This post brings you letters from industries that are affected by expired tax provisions; updates from GEA and its members Enel Green Power and Baker Hughes; and the latest on organizations and U.S. agencies that are involved in geothermal, including Commerce, the Census Bureau, the Army, the Energy Department, and the World Bank.
Click below for this week’s leading geothermal news.
*Energy Industries Need Congress to Act on Tax Policy
*Tax Provisions Critical for Manufacturing Jobs, Economy
*Geothermal Energy Association Announces 2015 Event Roster
*GEA Director to Serve on Newly Chartered RE&EE Commerce Advisory Committee
*Baker Hughes: Company Reaches Agreement to Combine with Halliburton
*Enel Green Power: Tuscany Plant to Integrate Geothermal and Biomass
*U.S. Census Bureau Reports $1 Billion Revenue for Geothermal in 2012
*Army Releases Guide to Incorporating Renewables Projects
*UNR Shares Online Renewable Certification Success Stories
*Understanding Subsurface Crucial in Addressing U.S. Energy and Security
*Global Geothermal Development Plan Presentations Now Available
Energy Industries Need Congress to Act on Tax Policy
The Geothermal Energy Association (GEA) joined the Business Council for Sustainable Energy and over 450 other companies and organizations in signing on to a letter to Congress urging immediate action on legislation to extend expired and expiring clean energy tax measures this year. The letter was sent Thursday, November 19, and reads:
“As companies, organizations, and advocates who support clean and alternative energy technology and energy efficiency provisions in the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, we urge you to pass this legislation this year.
“Businesses and investors need stable, predictable federal tax policy to create jobs, invest capital, and deploy pollution-reducing energy technologies. Allowing the lapsed clean energy tax provisions to languish undermines investor confidence and jeopardizes continued economic and environmental benefits. These bipartisan tax provisions have a proven track record of helping scale up production and drive down the cost of clean energy technologies, thereby ensuring that market-ready technologies are deployed to their full potential.
“The nation’s suite of clean and alternative energy technology and energy efficiency tax provisions lower the cost of clean energy and keep the U.S. competitive in the global technology race. They promote economic development, job creation, and a cleaner environment. To continue capturing these benefits it is essential to restore stability in the marketplace by seamlessly extending the provisions in the EXPIRE Act through 2015.
“Once again, we urge you to restore the expired clean and alternative energy technology and energy efficiency tax provisions during the post-election work period. Doing so will help build the economy, create jobs, and deliver a safer, healthier future for our children.
“We appreciate your consideration and look forward to working with you on this important matter.”
Tax Provisions Critical for Manufacturing Jobs, Economy
The GEA signed on to a coalition letter to members of the U.S. Congress, spearheaded by the National Association of Manufacturers, that urges action on expiring tax provisions in the lame duck session. The letter has over 520 signatories associated with manufacturers, research, and development in technology industries, and was sent to members of both the U.S. Senate and the U.S. House of Representatives. The tax extenders are seen by some as a bridge until comprehensive tax reform. The letter reads:
“The undersigned organizations, representing millions of individuals, businesses of all sizes, community development organizations and non-profit organizations, urge Congress to act in the Lame Duck session to extend seamlessly, enhance or make permanent the expired and expiring tax provisions. These tax provisions are critically important to U.S. jobs and the broader economy.
“Failure to extend these provisions is a tax increase. It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace. Acting promptly on this matter in Lame Duck will provide important predictability necessary for economic growth.
“The expired provisions should be renewed as soon as possible this year to enable implementation in time for the normal tax filing season. A delay in the tax filing season will delay tax refund checks and spending decisions, resulting in an immediate negative impact on the economy.
“We urge all members of Congress to work together to extend seamlessly, enhance, or make permanent these important tax provisions this year to provide a necessary bridge to comprehensive tax reform.”
