.

While major financial institutions look for $100 million+ export deals, Ex-Im supports smaller transactions; this is why 87% of Ex-Im Bank transactions support U.S. small business exporters. Geothermal industry members have partnered with Ex-Im on a variety of projects around the world, including some in Turkey, Kenya, and The Philippines.

The U.S. Chamber of Commerce has created a page for the public who wish to show support for Ex-Im at https://www.uschamber.com/international/international-affairs-division/show-your-support-export-import-bank.

GEA Geothermal Energy Expo: Open to the Public on October 1 in Portland, Oregon, USA
Press Release (Portland) September 3–On Wednesday morning, October 1 from 9am-noon, the GEA Geothermal Energy Expo, being held in Hall C of the Oregon Convention Center, will be free and open to Portland area public. If you are a local business owner, university student, teacher, or government official, you are welcome to walk the 120+ booths of the world’s largest geothermal gathering free of charge.

GEA’s most recent Annual Production Update (PDF) shows Oregon has 17 geothermal projects currently in development.  The GEA Expo floor features a unique opportunity for leaders in the business to showcase their projects, equipment, services and state of the art technology to the geothermal community. This is the premier gathering to learn about the latest developments in geothermal energy. The Expo, held in tandem with the GRC Annual Meeting is being held from Sept. 28 to Oct. 1.

Geothermal energy is a firm yet flexible renewable energy source that can bring the reliability of 24/7 baseload power or complement other energy technologies by firming up more intermittent power generation. It can also provide distributed power generation from small co-production projects, with one of the smallest environmental footprints of any technology.

As one of the country’s leading geothermal prospects, Oregon has spearheaded new initiatives that move to recognize the values of geothermal power, leading the industry to be optimistic that state policies such as these could spark a strong period of growth in geothermal power over the next decade. In addition, Oregon Public Utility Commission changed its current methodology for calculating standard renewable avoided cost prices that might more fairly calculate the cost of geothermal power. Southern Oregon boasts a cluster of developing geothermal power projects that fall in a highly desirable Klamath Basin that geothermal developers are actively pursuing.

It is encouraged to pre-register to attend the Expo during the open Wednesday am hours, To do so, please visit: http://www.gifttool.com/registrar/ShowEventDetails?ID=1872&EID=16295. A valid ID is required for admission. Join the conversation on Twitter by following the GRC @GRC2001 and #GRC2014 or GEA at @geoenergist and #GEAExpo2014. To request press credentials, please contact Shawna McGregor, The Rosen Group, 917 971 7852 or shawna@rosengrouppr.com.

California Takes Steps Toward a New Policy Structure for Renewable Power
By Karl Gawell, Executive Director, Geothermal Energy Association–The California legislative session that ended last week saw geothermal initiatives at the forefront of public discussion.  Geothermal supporters sought to take steps towards a new policy structure that should favor a diversity of renewable technologies.  Positive accomplishments included a first-ever Geothermal Awareness Day that brought operators from all over the state to the Capitol to raise geothermal’s profile.

Another success was the passage of AB 2363, sponsored by Rep. Brian Dahle, R-Lassen, which requires the Public Utilities Commission (PUC) to incorporate integration costs into procurement decisions.  This is a good first step given that the failure to consider integration costs has been a major contributor to the unbalanced procurement of recent years and has disadvantaged resources such as The Geysers, the world’s largest geothermal energy producer, from being awarded new contracts despite its local and environmental benefits.

Another bill the State legislature considered, SB 1139, sponsored by State Sen. Ben Hueso, D-San Diego and Assemblyman V. Manuel Pérez, D-Coachella, would have directed the state’s investor-owned utilities to procure 500 MW of new geothermal power. While the sponsors ultimately withdrew the bill prior to bringing it to the floor of the assembly for a final vote, it did shine a light on the plight of contracting geothermal resources and the economic and environmental benefits these resources provide including possible answers for the serious problems and unique opportunities facing communities around the Salton Sea.

At the GEA Summit in Reno last month, we heard from a range of different experts that as the state implements AB 32 and dramatically expands the percentage of renewable power it uses, it will need additional approaches to build on the Renewable Portfolio Standard (RPS) policy structure.  RPS policies were intended to bring a measure of new renewable power into the market. They typically favored new over existing power facilities and weren’t designed to incorporate capacity, ancillary grid services, and other important factors into their valuation methods. Geothermal can provide many of these services, and properly valued, geothermal is an affordable choice for Californians, particularly when all of the reliability, economic, and revenue factors are fairly compared.

This transition to a non-carbon economy will also take billions of dollars of new investment and needs to be completed in a relatively short period of time.  The California Council on Science and Technology’s report “California’s Energy Future – The View to 2050” (www.ccst.us) stresses how dramatic the change will be and raises concerns about the level of new capital investment it will involve.  So, it will be important for public policy to sustain and encourage reinvestment in the existing base of renewable power projects in the state.

Further, the state’s policies for the future need to facilitate contracting opportunities for existing geothermal facilities as well as the expansion of new geothermal power in California.  In addition to the significant contribution existing geothermal provides, the state has a large, untapped resource that can be utilized to provide firm and flexible power as needed by the system.  Doing so will help minimize total transition costs and ensure power reliability.  It can also help address environmental problems such as mitigating expected hazards from the changes underway impacting water, wildlife and human health at the Salton Sea (see pacinst.org).

