2015 Ends with Positive Progress for Geothermal Energy

In this post:

*Congress Extends Geothermal PTC Through 2016, Promises Further Action Next Year
*GEA Joins Multi-Group Letter Asking Congress: Please Fix PTC/ITC Deal
*GEA Tells Arizona and Colorado: Geothermal can Help Meet Clean Power Plan Goals
*Press Release: 2015 Ends with Positive Progress for Geothermal Energy
*EERE Publishes New Strategic Plan (Webinar Jan. 7)
*DOE Requests Information on Renewable Energy Deployment (due Jan. 13)
*GHPs Included in Tax Extenders; Left out of Omnibus
*Suzette Kimball Confirmed as USGS Director
*GRMF Releases EOI for Ethiopia; Three Companies to be Short-Listed (due Jan. 8)
*GRMF Announces 3rd Application Round Results

*Geothermal Visual:

The above graph was included in materials sent by the Geothermal Energy Association to Colorado agencies and shows that geothermal could provide as much as 17% of the state’s energy demand. GEA encourages Colorado and other states that contain geothermal resources to utilize geothermal in their Clean Power Plans (read more in this post.)

Congress Extends Geothermal PTC Through 2016, Promises Further Action Next Year
In its waning hours, the Congress passed legislation on December 18 that pulled together appropriations, taxes and other measures into an Omnibus bill. A provision in this bill extends the eligibility for the federal Production Tax Credit (PTC) to include new geothermal power projects that start construction before January 1, 2017.

In another part of the same Omnibus bill, Congress extends further, but also phases out, the PTC for wind projects and the 30% Investment Tax Credit (ITC) for solar projects.

Legislators were quick to react to criticism that the wind/solar extension-phaseout was unfair to the other technologies now eligible for the PTC and ITC. Ways and Means Chairman Kevinn Brady (R-TX) called it a “drafting error” and promised to “revisit that” next year. House Democratic Leader, Nancy Pelosi (D-CA) criticized the bill because it “did not include fuel cells, geothermal and some other renewables that are part of that tax credit” in the longer extension-phaseout.

Washington insiders reported that the mistake resulted from a closed-door meeting and from staff rushing to release a bill in time for a vote.

The result for geothermal, however, stands at reviving the PTC for new projects in 2016 with promise to look at further extensions next year.

GEA Joins Multi-Group Letter Asking Congress: Please Fix PTC/ITC Deal
Legislation that should have included geothermal energy was extended only to solar in what is being called a drafting mistake. Along with geothermal the legislation as-is also leaves out other qualifying sources, including combined heat and power systems, small wind and fuel cells.

In response, seventy-four associations and businesses signed onto a letter calling on Congress to expand the PTC/ITC deal to geothermal and the other technologies that should be eligible for the credits. The GEA signed onto the letter as well as GEA members Ormat Technologies and ElectraTherm.

The provision extends and phases down the PTC/ITC over five years while also allowing facilities to claim the incentive when they break ground, and was struck as part of the effort to end the crude oil export ban.

The letter to the Senate reads:

Dear Majority Leader McConnell, Minority Leader Reid, Chairman Hatch and Ranking Member Wyden:

As representatives of businesses and associations working in clean energy, we appreciate your commitment to improving tax incentives to advance the development of clean energy in the U.S., and we look forward to working with you to provide long-term extensions for the technologies that were not included in the omnibus and tax legislation that passed last week.

The tax agreement extends and gradually ramps down the production tax credit (PTC) for wind as well as the investment tax credit (ITC) and residential tax incentives for solar while also allowing projects to qualify so long as they have commenced construction before the deadline. While these changes are important, we are concerned that other technologies that currently access the PTC and ITC such as, but not limited to: combined heat and power, microturbines, fuel cells, small wind, biomass, geothermal, landfill gas, municipal solid waste, qualified hydroelectric, and marine and hydrokinetic will suffer without long-term certainty regarding tax incentives.

We also look forward to working with you to clarify the existing ITC to add waste heat to power as a qualifying technology. Waste heat to power (WHP) captures exhaust from industrial processes and uses it to generate electricity with no additional combustion and no additional fuel. The Senate Finance Committee approved bi-partisan legislation earlier this year that included adding WHP as a qualifying technology to the ITC; however, this provision was left out of the final agreement.

All of these advanced energy technologies have a place in the future of the U.S. power generation mix and each one should be provided access to federal incentives. Our hope is that Congress will craft policy that best suits each technology’s needs and provides certainty and parity across all clean and renewable energy sources as early in 2016 as possible.

Extending and improving the PTC and ITC for these other technologies will reduce their costs, allow greater competition among all of our nation’s energy sources, and diversify our nation’s energy mix.

A similar letter was sent to House of Representatives Speaker Ryan, Minority Leader Pelosi, Chairman Brady and Ranking Member Levin.