Geothermal Energy Association Announces 2015 Event Roster
Press Release (Washington, DC) November 17–State of the Geothermal Industry Briefing in Washington, DC to kick-off year of events highlighting the dynamic growth of the geothermal market–The Geothermal Energy Association (GEA) has released the trade association’s schedule of events for 2015, commencing with the State of the Geothermal Industry Briefing in Washington, DC on February 24.
Mark your calendar for GEA Events in 2015:
• February 24, 2015, State of the Geothermal Industry Briefing, Washington, DC
• June 3-4, 2015, National Geothermal Summit, Reno, NV
• September 20-23, 2015, GEA Geothermal Energy Expo and GRC Annual Meeting, Reno, NV
GEA events offer important opportunities to learn and network within the dynamic and growing geothermal community, and to inform and educate companies and organizations outside the industry, who are interested in learning more and getting involved geothermal energy.
GEA Director to Serve on Newly Chartered RE&EE Commerce Advisory Committee
The U.S. Department of Commerce has chartered the Renewable Energy and Energy Efficiency Advisory Committee (REEEAC) for a third time. Once again, Karl Gawell, Executive Director of the GEA has been nominated by the Secretary of Commerce to serve on the REEEAC. The first meeting is December 17.
The 2011 to 2013 incarnations of the REEEAC provided recommendations to DOC on U.S. domestic policy positions, framework improvements that would increase U.S. export competitiveness, financing, structure and factors affecting competitiveness, and facilitating the connection between companies and foreign sources of capital.
The 2012 to 2014 charter developed 16 recommendations that range from developing an internal catalog of U.S.-manufactured renewable energy and energy efficiency products and services for use by U.S. facilities overseas, to efforts to eliminate or reduce tariffs on renewable energy and energy efficiency products and services, to further ways for agencies to work together and across borders.
For more on the DOC’s Renewable Energy and Energy Efficiency Advisory Committee visit www.federalregister.gov (Federal Register Notice announcing the December 17 meeting) and www.export.gov/reee (REEEAC documents–check back for updates).
See also, “Administration Could Expand Tax Options for Renewables and Efficiency Without Raising Direct Spending,” GEA’s GeoEnergyWire, June 2014.
Baker Hughes: Company Reaches Agreement to Combine with Halliburton
Press Release (PDF) (HOUSTON) November 17–Halliburton Company (NYSE: HAL) and Baker Hughes Incorporated (NYSE: BHI) today announced a definitive agreement under which Halliburton will acquire all the outstanding shares of Baker Hughes in a stock and cash transaction. The transaction is valued at $78.62 per Baker Hughes share, representing an equity value of $34.6 billion and enterprise value of $38.0 billion, based on Halliburton’s closing price on November 12, 2014, the day prior to public confirmation by Baker Hughes that it was in talks with Halliburton regarding a transaction. Upon the completion of the transaction, Baker Hughes stockholders will own approximately 36 percent of the combined company. The agreement has been unanimously approved by both companies’ Boards of Directors.
The transaction combines two highly complementary suites of products and services into a comprehensive offering to oil and natural gas customers. On a pro-forma basis the combined company had 2013 revenues of $51.8 billion, more than 136,000 employees and operations in more than 80 countries around the world.
“We are pleased to announce this combination with Baker Hughes, which will create a bellwether global oilfield services company and offer compelling benefits for the stockholders, customers and other stakeholders of Baker Hughes and Halliburton,” said Dave Lesar, Chairman and Chief Executive Officer of Halliburton. “The transaction will combine the companies’ product and service capabilities to deliver an unsurpassed depth and breadth of solutions to our customers, creating a Houston-based global oilfield services champion, manufacturing and exporting technologies, and creating jobs and serving customers around the globe.”
Lesar continued, “The stockholders of Baker Hughes will immediately receive a substantial premium and have the opportunity to participate in the significant upside potential of the combined company. Our stockholders know our management team and know we live up to our commitments. We know how to create value, how to execute, and how to integrate in order to make this combination successful. We expect the combination to yield annual cost synergies of nearly $2 billion. As such, we expect that the acquisition will be accretive to Halliburton’s cash flow by the end of the first year after closing and to earnings per share by the end of the second year. We anticipate that the combined company will also generate significant free cash flow, allowing for the return of substantial capital to stockholders.”
