In this post:
*IRS Issues Guidance on Geothermal Tax Credit may spur projects to gear up by Jan 1, 2017
*GEA Releases 2016 Baseload Summit Agenda; Early Bird Discount Rates End Today!
*GEA Supports California Study of 1.5 GW of New Geothermal in California
*Thank you to GEA Members New and Renewed!
*India Attracts Geothermal Power Producers From Across Europe
*Countries Begin Trading Power Generated by Olkaria Geothermal Plant
*Geothermal Project on St. Vincent and Grenadines Analyzed by Caribbean Development Bank
*Canadian GEA Release: Yukon Geothermal Opportunities and Applications Report
*ElectraTherm Press Release: ElectraTherm Power+ Generator Commissioned in Japan on Geothermal District Heating System
*International Forum on Energy Security for the Future Announcement
Check out the Desert Sun’s coverage of geothermal developments at the Salton Sea
Image Credit: The Desert Sun/Robert Hopwood
IRS Issues Guidance on Geothermal Tax Credit May Spur Projects to Gear Up by Jan 1, 2017
Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) was enacted by Congress in December 2015. This legislation extended the geothermal tax credit, and now the IRS has issued guidance on how geothermal power facilities would eligible to claim the full Production Tax Credit (PTC) if they begin construction before January 1, 2017.
On Thursday, May 5th, the IRS issued guidance updating how they will approach key questions about the “beginning of construction” requirement for the production tax credit (PTC) under Section 45 of the Internal Revenue Code (the Code) Notice 2016-31 . This notice supplements the IRS’s prior guidance to address issues raised by the extension of the PTC that was enacted at the end of 2015.
The new guidance should help companies attempting to gear up to utilize the tax credit for facilities that can meet the initial construction deadline of January 1, 2017.
There is often confusion about whether geothermal qualifies for a full or partial credit, and the PATH Act made the situation more complex by extending some credits for two years (one retroactive) and phasing out others over a longer term of 5-7 years. Geothermal power facilities were extended for two years (one retroactive) and are eligible for the full Production Tax Credit. New geothermal facilities can qualify by beginning construction by January 1, 2017 and meeting the other IRS requirements.
Previous guidance made it clear that a taxpayer may “begin construction” by either (1) starting physical work of a significant nature (the “physical work test”) or (2) paying or incurring five percent or more of the total cost of the facility (the “5% safe harbor”). And the prior guidance noted, once construction begins, a taxpayer must maintain a continuous program of construction or make continuous efforts toward construction until the facility is placed in service.
In the prior guidance the IRS also established a safe harbor under which the continuous construction would be deemed satisfied with respect to a project if the project were placed in service in a specified timeframe, generally two years – a challenging timeframe for most geothermal projects. However, the new IRS guidance extends that date, providing generally that if a taxpayer places a facility in service during a calendar year no more than four years after the year during which construction begins, the facility will be considered satisfactorily having met the continuous construction requirement.
For geothermal facilities, the new guidance indicates they may qualify using the physical work test by employing “On-site physical work of a significant nature may include physical activities that are undertaken at a project site after a valid discovery.”
Furthermore, the notice specifies eleven additional disruptions that will be viewed as excusable in meeting the continuous work test.
For more information on the recently issued guidance, contact a professional tax advisor or the IRS. This article should not be relied upon as tax advice. Please consult your professional text advisor regarding the new notice and how it may affect any particular project.
Congress is still looking at extending the geothermal and other tax credits, but any action they take is not considered likely to affect the extension provided in the PATH Act for projects able to qualify this year.
GEA Releases 2016 Baseload Summit Agenda; Early Bird Discount Rates End Today!
The 2016 Baseload Renewable Summit agenda is now available online at: http://www.geo-energy.org/nationalgeothermalsummit/Agenda.aspx.
With a diverse list of speakers and participants with expertise in Western baseload energy policy issues and industry advances, the BRESx3 summit is shaping up to be a high-profile renewable energy event, with attendees from the Department of Energy, premier American geothermal companies, government officials from leading geothermal Western states, and more key players in America’s baseload renewable landscape.
It’s not too late to claim a special discount rate! Early bird registration ends today. Register online at: https://www.gifttool.com/registrar/ShowEventDetails?ID=1872&EID=22151
Why Attend the 2016 BRESx3?
As states move towards a low-carbon future, what is the role and outlook for geothermal technologies in the future?
These are important questions for decision-makers to ask as Western States in particular seek out the lowest-cost, lowest impact path to a low carbon future.
