Leading news: Emerging Economies and New Technologies Enable Geothermal Growth

This post brings you the status of geothermal power in global emerging economies; geothermal presentations available from 6 key East African countries; updates on new technologies; and more from GEA and GEA member companies.

2014djiboutiassalwells
The “ASAL-FIALE CALDERA DRILLING TARGET” prefeasibility studies show the heat source and geothermal fluid recharge. The Government of Djibouti has said after the drilling program there will be a call for tenders to develop and construct the plant and sell to the off taker. Source: Djibouti Geothermal Roadshow Presentation 1, October 2014. Presentations are now available on the GEA Web site at geo-energy.org/East%20African%20Geothermal%20Information. The World Bank team working on the Lake Assal Djibouti geothermal project shared exclusive insight on the project with GEA back in December; read or re-read it at geoenergist.wordpress.com/2013/12/03/world-bank-prepares-djiboutis-geothermal-project-for-private-sector-expertise.

Click below for GEA’s leading news.

*Industry Paper Examines Emerging Economies in Fast Growing Geothermal Nations
*Presentations Publicly Available from 6 Key East African Countries on GEA Web site
*Energy Secretary Moniz Visits Nevada Geothermal Plant
*AltaRock Energy: EGS Stimulation Underway
*Calpine Corp.: California Energy Commission Grant will Fund Flexibility Enhancement Study at The Geysers
*U.S. Geothermal: Company Offers Update on 3 Projects
*Save the Date for GEA’s 2015 Events
*DOE Extends Deadline and Enables Teaming for FORGE
*U.S.-Turkey Geothermal Workshop Concludes in Ankara
*Climate Policy Institute Looks at Public Finance in Geothermal
*LA Times Explores how New Technologies Enable Geothermal Growth

Industry Paper Examines Emerging Economies in Fast Growing Geothermal Nations
GEA Press Release (Washington, DC) October 23–According to a report recently released by the Geothermal Energy Association (GEA), titled “The Status of Geothermal Power in Emerging Economies,” globally approximately 12.1 GW of geothermal power was under development at approximately 730 sites. Emerging economies in East Africa, Central America, the Caribbean and the South Pacific are some of the fastest growing geothermal nations worldwide. Motivated by the threat of climate change, and the desire for a domestic source of energy that can provide jobs and economic security around 80 nations are exploring for geothermal resources.

Specifically, Emerging Economies are recognizing geothermal energy as an emission-free and cost-effective option to produce electricity. Geothermal plants can ramp up or down quickly, allowing them to adjust to the needs of the power system acting as a flexible power source in addition to generating electricity as a baseload. As a result, geothermal plants can replace natural gas, coal, or oil generation in economies starving for power or help with the integration of other renewables by stabilizing their intermittency.

The paper glimpses at geothermal development taking place in emerging economies. Specifically a selection of countries that falls adjacent to the Ring of Fire or East African Rift capable of generating geothermal power. In total, this market equates to a nearly $9 billion industry by 2019. In Central America, as of August 2013, $230 million has been committed to renewable energy projects. In the Caribbean, where most countries rely heavily on oil for their energy needs, geothermal energy has been recommended as a viable solution with 850 MW potential in the area. The South Asian Pacific leads the world in developing geothermal capacity. Within the next decade the South Pacific will likely not only be the world’s leading region on geothermal power but also have nearly doubled their operating capacity.

The report is available from the Geothermal Energy Association Web site at geo-energy.org/reports. GEA will be releasing a full update on developing geothermal projects as part of its State of the Geothermal Industry Briefing in Washington, DC on February 24, 2015.

Presentations Publicly Available from 6 Key East African Countries on GEA Web site
GEA Press Release (Washington, DC) October 23–Last month in Portland over 50 government and industry officials from East Africa travelled to the GRC Annual Meeting and GEA Geothermal Energy Expo to meet with U.S. companies interested in bringing their expertise to East Africa.

Senior executives from the following East African institutions made presentations from the exhibit hall discussing business opportunities open to the private sector in the region:

• The National Treasury, Republic of Kenya
• KenGen
• Geothermal Development Company, Kenya
• Ministry of Infrastructure, Republic of Rwanda
• Ministry of Finance, Tanzania
• Uganda Geothermal Resources Development Project
• Ethiopian Electric Power
• Djiboutian Agency for Geothermal Energy Development, Republic of Djibouti

These presentations are available for free download on the GEA Web site at: geo-energy.org/East%20African%20Geothermal%20Information.