Martin Craighead, Chairman and Chief Executive Officer of Baker Hughes said, “This brings our stockholders a significant premium and the opportunity to own a meaningful share in a larger, more competitive global company. By combining two great companies that have delivered cutting-edge solutions to customers in the worldwide oil and gas industry for more than a century, we will create a new world of opportunities to advance the development of technologies for our customers. We envision a combined company capable of achieving opportunities that neither company would have realized as well – or as quickly – on its own, all while creating exciting new opportunities for employees.”
Lesar concluded, “We believe that the expertise of both companies’ employees and leaders will be a competitive advantage for the combined company. Together with the people of Baker Hughes, we will establish a team to develop a detailed and thoughtful integration plan to make the post-closing transition as seamless, efficient and productive as possible. We look forward to welcoming the talented employees of Baker Hughes and are pleased they will be joining the Halliburton team.”
Transaction Terms and Approvals
Under the terms of the agreement, stockholders of Baker Hughes will receive, for each Baker Hughes share, a fixed exchange ratio of 1.12 Halliburton shares plus $19.00 in cash. The value of the merger consideration as of November 12, 2014 represents 8.1 times current consensus 2014 EBITDA estimates and 7.2 times current consensus 2015 EBITDA estimates. The transaction value represents a premium of 40.8 percent to the stock price of Baker Hughes on October 10, 2014, the day prior to Halliburton’s initial offer to Baker Hughes. And over longer time periods, based on the consideration, this represents a one year, three year and five year premium of 36.3 percent, 34.5 percent, and 25.9 percent, respectively.
Halliburton intends to finance the cash portion of the acquisition through a combination of cash on hand and fully committed debt financing.
The transaction is subject to approvals from each company’s stockholders, regulatory approvals and customary closing conditions. Halliburton’s and Baker Hughes’ internationally recognized advisors have evaluated the likely actions needed to obtain regulatory approval, and Halliburton and Baker Hughes are committed to completing this combination. Halliburton has agreed to divest businesses that generate up to $7.5 billion in revenues, if required by regulators, although Halliburton believes that the divestitures required will be significantly less. Halliburton has agreed to pay a fee of $3.5 billion if the transaction terminates due to a failure to obtain required antitrust approvals. Halliburton is confident that a combination is achievable from a regulatory standpoint.
The transaction is expected to close in the second half of 2015.
Enel Green Power: Tuscany Plant to Integrate Geothermal and Biomass
Press Release (Rome) November 13–Enel Green Power has started construction at the “Cornia 2” geothermal power plant in the town of Castelnuovo Val di Cecina, in Tuscany, on the first plant in the world that uses biomass to heat geothermal steam in order to increase the energy efficiency and electricity output of the geothermal cycle.
The existing geothermal plant will be supplemented by a small plant powered with locally sourced virgin forest biomass produced within a radius of 70 km from the plant: thanks to the biomass, the steam entering the plant will be heated to raise the initial temperature to between 370°-380° from 150°-160°, thereby increasing net capacity for power generation, thanks to both the greater enthalpy of the steam and the enhanced efficiency of the cycle due to lower humidity in the generation phase.
This plant represents a major technological innovation with virtually no impact on the environment, as it supplements an existing industrial site, maintains the total renewability of the resource and the cycle and in fact combines two renewable energy sources for a form of generation that opens new prospects at the international level.
In this case, 5 MW of capacity from biomass will be added to a geothermal plant that currently has an installed capacity of 13 MW. The geothermal plant’s annual power output will be boosted by approximately 37 GWh. Enel Green Power is investing more than 15 million euros in the project, with construction due to be completed by the first half of 2015.
Overall, the biomass project will avoid the emission of an additional 17 thousand tonnes of CO2 per year. It will also have a major impact on employment, with the direct and indirect creation of 35 to 40 jobs in sourcing the local biomass.