The day long Baseload Renewable Energy Summit on June 8th will bring together experts, analysts, industry executives, regulators and policy makers from across the U.S. and abroad to explore key questions about: the value to the power systems of baseload renewables, how to find the right mix of technologies, future state plans for cutting carbon emissions, current state and regional power initiatives, new technologies and more.
GEA Supports California Study of 1.5 GW of New Geothermal in California
Last year, California Governor Edmund G. Brown Jr. issued Executive Order B-30-15 establishing a new statewide intermediate target to reduce greenhouse gas emissions 40 percent below 1990 levels by 2030 in order to guide policy and maintain momentum across the government, industry and populace to reduce GHG emissions to 80 percent below 1990 levels by 2050. The Legislature enacted the Clean Energy and Pollution Reduction Act of 2015 (Chapter 547, Statutes of 2015) was signed into law on October 7, 2015, which establishes targets to increase retail sales of qualified renewable electricity to a minimum of 50 percent by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030.
To support achieving these targets, the California Energy Commission, California Public Utilities Commission, and the California Independent System Operator have initiated the Renewable Energy Transmission Initiative 2.0, also known as RETI 2.0. RETI 2.0 is not a regulatory proceeding in itself, however, the insights, scenarios and recommendations it develops will frame and inform future transmission planning proceedings with stakeholder-supported strategies to help reach the state’s ambitious 2030 energy and environmental goals.
GEA recently filed comments on the May 2nd RETI workshop. The GEA comments follow:
RE: Transmission Assessment Focus Areas. Presentation and discussion of proposed Focus Areas and next steps for assessment of potential transmission and environmental/land use issues during phase two of the RETI 2.0 process on May 2nd, 2016.
The Geothermal Energy Association (GEA) is pleased with the RETI 2.0 management team’s decision to study the integration of 450 MW of geothermal power from Northern California and 1000 MW from the Imperial Valley. While the Imperial Valley resources are not fully flexible, as Hal Harvey’s presentation noted there is still a substantial amount of dirty and imported power this geothermal generation could replace. In addition, building fast-ramping gas-fired generation to supplement intermittent generation rather than base load geothermal resources would be a less effective means in meeting California’s
To replace some of this dirty imported power, GEA would like to highlight Nevada’s experience in geothermal development. Developers in Nevada have demonstrated geothermal power can be built quickly along existing transmission lines at cost-effective prices. New plants or existing projects that will be coming off contract should be considered by California’s utilities trying to reach a 50% renewable goal by 2030.
As Jim Caldwell notes in his presentation and public comments on April 18th, additional geothermal power would help shrink the “duck’s belly,” reduce CO2 emissions compared to the base case and save the electricity system up to $75 in operational costs for every MWh of added geothermal generation. This number translates into potential savings as high as 2% of total system costs by 2030.
As the California Energy Commission moves forward with RETI modeling and planning, please use the Geothermal Energy Association as a resource if you have any questions. GEA looks forward to your modeling results in a few months’ time.
Submitted by Benjamin Matek,,Research Projects Manager, Geothermal Energy Association
For more information on the RETI process go to: http://www.energy.ca.gov/reti/
Thank you to GEA Members New and Renewed!
GEA works to put geothermal on the map in Washington, Sacramento, and elsewhere. We depend upon our members support to do so. We work to make a difference so that the industry and your company can succeed.
This week we want to say thank you to following new/renewed GEA Members:
John M. Phillips
Global Power Solutions
India Attracts Geothermal Power Producers From Across Europe
With India intending to grow renewable energy capacity fourfold to 175 GW by 2022, European geothermal energy producers have expressed interest in establishing generation plants in the country.
Experienced European companies, which generate electricity in geothermal power plants by tapping steam from reservoirs of hot water located several kilometers belowground, have claimed that the proposed plants can harness untapped heat energy in India.
Iceland, a leader in the geothermal power sector, is interested in constructing two geothermal power plants, including a 5 MW plant in Jammu and Kashmir and a 10 MW plant in Chhattisgarh. Over the course of a recent visit to New Delhi, Iceland’s Foreign Minister Gunnar Bragi Sveinsson said: “Icelandic companies have the expertise and experience in harnessing geothermal energy. They are keen to have partnerships with Indian companies – private and state-owned – and invest in the Indian market.” Sveinsson met with local media after discussing ways to increase bilateral trade and investments with the top Indian leadership.
The foreign minister reminded the media that Iceland had developed its renewable energy industry due to increasing cost of imported fossil fuels such as coal. “Climate change is affecting Iceland. It is affecting you. It’s affecting everyone. India is a big country and is going for more clean energy, which is a very important step,” explained Sveinsson.