Energy Secretary Moniz Visits Nevada Geothermal Plant

nevada-oct2014
Secretary Moniz visits Steamboat geothermal complex in Reno, Nevada. Image via NV Office of Energy on Twitter (@NevGOE)

On October 22, U.S. Department of Energy Secretary Ernest Moniz visited Reno, Nevada, coming face to face with some of the world leaders in the geothermal energy sector. Secretary Moniz, the top official for the U.S. DOE visited the Ormat Technologies Steamboat geothermal plant complex. He met with geothermal business leaders and Nevada state officials, and he heard presentations from University of Nevada Reno geothermal students. Numerous geothermal companies have offices located in Reno, and geothermal production within its city limits is enough to power the entire residential load.

At GEA’s recent National Geothermal Summit, located in Reno this past July, Paul Thomsen, Director of the Nevada Governor’s Office of Energy said: “While Nevada has excelled at developing geothermal, we’re not done yet! The State of Nevada is committed to the development and exportation of renewable energy by removing barriers and developing better business models.”

AltaRock Energy: EGS Stimulation Underway
GEA member AltaRock Energy has provided a blog update on the stimulation of the Newberry EGS Demonstration injection well, NWG 55-29, which began on September 23. The project team has injected approximately 3,000,000 gallons of water, and stimulation data is available for viewing on the Pacific Northwest Seismic Network and the Lawrence-Berkeley Nation Laboratory Web site. According to blog.newberrygeothermal.com: “Over the next week, we’ll inject TZIM into the well, diverting water flow away from the current zone and forcing it out into other areas to further improve the reservoir. After stimulation is complete, TZIM will biodegrade leaving behind an interconnected, multi-zone EGS reservoir. Once the TZIM has biodegraded, the well will be flow tested; steam and water production and temperature will be recorded and used to analyze results of this year’s field work.”

Calpine Corp.: California Energy Commission Grant will Fund Flexibility Enhancement Study at The Geysers
Press Release (SACRAMENTO, Calif.)–Calpine Corporation (NYSE: CPN), on behalf of its subsidiary Geysers Power Company LLC (The Geysers), announced today that it has been selected by the California Energy Commission (CEC) to receive a $3 million grant for “Advancing Utility-Scale Clean Energy.” Calpine will match the grant award, which will fund a study to investigate how generation at The Geysers may be modified to enhance flexibility and address the greater demands imposed on the grid by intermittent renewables.

“The Geysers is a true treasure of California,” said Joseph Ronan, Senior Advisor of Government and Regulatory Affairs for Calpine. “In continual operation for over 50 years, this keystone resource will continue to play a major role in helping California meet its renewable energy and climate objectives for years to come.”

The Geysers is the world’s largest geothermal resource developed for electric generation and produces approximately 6 million megawatt hours of reliable, low-carbon energy annually accounting for more than 15% of the delivered renewable energy in California.

The California Independent System Operator (CAISO) also offered support of the project in a letter submitted with the proposal. “As the integration of renewable resources progresses, it will be increasingly common to experience periods in which it is difficult for the electric power system to accommodate all available renewable generation. Consequently, it will become increasingly valuable to be able to shift the output of renewable resources, such as The Geysers, through enhanced modeling and/or additional investment in controls and associated equipment,” said Mark Rothleder, Vice President of Market Quality and Renewable Integration at CAISO.

“While The Geysers currently offers a considerable amount of flexibility and shaping to the system, we have been analyzing new ways to operate our facility with even greater responsiveness to changing demand. This grant will enhance our ability to support the reliability needs of the system from this renewable and low-carbon resource,” said Jim Kluesener, Calpine’s Vice President of Geothermal Operations. “We are appreciative of the support from the CEC and other California energy stakeholders in considering the role of The Geysers in meeting the challenges associated with integrating other renewable technologies into the grid.”