GEA Tells Arizona and Colorado: Geothermal can Help Meet Clean Power Plan Goals
GEA has provided comments to Arizona and Colorado agencies, encouraging the use of geothermal power as a low-cost, emission-free and reliable renewable power source to help comply with individual states’ Clean Power Plans.

The comments to Arizona ADEQ Air Quality Division discuss Arizona’s substantial undeveloped geothermal resources as well as several gigawatts of undeveloped resources next door in Imperial Valley, California. These resources could be brought online relatively quickly with signed PPAs.

The comments to Colorado note the state “has approximately 30 MWe of identified and 1,100 MWe of undiscovered resources, for a total potential of 9 million MWh, assuming a 90% percent capacity factor.”

In the letters GEA further expressed willingness to provide the latest available information about geothermal potential, sustainability, planning and land-use information, “or any other question that might come up during the planning process.”

Press Release: 2015 Ends with Positive Progress for Geothermal Energy
GEA Press Release — GEA members contributing to 15 new geothermal power plants and 50 under construction — The past year has brought continued growth for geothermal in the U.S. and worldwide, and the outlook is positive. The Geothermal Energy Association’s (GEA) 150 member companies worked in the U.S. and globally in 2015 to increase the use of geothermal energy through their work on many of the 15 new geothermal power plants and the 50 projects under construction.

Nationally, important policy progress was made, particularly in the final weeks of 2015. Congress extended the production tax credit to provide incentives for geothermal power plants that start construction by January 1, 2017. This is sure to encourage new U.S. projects next year and Congress is expected to discuss further extensions next year. Additionally, the charter of the Export-Import Bank of the U.S. (Ex-Im), which has supported geothermal projects in the past, was extended through September 30, 2019. Ex-Im and other federal agencies provide important support for the U.S. industry working globally. Congress also increased funding to support critical research programs of the Department of Energy’s Geothermal Technologies Office.

On the international scene, the International Renewable Energy Agency spearheaded a coalition of 38 countries and over 20 development and industry partners pledging to work together to increase geothermal energy development worldwide. GEA played a key part helping to form the resulting Global Geothermal Alliance which was launched at the UN Climate Change Conference in Paris this month.

GEA Events and Industry Developments

GEA events in 2015 provided a structure for industry discussions on maximizing the use of clean, baseload geothermal resources in a competitive global enterprise. GEA events included the State of the Geothermal Industry Briefing, the National Geothermal Summit, and the GEA Geothermal Energy Expo.

At the 2015 National Geothermal Summit in Reno, Nevada, GEA awarded 12 notable individuals and companies with GEA Honors in recognition for their work as industry champions. GEA members Ormat Technologies, Enel Green Power North America and Cyrq Energy were awarded for state-of-the-art industry advancements in Hawai’i, Nevada and New Mexico, respectively. Non-GEA members were also awarded for their work bringing attention to geothermal needs, including Senator Harry Reid for his career-long support for geothermal energy; President Obama’s Power Africa program; the California Energy Commission’s Geothermal Grant and Loan Program and Lawrence Livermore National Laboratory (LLNL) researchers Tom Edmunds and Pedro Sotorrio.

New plants coming on line in 2015 included Ormat Technologies’ 45-MW expansion to the McGinness Hills geothermal site in Lander County, Nevada in February 2015. Ormat Technologies also completed the 19-MW second phase of its Don A. Campbell geothermal power plant located in Mineral County, Nevada and began commercial operations there in September 2015.

Stating their climate pledges and support for cooperation, GEA members signing on to The American Business Act on Climate Pledge, a White House initiative, included Berkshire Hathaway, Calpine and Ormat Technologies as well as non-GEA member companies who have supported geothermal in the past including Apple and Google.

Federal and States’ Policies

Late breaking action in Congress ended some of the uncertainty surrounding tax incentives, extending them through next year and promising to look at further extensions when it returns in 2016. A number of measures pending in the Senate to support further geothermal energy development were included as a geothermal section of an energy bill that has been reported favorably by the Senate Energy Committee. The efforts tackle issues ranging from streamlining a complex permitting process to setting a 50,000-MW National Geothermal Goal.

Bills supporting geothermal energy included S.562, sponsored by Senator Heller (R-NV) and co-sponsored by Senator Risch (R-ID); S.1057, sponsored by Senator Wyden (D-OR) and co-sponsored by Senator Tester (D-MT); also S.822, S.1155 and S. 1407; and Lisa Murkowski (R-AK) and Maria Cantwell (D-WA)’s The Energy Policy Modernization Act of 2015.

The Environmental Protection Agency filed its Clean Power Plan in late 2015, and states have begun planning their individual responses to meet its goals. GEA is working to make sure states have the information they need to include geothermal in their plans.