At the Paris Climate Conference in December, 195 countries adopted the first universal, legally binding, global climate agreement to limit the increase in global average temperatures to below 2 Degrees Celsius above pre-industrial levels. India pledged to reduce carbon emissions by 35% in the next 14 years.
For his part, Manager of Islandsstofa (which promotes Iceland’s industry abroad) Thorleifur Thor Jonsson said that India could generate approximately 3 GW of electricity every year from geothermal power with the help of his country’s expertise. “India has very good potential for geothermal power generation. But it is best not to utilise the entire potential as many areas with geothermal activity are also tourist spots with geysers and hot springs. So, we have to take a balanced view of harnessing the energy generation potential and maintaining those attractions,” he Jonsson highlighted.
As far as geothermal power is concerned, Kenya, Iceland, El Salvador and New Zealand are taking their place on the international stage as major global players in recent years. Although the current global geothermal energy capacity is just 12.6GW, Kenya (32% of power), Iceland (30%), El Salvador (25%) and New Zealand (17%) play a significant role in this particular sector. The BP Global data show that the US has the largest geothermal installed capacity at 3.5GW.
Meanwhile, the volume of trade between India and Iceland was $25 million in 2014-15. India has received $21 million in Foreign Direct Investment (FDI) from the Nordic country in the last 15 years.
Countries Begin Trading Power Generated by Olkaria Geothermal Plant
As reported on Renewable Energy World, Kenya, Rwanda and Uganda will begin trading 15 MW of power generated by the Olkaria Geothermal power plant beginning in May 2016.
The border-spanning power trade, one of the mega Northern Corridor Infrastructure Projects that is trailing behind schedule, was originally planned by the trio of countries to begin trading power by the first months of 2015.
The countries in question had agreed on an initial power sale of 30 MW by Kenya to Rwanda to be transmitted through Uganda by July 2015, Reuters Africa reported.
Progress for a transmission line in the African region is to date at 50% and substation at 61% stemming from slow performance of contractors.
A memorandum of understanding that Rwanda, Kenya and Uganda became parties in in 2013 allows the three countries to share cheaper generation capacity as further power is made available.
On April 23, in Kampala Uganda, the partner states concurred that the power trade will begin in December.
Right of way (ROW) issues and slow performance of contractors are the main challenge to achieving the target goal.
“There should be concerted effort within government to clear the ROW issues, and Uganda is expected to address pending ROW issues,” East African Community senior energy officer Peter Kinuthia commented, adding that the implementing agencies will fast track the application of the contractual provisions, like the termination of performing contracts in order to move forward project activities.
It was additionally agreed that the government will provide timely compensations to project-affected individuals who accept the disclosed compensation packages.
“Government is gazetting transmission line route corridors and the associated substation sites,” Kinuthia explained.
The cross-border electricity grid through the trio of countries aims to upgrade the region’s power infrastructure and commercial prospects.
The 400-kilovolt (kV) transmission lines would connect Olkaria in Kenya, where the country is constructing geothermal power plants, and Birembo in Rwanda through Uganda. Uganda and Kenya were previously connected by past lines still in existence.
The grid is necessary to improve reliability and the security of the African region’s power supply alongside improving trade and sharing of resources among the three East African countries.
Under the East African Power Pool project, countries are expected to export surplus electricity under circumstances when it is available to neighboring states in need, taking into account that power production in the region is usually unstable due to community dependence on hydroelectric power generation.
Partner states are expected to conduct close monitoring of their respective 220 kV project components for power trade.
The regional power pool will allow power transmission capacity of over 500 MW in the three joint partner states and establish reliable supply in the region.
Since 2003, East African countries have been interconnecting their power lines to improve supply, stabilize access and encourage trading in electricity across national borders.
Kenya, Uganda, Rwanda, Burundi and Tanzania also agreed to pull out of a proposed regional power sharing pool in favor of the wider Eastern Africa Power Pool (EAPP), under which the EAC Power Pool falls. EAPP aims to connect nine countries by 2018.
Geothermal Project on St. Vincent and Grenadines Analyzed by Caribbean Development Bank
As Alexander Richter at ThinkGeoEnergy reports, the Caribbean Development Bank recently released official details on the Geothermal Energy Development Project on St. Vincent and the Grenadines in the Caribbean. The document appraises a proposal for exploratory drilling by the St. Vincent Geothermal Company Limited (SVGCL), a joint venture established between the Government of St. Vincent and the Grenadines (GOSVG) and St. Vincent Geothermal Holdings Limited, to investigate the geothermal resource in the La Soufrière region in northern St. Vincent; and for the services of a Community Liaison Officer (the CLO) to support and facilitate stakeholder engagement throughout the project implementation (the Project). The outcome of the Project will be the enhanced capability of SVGCL to make an evidenced based determination of the feasibility of continuing geothermal resource development for electricity production.