The CEC solicited grant proposals to help “fund applied research and development projects that develop emerging utility scale renewable energy generation technologies and strategies to improve power plant performance, reduce costs, and expand the resource base.” The funding is contingent upon approval at a public business meeting of the CEC in November and execution of a grant agreement. The solicitation comes from funds awarded by the Electric Program Investment Charge (EPIC) program, an electricity ratepayer surcharge established by the California Public Utilities Commission (CPUC) in December 2011. The EPIC funds clean energy technology projects that promote greater electricity reliability, lower costs and increased safety.

U.S. Geothermal: Company Offers Update on 3 Projects
Press Release, October 23–U.S. Geothermal Inc. (NYSE: HTM) provides this update on the results of its three operating projects for the third quarter of 2014, and the status of development activities.

OPERATIONS
Neal Hot Springs, Oregon
All three units continue to operate well, with third quarter availability for the facility of 99.1%. Generation for this third quarter of 2014 was 32,264 megawatt-hours, for a total generation for the first nine months 2014 of 128,945 megawatt-hours. This compares to 101,989 megawatt-hours for the first nine months of 2013, reflecting a 26% increase over the prior year period.

Under the terms of our Power Purchase Agreement (“PPA”), generation for July, and August were paid at the seasonally adjusted price of $123.34 per megawatt-hour and September was paid at the average 2014 contract price of $102.78 per megawatt-hour.

San Emidio, Nevada
The plant continues to operate well, with third quarter availability of 96.1%. Generation for the third quarter of 2014 was 18,240 megawatt-hours, for a total generation for the first nine months 2014 of 55,150 megawatt-hours. This compares to 55,585 megawatt-hours for the first nine months of 2013. Inclusion of higher temperature brine from well 61-21 in late September is expected to result in a moderate increase in power generation at the Phase I plant.

Under the terms of our PPA, generation during the quarter was paid at the price of $91.18 per megawatt-hour. There is no seasonal adjustment under this power purchase agreement.

Raft River, Idaho
The plant continues to operate well, with third quarter availability of 99.7%. Generation for this third quarter of 2014 was 18,500 megawatt-hours, for a total generation for the first nine months 2014 of 58,181 megawatt-hours. This compares to 55,610 megawatt-hours for the first nine months of 2013, reflecting a 5% increase over the prior year period.

Under the terms of our Power Purchase Agreement (“PPA”), generation for July and August were paid at the seasonally adjusted price of $72.86 per megawatt-hour and September was paid at the average 2014 contract price of $60.72 per megawatt-hour. In addition to the price paid for energy, Raft River currently receives $4.75 per megawatt-hour under a separate contract for the sale of Renewable Energy Credits.

“Our operations team has done an outstanding job during this first three-quarters of the year focusing on maximizing production from all of our facilities. Our units are all performing with exceptionally high availabilities, and with output that is at or above what we had expected. The total generation from all of our units for the first nine-months of 2014 was 242,276 megawatt-hours, compared to 213,184 megawatt-hours for the first nine-months of 2013, reflecting a 14% increase over the prior year period,” said Dennis Gilles, Chief Executive Officer of U.S. Geothermal. “As a result of this strong performance, we anticipate our projected year-end results should be at the higher end of the guidance range previously provided.”

DEVELOPMENT
El Ceibillo, Guatemala
The final lease for surface use of a 97 acre parcel was signed on October 15. Construction of a drill pad, pond and cellar for EC-2, our new well, has been completed. EC-2 is located on the new surface leasehold.

Drilling of EC-2 is expected to begin as soon as the approval to extend the development schedule contained in the concession agreement has been obtained from the Guatemalan Ministry of Energy. We are optimistic that we will receive approval of our application shortly.

San Emidio, Nevada
To further define the resource and confirm that it can support the Phase II plant, a drill rig was mobilized to the site on June 26th. Two additional wells were completed on the BLM administered land. Well OW-14 was drilled to a depth of 3,501 feet and had a bottomhole temperature of 265 degrees F. Well OW-15 was drilled to a depth of 3,716 feet and had a maximum downhole temperature of 300 degrees F. While the wells extended the high temperature outline of the South Zone, neither well encountered the commercial permeability seen in Well 61-21 (OW-10). Geologic, geochemical and temperature data generated by the drilling program is being evaluated to determine the next phase of drilling.

A cross tie pipeline was installed during September between the San Emidio Phase I and Phase II projects. Well 61-21 has been connected and is producing 630 gpm of 298 degrees F fluid to the San Emidio Phase 1 power plant as part of a long term flow test of the South Zone portion of the reservoir.