California continues to be a key state for geothermal in both current use and in future potential, and the state has adopted a 50% renewable energy goal as part of its aggressive climate initiative. The new development has state agencies working to determine how to achieve the best mix of renewables, and geothermal should play an important role in meeting the new goal. In southern California, the governor’s just-released Salton Sea action plan includes a geothermal energy component as part of a larger framework for the near-term restoration effort.

International Markets

Geothermal energy is providing power in 24 countries throughout a variety of regions in the world and has had continued upward growth on every continent except Antarctica.

Nearby, Mexico issued guidelines for bidding for geothermal and other energy sources in its continuing efforts to open power projects up to private companies. Caribbean area geothermal potential has garnered recent support from such entities as U.S. agencies U.S. Trade and Development Agency and U.S. Department of Energy, and financial institutions Inter-American Development Bank and Caribbean Development Bank.

In East Africa, geothermal provides 51% of in-country power supply in Kenya, where these additions are credited with reducing consumer bills by over 30%. The U.S.-East Africa Geothermal Partnership continues to work in Kenya, Ethiopia and Djibouti under the Power Africa umbrella. Efforts may be increasing in Uganda where Climate Investment Funds has endorsed a plan for renewable energy with a 130-MW geothermal component.

In the Pacific, Indonesia and the U.S. made headway with an MOU “To increase our cooperation on climate change and bolster Indonesian energy security” through efforts like “financing structures and adequate project risk mitigation tools to accelerate the pace of geothermal investments in Indonesia,” said a joint statement.

In Europe, Enel Green Power brought on line a biomass-geothermal hybrid plant at the Cornia 2 geothermal plant in Tuscany, Italy. Turkey’s successful growth in geothermal seems to be helping to keep the country on track to meet its power goals. Europe as a whole led the way on carbon pricing schemes as the international dialogue on climate change continued.

At the upcoming March 2016 U.S. & International Geothermal Energy Showcase in Washington, DC, confirmed and invited speakers include representatives from the United States Congress, IRENA, U.S. Department of Energy, Ormat, Enel Green Power, ElectraTherm, U.S. Geothermal, Alstom, Power Engineers/Galena Advisors, CPI, CalEnergy, Nordic Development Fund, World Bank, Citigroup, IADB, EBRD, AfDB, EDC, Dewhurst Group, Standard Bank, Thermochem, Reykjavik Geothermal, AltaRock Energy, Indonesia Ministry of New and Renewable Energy, CFE, PT Pertamina, and more.

Co-sponsors will include: Power Engineers, the East Africa Geothermal Partnership, Dewhurst Group and the Geothermal Resource Group. Supporting organizations include the Geothermal Resources Council, U.S. Trade and Development Agency, U.S. Department of Energy Geothermal Technologies Office, U.S. Energy Association, The World Bank, U.S. Department of State, International Development Bank, U.S. Agency for International Development and the Overseas Private Investment Corporation.

EERE Goals Include Reducing Costs of Geothermal (Webinar Jan. 7)
The Department of Energy (DOE) Office of Energy Efficiency & Renewable Energy (EERE) has published its new Strategic Plan. This plan codifies EERE’s model for clean energy RDD&D and lays out organizational priorities going into 2016.

One of EERE’s key goals is to increase the generation of electric power from renewable resources. This includes: “By 2020, reduce the modeled cost of geothermal power from currently undiscovered hydrothermal resources to $0.10/kWh.”

Another part of the goal is to, “By 2030, reduce the modeled LCOE from newly developed geothermal systems, including EGS, to $0.06/kWh.”

EERE also plans to increase its focus on understanding resource characterization of geothermal.

EERE leadership will discuss the plan in a Webinar on January 7. To register, go to attendee.gotowebinar.com/register/3349163366904341505.

DOE Requests Information on Renewable Energy Deployment (due Jan. 13)
A new Request for Information (RFI) from DOE asks for feedback on how interested governments, industry and others are in including renewable energy in their energy strategies. Geothermal is included in the assessment.

A note from DOE states, “Renewable energy targets and strategic plans have been set at the state level for many years, sometimes including technology-specific plans and programs. As Renewable Portfolio Standards sunset in many states and as compliance requirements are launched for greenhouse gas reduction, states may wish either to establish or re-evaluate targets for renewable electricity deployment and/or consider the most beneficial paths for achieving those goals.”

The RFI submission deadline is January 13, 2016. This is not a Funding Opportunity Announcement (FOA). For more information go to eere-exchange.energy.gov.

GHPs Included in Tax Extenders; Left out of Omnibus
A statement from the Geothermal Exchange Organization (GEO) said tax credits for commercial geothermal heat pumps (GHPs) were not included in the sweeping $1.1-trillion Omnibus spending bill passed in Congress this past week, but that progress was made for GHPs.