The state’s future policy structure must be designed to achieve more than just promoting new renewable investment.  It will also need to build on the existing renewable power base, support a reliable power system, promote a diversity of technologies, achieve significant renewable power growth, enhance environmental quality, and of course reduce carbon emissions.

It appears this timely transition beyond RPS-based policy has begun, but there is a lot more work to do.  We expect the legislature to resume consideration of these and related measures when it meets after the upcoming elections.  Meanwhile, we hope the Governor, the California Public Utilities Commission (CPUC), the California Energy Commission (CEC), and other state agencies will continue their efforts to build upon this work.   GEA and its members stand ready to support them to help secure for Californians the full benefits of their investment in renewable energy.

This story is heading to the Renewable Energy World news site at http://www.renewableenergyworld.com/rea/news/article/2014/09/california-takes-steps-toward-a-new-policy-structure-for-renewable-power.

CEC Names Four Geothermal Grant Awardees
The California Energy Commission has announced (PDF) the Proposed Awards and Results of Submitted Proposals for its recent Geothermal Grant and Loan Program Grant Solicitation PON-13-507. The solicitation requested competitive applications from local jurisdictions and private entities for geothermal projects in California.

The four proposed winners are: $1,129,619 to The County of Modoc for its Geothermal Exploration, Economic Feasibility and Market Analysis and Distributed Energy Resource Demonstration; $3,155,759 to the Modoc Joint Unified School District for its Alturas Schools and Swimming Pool Geothermal Heating Project; $631,620 to Ormat Nevada Inc. for its Initiate Groundwater Monitoring Program for CD IV Geothermal Development Project; and $883,002 to Paulsson, Inc. for its Surveying and Monitoring of Geothermal Operations Using a Fiber Optic Borehole Seismic Vector Sensor Array.

Curtis Rose is a partner with Warner Mountain Energy Corporation, part of the top-placing Modoc County project that will allow further geological research and economic feasibility studies into the development of a geothermal power plant at the Surprise Valley Hot Springs. “Modoc County, a county that has more cows than people, not to mention an abundance of geothermal is very humbled and enthusiastic for the opportunity to show and tell Sacramento about the abundant geothermal resources that are waiting to be harvested in the northern counties of California,” Rose told GEA.

“Making better use of our natural resources, including renewable sources of energy, is key to the North State’s long-term prosperity,” Assemblyman Brian Dahle, R-Bieber said in a statement. “I applaud the forward-thinking leaders of Modoc County who’ve helped pushed these projects forward, and I thank the California Energy Commission for its commitment to geothermal energy.”

Alternative Earth Resources Completes Sale of Geothermal Projects to Ormat
Press Release (VANCOUVER) August 27–Alternative Earth Resources Inc. (AER) is pleased to announce that it has completed the sale of certain geothermal projects to Ormat Nevada Inc. (Ormat) pursuant to a Purchase and Sale Agreement dated August 5, 2014. Under the transaction, Ormat also has the option, exercisable for 4 years, to acquire an additional geothermal lease. Shareholder approval for the Transaction was obtained at the annual and special meeting of shareholders held on August 22, 2014. Details of the Transaction were previously disclosed in news releases dated June 11, 2014, and August 5, 2014.

The benefits to AER resulting from the Transaction include: receipt today of US$1,490,000 to the treasury; freeing up US$175,000 of cash that is currently pledged for geothermal well bonds; removal of liability for geothermal well abandonment costs of approximately US$450,000; and elimination on-going geothermal lease payment obligations.

USTDA Supports Dewhurst Group Geothermal Power Plant in Colombia
Press Release (MEDELLÍN, COLOMBIA)–Builds Upon Activities in Renewable Energy and Smart Grid–Last week, the U.S. Trade and Development Agency awarded a grant to Empresas Públicas de Medellín E.S.P. (Public Enterprises of Medellín, or EPM) to evaluate the technical, economic and financial feasibility of constructing one or more geothermal power plants in Colombia’s Nereidas Valley. EPM is a multi-sector utility founded in 1955 that is owned entirely by the Municipality of Medellín, the second largest city in Colombia. It is the largest electric utility in Colombia and has subsidiaries that operate outside of its home department of Antioquia as well as internationally.

“We are pleased to partner with EPM to advance one of Colombia’s first geothermal power plants, and we hope that, over time, geothermal power will become a significant contributor to the country’s energy matrix,” said USTDA Regional Director Nathan Younge. “This activity builds upon USTDA’s support for projects that will benefit from Colombia’s new law on the integration of non-conventional renewable energy – including a hybrid wind and solar study, a demand side management pilot project and another geothermal activity.”

EPM has selected Dewhurst Group LLC (Germantown, MD) to carry out the feasibility study, which includes geologic conceptual modeling, site and infrastructure engineering, and the computation and estimation of economic performance. Dewhurst was first introduced to the project opportunity during EPM’s participation in a USTDA-sponsored geothermal reverse trade mission in 2011. The work performed by Dewhurst will provide EPM with the information necessary to perform resource confirmation drilling and make the required infrastructure upgrades to prepare for the procurement of a scalable electrical power plant.

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