In compliance with Caribbean Development Bank’s Environmental and Social Review Procedures, the Project is categorized as ‘B’ due to the limited number of specific adverse social and environmental impacts which may result from the proposed activities, and which can be avoided or mitigated by adhering to national regulations and generally recognized performance standards, guidelines or design criteria. An Environmental and Social Impact Assessment (ESIA) and associated Environmental and Social Management Plan (ESMP), was prepared by independent consultants for the Project. An Environment and Social Action Plan (ESAP) has been designed to guarantee that any outstanding issues at the time of project approval are addressed in a timely and appropriate manner. The ESIA was disclosed in country on April 12, 2016 and was also presented at public meetings.
Canadian GEA Release: Yukon Geothermal Opportunities and Applications Report
CanGEA recognizes the immense benefits that geothermal energy could provide for northern and remote communities, which suffer socio-economic hardships. Geothermal heat and power projects could also experience superior resource efficiency due to a favourable temperature difference between the reservoir temperature and ambient temperature (which defines the “useable” energy) as a result of the arctic climate.
At present there is no geothermal power production in Canada and the direct use applications are limited to swimming and balneological applications. We are choosing to conduct outreach (such as the Yukon geothermal maps and report) in our country’s northern territories for two reasons. The first is that the lack of affordable heat and power sources has significantly impacted the region’s socio-economic conditions and current sources of energy have already impacted the vulnerable environmental balance. The second is that the extreme temperature difference will increase the output of geothermal projects in the north.
Geothermal energy is able to provide northern communities with a clean and renewable energy source for the foreseeable future. In addition, geothermal micropower can deliver Canada’s northern communities with a dependable and economical baseload energy capacity. Geothermal energy can replace inefficient and green house gas (GHG) emitting diesel-powered generators that are currently used by many off-grid communities. This allows for a much more cost-effective and sustainable means of energy production, which translates into greater economic viability for northern communities. It will also produce regional employment and contribute to food security as the heat generated from such projects can be used for various direct use applications, such as heating greenhouses in order to produce fruit and vegetables. Heat produced from geothermal projects can be used for a variety of other agriculture and aquaculture purposes.
The primary objective of this outreach is to build capacity among northern Canadian residents so that they can initiate their own geothermal projects contributing to local economies and food security. The larger goal is to develop the knowledge and skills necessary to harness northern Canada’s geothermal resources, which will significantly enhance the economic, environmental and social viability of many remote, northern and aboriginal communities. Notably, this effort will also result in an improvement in such communities’ “triple bottom line”. That is, not only does the use of geothermal energy carry economic benefits, but it also advances the communities’ social and environmental interests.
Key Findings Summary
* The Yukon geothermal resource evaluation revealed a number of key findings and limitations of the available data. Key items are summarized below.
* The geothermal potential of the Yukon implies more than 1,700 MW of indicated resources at a depth of less than 5,000 meters (using a 5% recovery factor). This number rises to approximately 5,000 MW when inferred resources are considered. Approximately 100 MW of low-hanging-fruit resources are available at a depth of less than 2,000 meters.
* Large areas of the Yukon were not available for incorporation into this study due to the lack of sufficient data across much of the territory.
* While the reported resource estimates are substantial, the estimates are dominantly based on potential resources in the northeastern half and southeastern tip of the Yukon only, due to the data density from the oil and gas wells drilled in the Peel Plateau, Mackenzie Delta, and the Liard Basin.
* The Global Protocol is not suitable for incorporating data within volcanic and crystalline rock terrain. Therefore, areas that have been indicative of high potential for geothermal development, based on geological setting and previous evaluations, are not adequately reflected within this mapping study.
* Further evaluation of the oil and gas industry data would likely serve to increase the confidence in the resource estimates for the Yukon. Significant water production data exist within the industry. This could be combined with relevant thermal data to produce a “Measured” estimate of the geothermal potential of specific reservoirs, according to the Canada Geothermal Code for Public Reporting.
* There may be other industry information that would serve to increase the data coverage and add to the estimates for geothermal potential in the Yukon if it were made available or collected during future work, such as within the mineral exploration or water well drilling industries.
The overall result of these limitations is a significant underestimation of the geothermal resource potential in the Yukon, in our opinion.