Other benefits may result from the efficient use of agricultural and agro-industrial by-products, from the optimal maintenance of forest resources with the consequent prevention of hydrological risk, from the sustainable development of energy crops and from the production of significant amounts of co-generation heat.
“Thanks to its century-long experience in geothermal energy, Tuscany is already in the future”, said the CEO of Enel Green Power, Francesco Venturini, “Hybrid technologies are the new frontier of renewable energy in our efforts to optimize performance, and this facility, which offers an innovative approach to integrating biomass and geothermal energy, is a replicable model that can open new prospects for the development of energy, the economy and employment for local communities”.
U.S. Census Bureau Reports $1 Billion Revenue for Geothermal in 2012
For the first time, the U.S. Census Bureau has released statistics for geothermal power generation, as well as for wind, biomass, and solar. Geothermal had revenues of $995.4 million in 2012, coming in third place for renewables behind wind and hydro. Overall, revenues for renewable energy power generation rose to $9.8 billion in 2012, a 49% increase from $6.6 billion in 2007.
“As industries evolve, so does the Census Bureau to continue to collect relevant data that informs America’s business decisions,” Census Bureau Director John H. Thompson said in a statement. “Industries that use renewable energy resources are still relatively small, but they are rapidly growing.”
Army Releases Guide to Incorporating Renewables Projects
A new guide from the U.S Army Office of Energy Initiatives (OEI) outlines all the information pertinent to incorporating renewable energy projects. A statement from OEI reads, “This guide includes best practices and lessons learned for renewable energy projects ranging from less than 1 megawatt (MW) to over 10 MW in size. It includes principles, tools, and processes to develop competitive renewable energy projects that leverage the Army’s stable demand and available land to attract private capital investment.” Download “Army Guide: Developing Renewable Energy Projects by Leveraging the Private Sector” at www.asaie.army.mil (PDF).
UNR Shares Online Renewable Certification Success Stories
This week the College of Engineering and 365 Learning at the University of Nevada, Reno shared success stories from two NV Energy employees that are recent graduates of the online Graduate Renewable Energy Certificate. The program began in Spring 2012.
“As a professional working in the utility industry, I was able to take graduate level courses that were related to my experiences,” said one of the graduates. “Each course’s material was up to date and I was glad to see that none of it was outdated. I was impressed with the knowledge and the professionalism of the professor’s teaching the class. The courses’ content was perfect and applicable to what is going on in the private industry.”
“As an engineer, I was familiar with the technological and scientific aspects of renewable energy; although, I did learn plenty of new material as well,” said the second graduate. “The most useful knowledge for me was learning about public policies and incentives involved with renewable energy and energy efficiency projects. These concepts are just as important as the technological aspects of the project.”
Understanding Subsurface Crucial in Addressing U.S. Energy and Security
Via the U.S. DOE–A new report by an independent panel recommends that the Energy Department take a leading role in understanding subsurface systems to better address the nation’s energy and security issues. JASON – a group of scientific thought leaders that has provided independent consultation to the U.S. government for over 50 years – undertook the study on behalf of the new crosscutting Subsurface Technology and Engineering Research, Development, & Demonstration (SubTER) Tech Team in the Office of the Under Secretary for Science and Energy. SubTER is an integrated platform across DOE offices to address crosscutting grand challenges associated with the use of the subsurface for energy extraction and storage purposes.
Global Geothermal Development Plan Presentations Now Available
The World Bank’s Energy Sector Management Assistance Program has posted the final agenda and presentations from its Second Roundtable of the Global Geothermal Development Plan. The high-level discussion was held last month in Copenhagen, Denmark jointly with the Climate Investment Funds and the Climate Policy Initiative. Topics focused on the exploration phase of development and include best practices in data management and lessons learnt from risk mitigation options. Karl Gawell, Executive Director of the GEA, provided a presentation at the event (PDF). Additional presentations and documents are available at www.esmap.org.