A Request for Proposal (“RFP”) from NV Energy for 100 megawatts of renewable energy was issued on October 1st. We are evaluating the RFP requirements and anticipate submitting a bid for the Phase II project if it qualifies. In parallel, we are investigating pursuing a power purchase agreement with California power off-takers, where power prices are typically higher.

WGP Geysers, California
We continue to evaluate the detailed design and project costs for two development scenarios: 1) Build a new power plant and sell electricity, or 2) Build pipelines and sell steam. Discussions are underway with counterparties for both scenarios, and we are reviewing several California based renewable energy contract solicitations for which the project may qualify. Designs for each scenario are being optimized, and we are refining our detailed cost estimates and associated economic models.

Gerlach, Nevada
Preparation is underway to continue evaluation of the Gerlach resource with the deepening of well 18-10A. Drilling is planned to start by early November. The 18-10A well was drilled to a depth of 1,900 feet in 2010, but was not completed at the time. The current drilling plan has a permitted depth of up to 3,000 feet. The original 18-10 well was drilled to a total depth of 2,868 feet in 1994 but was plugged and abandoned in 2006, before we acquired the property. The original well encountered a very promising, total lost circulation zone at a depth of 2,788 feet, but the well was not flow tested and the resource temperature is undetermined. The U.S. Geological Survey considered the Gerlach resource to be the 3rd largest geothermal resource in the state of Nevada in their Assessment of Geothermal Resources of the United States published in 1975.

MERGERS AND ACQUISITIONS
Our focus on M&A activities remains very active. As noted previously, we announced the merger of Earth Power Resources (“EPR”) into U.S. Geothermal on October 16. The merger is expected to close by the end of November 2014 following approval of EPR shareholders. The EPR acquisition adds high quality projects to the company’s pipeline.

We are continuing due diligence on a number of other excellent opportunities that encompass operating projects, advanced development projects and green field opportunities.

REGULATORY ENVIRONMENT UPDATE
Recent developments in the market are encouraging to the growth of renewable energy, and more specifically to geothermal energy in our opinion. In California, the signing into law of AB-2363 earlier this month by the California Governor, will require the California Public Utilities Commission to establish the appropriate adders (integration cost) for each technology that must be used when evaluating bids for long term wholesale power contracts. We believe this change will add appropriate costs to wind and solar power generation due to their intermittent deliveries of power, which then should allow base load renewables like Geothermal and Biomass to compete for PPAs based on a more accurate comparison of the full cost for power. That has not been the case in the past.

Similarly, in the State of Nevada, in 2013 the legislature mandated that the utilities in the state must purchase 300 megawatts of renewable energy from independent power producers to replace coal generation that is going to be retired. In response, NV Energy has issued their first of 3 Requests for Proposal for 100 MW of renewable energy. This creates a solid market of 100 MW per year for the next three years, which provides our company with a potential path for selling power from both our existing and new projects.

In addition, there are a number of pending bills, both at the federal and state level that could have a favorable impact on future geothermal development. At the federal level, Senate Bill S-2260 would extend the current tax credits available to new geothermal plants for an additional 2 years. Under the proposed bill, plants that begin construction by December 31, 2015 would be eligible for a 30% Investment Tax Credit (“ITC”), or alternatively a 10 year Production Tax Credit (“PTC”). S-2260 has been approved by the Senate, and is now at a conference committee to be merged with a companion House tax extenders bill.

“We are very pleased with our accomplishments to date, and are optimistic with the growth opportunities that lie ahead for our company and its shareholders,” said Dennis Gilles, Chief Executive Officer of U.S. Geothermal Inc. “We are currently well capitalized, and with the addition of our positive cash flows from operations, are well positioned to fund internal development, and growth through strategic M&A activities, as was demonstrated with our most recent Geysers acquisition which we acquired with cash off our balance sheet.”

The Company expects to release third quarter financial results, along with 2014 and 2015 guidance, on November 13, 2014 with the earnings call on November 14, 2014 at 11:00 am Eastern.