To see maps and further details, follow the link: http://www.cangea.ca/Yukon-Geothermal-Resource-Estimate-Maps.html
ElectraTherm Press Release: ElectraTherm Power+ Generator Commissioned in Japan on Geothermal District Heating System
Reno, Nevada – ElectraTherm, a leader in distributed waste heat to power generation, commissioned the Power+ Generator™ 4400 in Beppu, Japan. This is the first Power+ Generator in the country and it utilizes geothermal heat to generate fuel-free, emission-free electricity at the site. Commissioned in March, the Power+ runs off low temperature geothermal steam from a small district heating system. The power is sold to the local utility at an attractive feed-in-tariff rate for renewables. The existing geothermal well requires the temperature of the geothermal resource to be cooled before it can be used for heating. As the Power+ generates power, it also provides the necessary cooling with zero environmental impact or imposition on the onsen’s primary function as a community resource.
ElectraTherm utilizes Organic Rankine Cycle (ORC) and proprietary technologies to generate up to 110kWe of electricity from low temperature water ranging from 77-122°C. At this site the onsen provides geothermal steam at 110°C. Unlike other renewable sources, geothermal heat is baseload, providing a continuous hot water flow with power generation capabilities 24/7. Instead of expensive cooling equipment to lower the resource to a suitable temperature for heating, the water runs through the Power+ Generator which simultaneously cools the water up to 20°C while producing clean electricity.
“The Power+ Generator not only generates power and profit it also solves a problem – cooling onsen water that is otherwise too hot for human use” said Kazunori Ueda, Project Lead and Director of Sales & Marketing, Sankou Denki. “With Japan’s feed-in-tariff rate for geothermal at 40 Yen/kW (~$.33/kW), we see a strong opportunity for profit at this site and approximately 40 + similar sites in the prefecture of Oita alone – and hundreds more at other districting heating systems and onsens (hot springs) throughout Japan. The minimal impact to the property with a small footprint and quiet sound profile make this a hidden gem for the local community, serving as a resource and providing a fixed profit at a district heating system that has been in operation for many years, and will continue for many more.”
ElectraTherm’s Power+ Generators utilize waste heat on applications such as internal combustion engines, biomass boilers, incinerators, geothermal and also flare to power methane utilization at wastewater treatment plants and oil & gas fields. ElectraTherm’s Power+ fleet of 50+ global installations has exceeded 520,000 hours of run time. A list of reference sites is currently available on the website.
About ElectraTherm, Inc.
ElectraTherm, Inc. is a renewable energy company focused on waste heat to power headquartered in Reno, Nevada. Our machines are modular, robust power generators with an attractive return on investment. For more information on ElectraTherm and its clean energy products, please visit www.electratherm.com.
International Forum on Energy Security for the Future Announcement
Burisma Group, in association with the Prince Albert II of Monaco Foundation, are hosting the inaugural International Forum on Energy Security for the Future: New Sources, Responsibility, Sustainability.
The initiative, which they have co-founded, is the first of its kind to focus on the development of alternative energy sources. It will be held on June 2, 2016, at the Yacht Club de Monaco (Monte Carlo, Monaco).
Burisma Group, which owns assets in Italy, Ukraine and Kazakhstan, is aiming to bring together leading politicians, energy experts, businessmen, journalists and representatives of civil society to address Europe’s energy needs and energy risks.
* The venue for this year’s Forum was not chosen by chance: the Prince Albert II of Monaco Foundation is dedicated to the development of clean energy and the latest environmental initiatives.
* Among key partners of the event are the British Ukrainian Chamber of Commerce (BUCC), the U.S.-Ukraine Business Council (USUBC), the Honorary Consulate of Monaco in Estonia, and Electric Marathon International.
Leading European politicians, diplomats, public figures, journalists, analysts and businessmen from more than 20 countries in Europe and America will be sharing their vision of our energy prospects. With more than 150 guests expected to attend, the event will be an open platform for exchanging views and ideas on ensuring energy security in Europe.
Key Speakers will include:
* His Serene Highness Prince Albert II of Monaco
* Alexander Kwasniewski, President of Poland 1995-2005
* Joschka Fischer, Vice Chancellor of Germany 1998-2005
* TJ Glauthier, US Deputy Secretary of Energy 1999-2001
* Andris Piebalgs, European Commissioner for Energy 2004 and 2009
* Ilkka Kanerva, President of the Parliamentary Assembly of the OSCE
* Hunter Biden, Independent director at Burisma Holdings and Burisma Geothermal
Moderated by: David Eades, anchor on BBC World News TV, and presenter of the prestigious BBC national news and current affairs program ‘The World Tonight’, on Radio 4.
Key topics include:
* Alter-Eco: New energy for the “New” Europe
* Geopolitics and the diversification of energy sources
* Environmental security and corporate responsibility
* Public-private partnership on the alternative energy roadmap
For more information, please, visit: energysecurityforum.org
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