GEO stated, “…we scored a big win today with passage of a companion $650 million tax bill that includes four “tax extenders” which are particularly beneficial to the geothermal heat pump (GHP) industry: Expensing under Section 179 was modified and made permanent (making small business eligible for a 100% deduction for investments in geothermal system equipment during the first year after installation); Bonus Depreciation was modified and extended for 5 years; Tax credit for energy efficient new homes was extended to Dec. 31, 2016; and Deduction for energy efficient commercial buildings was extended to Dec. 31, 2016.”

“Having worked hard for passage of these extenders over the past couple of years, GEO is happy about their passage. But we are just as disappointed as all of you when despite our best efforts, GHPs were passed over for extensions of tax credits for wind and solar technologies included in the Omnibus bill,” according to the statement from Douglas Dougherty, President and CEO of GEO.

Suzette Kimball Confirmed as USGS Director
Suzette Kimball, longtime acting director of the U.S. Geological Survey (USGS) (since February 2013), was formally confirmed as the full director in one of the final acts before Congress left town for the Christmas holiday recess. The Senate Floor Proceedings read: “Cal. #383, Suzette M. Kimball, of West Virginia, to be Director of the United States Geological Survey.”

In its 2007-17 strategy the USGS is shifting away from a traditional academic framework toward big questions, as Kimball described in a May interview with E&E News: “An important role for scientists in this day and age is to be able to forecast the big questions where we have gaps in scientific knowledge we need to fill in and to be able to do it now before the question becomes a crisis,” she said.

Kimball’s background includes environmental sciences, coastal processes, geology and geophysics from the University of Virginia, Ball State University and the College of William & Mary.

GRMF Releases EOI for Ethiopia; Three Companies to be Short-Listed (due Jan. 8)
The Consultancy for Geothermal Risk Mitigation Facility (GRMF) has released a Call for Expression of Interest for Application Assistance for the Geological Survey of Ethiopia (GSE). A note from U.S.-East Africa Geothermal Partnership (EAGP) invites eligible experts and companies to express interest in being shortlisted, with three to be chosen for submitting proposals.

Possible areas of assistance to GSE for this project may include site selection for application; writing of Surface Study Plan or Drilling Plan; development of business plan for project; design of financing plan and statements on financial capabilities; and more.

Please view the full PDF for more information on this opportunity. From EAGP: “Additional information and clarifications may be requested from the following email address: csmith@usea.org. Responses to inquires will be posted on the EAGP website at http://www.usea.org/program/EAGP. Questions should not be submitted later than December 30, 2015. Expressions of interest and the associated documentation in English must be delivered by 5:00pm Pacific Daylight Time on January 8, 2016 to EAGP.”

Round 4 of GRMF applications is expected to be launched in March of 2016. GRMF was established in 2012 by the African Union Commission (AUC), the German Federal Ministry for Economic Cooperation and Development, and the EU-Africa Infrastructure Trust Fund in cooperation with the German government owned development bank KfW.

GRMF Announces 3rd Application Round Results
Press Release via GRMF — The 3rd AR started on 31st October 2014 after the pre-qualification workshop held as side-event to the ARGeo-C5 conference in Arusha, Tanzania. On 8th January 2015 – the submission deadline of the pre-qualification phase, sixteen (16) Expressions of Interest (EoI) (10 surface studies and 6 drilling programmes) were formally accepted.

As communicated in a news item on 1 October, on 20th July 2015, of the 18 project represented in the pre-bidding workshop, 14 applications were submitted for GRMF financial support. These 14 applications (7 Surface Studies and 7 Drilling Programmes) were submitted by ten (10) entities (6 public and 4 private) from seven – out of the eleven – GRMF countries (Comoros, Djibouti, Ethiopia, Kenya, Tanzania, Uganda and Rwanda).

We are pleased to announce that 7 projects qualified for grant award in the GRMF 3rd AR (2 Surface Studies and 5 Drilling Programmes).

Please find further information about the qualified project in the following table:

No Name of Bidder Country of Bidder Project Name Activity
1. Cluff Geothermal Ltd Ethiopia Fantale Drilling Programme
2. L’Office Djiboutien de développement de l’Energie Géothermique ODDEG Djibouti Arta Surface Study
3. Geothermal Development Company Ltd (GDC) Kenya Paka Drilling Programme
4. GDC Kenya Korosi Drilling Programme
5. Cluff Geothermal Ltd Ethiopia Butajira Surface Study
6. Bureau Géologique des Comores, Government of Comoros Union of Comoros Karthala Drilling Programme
7. Energy Development Corporation Ltd Rwanda Kinigi Drilling Programme

The cumulative GRMF financial support – including potential continuation premium, for all qualified applications of the 3rd AR amounts to approximately USD 36.7 million. All projects that submitted applications will receive qualification/ rejection letters.

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