Save the Date for GEA’s 2015 Events
Save the Date for upcoming 2015 events of the Geothermal Energy Association. GEA events provide important opportunities to learn and network within the geothermal community as well as inform and educate companies and organizations outside today’s industry that are interested in learning more. On February 24, 2015, GEA will hold a State of the Geothermal Industry Briefing in Washington, DC. On June 3-4, 2015, GEA is planning its National Geothermal Summit, California. And on September 20-23, 2015, the GEA Geothermal Energy Expo will be co-located with the GRC Annual Meeting in Reno, Nevada. Check back for more information coming soon to the GEA Web site. Your company can tap into high-visibility opportunities by sponsoring GEA events; visit geo-energy.org/events.

DOE Extends Deadline and Enables Teaming for FORGE
The U.S. Department of Energy’s Geothermal Technologies Office (GTO) has announced changes to the Frontier Observatory for Research in Geothermal Energy (FORGE) funding opportunity. GTO has extended the submission date for applications to November 12, 2014. GTO has also created a new “Teaming Partner List” that enables potential applicants to connect with others and form new project teams. For more information check out energy.gov/eere/forge.

U.S.-Turkey Geothermal Workshop Concludes in Ankara
Press Release (ANKARA, TURKEY) October 23–Highlights Business Opportunities for U.S. Companies in Turkey’s Energy Market–Yesterday, the U.S. Trade and Development Agency concluded a successful two-day U.S.-Turkey Geothermal Workshop. The Workshop connected officials from U.S. companies and Turkey’s public and private sectors to discuss current and future geothermal projects in Turkey. Turkish participants detailed the country’s geothermal regulatory environment, and U.S. industry showcased expertise and technologies. With over 3,100 megawatts (MW) of proven geothermal capacity, Turkey has a current generation capacity of more than 300 MW, with an additional 600 MW currently under development.

“Turkey has abundant geothermal energy resources and represents an ideal sector for U.S.-Turkish collaboration,” said USTDA Regional Director Carl B. Kress. “We are proud to connect industry-leading U.S. experts to Turkish geothermal entities in order to help Turkey meet its energy needs.”

Turkey’s Gurmat Energy Investment and Trade Company, along with three U.S. partners – Veizades & Associates, POWER Engineers and Geologica – provided a case study review of their collaboration under a USTDA grant. According to Mr. Henry Veizades, President of Veizades & Associates, “As a result of our work on the initial USTDA grant with Gurmat, our companies have had the opportunity to work on the installation of 280 MW of geothermal energy in Turkey. The 280MW of installed geothermal creates an additional $182 million annual revenue in Turkey.”

The Workshop was an outcome of a USTDA-sponsored Turkish geothermal reverse trade mission to the United States in 2013. Mr. Kerim Ertan, Chairman of the Board of Barok Investment Consultancy, noted, “I am very pleased to see this idea come to fruition as it was important to bring the key U.S. and Turkish players together again.”

USTDA will release a complete resource guide to highlight additional geothermal projects in Turkey. Interested U.S. firms may contact the USTDA Library at library@ustda.gov or 703-875-4357 to request a copy of the U.S.-Turkey Geothermal Project Resources Guide.

Climate Policy Institute Looks at Public Finance in Geothermal
A new report explores the role of public finance in deploying geothermal power. The report from San Giorgio Group is part of a project by Climate Policy Initiative for geothermal deployment in developing countries. According to the Executive Summary, “Geothermal energy is broadly cost competitive with fossil fuel alternatives even without a carbon price. The levelized cost of geothermal electricity is around 9-13 USDc/kWh, making it one of the cheapest renewable energy options available. Its ability to provide low-cost, low-carbon power reliably and flexibly means is well-placed among to meet developing countries growing energy needs while displacing polluting fossil fuel power plants.”

LA Times Explores how New Technologies Enable Geothermal Growth
A feature story in LA Times this week, “Geothermal power industry lost steam but may be poised for comeback” by Julie Cart, explores a topic often discussed by the industry: how new technologies like Enhanced Geothermal Systems and co-developed mineral recovery will enable the geothermal industry as it grows. In the U.S., geothermal development hit a peak in the 1980s in Western states, and now the industry is rising again. Key industry leaders are quoted in the story, including Doug Hollett, director of the federal Energy Department’s Geothermal Technologies Office; Bob Sullivan, senior vice president of Ormat Technologies Inc.; Joseph Ronan Jr., senior advisor at Calpine Corp.; and Karl Gawell, executive director of the Geothermal Energy Association.

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