In this post:
*Reno 3X Renewable Baseload Summit a Success
*BLM Outlines Workplans at GEA Summit
*GEA Applauds EPA for Proposing to Include Geothermal Power in the CEIP
*Senate Finance Committee Holds Tax Policy Hearing
*Philippines EDC Exploring Investment Opportunities in South America
*Geothermal Works Will Begin in Bogoria Silali Block
*EBRD Press Release: EBRD Presents Financing Scheme for Geothermal Projects at Izmir Conference
*Press Release: K&M Advisors Retained as Transaction Advisor for Olkaria VI 140 MW Geothermal Power Plant in Kenya
Check out this fascinating article on how a power plant in Iceland turned its CO2 into stone!
Image Credit: Ásgeir Eggertsson/Wikipedia
Reno 3X Renewable Baseload Summit a Success
Last week on June 8, geothermal developers, scientists, and stakeholders gathered in Reno, Nevada alongside hydropower and biomass experts to network, collaborate, and discuss issues common to baseload technologies for the 2016 3X Renewable Baseload Summit, an event that fostered a dialogue on topical technological and political challenges amongst baseload technologies and common policy hurdles.
After Congress failed to include biomass and hydropower in last year’s ITC tax credits and granted geothermal developers an inadequate one-year extension, the need for a unified effort between baseload technologies to find parity with solar and wind was more evident than ever, spurring the idea of the joint 3X Baseload Summit, combining the expertise of leaders in hydro, biomass, and geothermal in an event to find common ground and foster a dialogue between industry stakeholders across professions.
GEA hosted the event with support from the National Hydropower Association, the Biomass Association, and Ormat Technologies, Inc.. Rahm Orenstein, VP of Business Development of Ormat made welcoming remarks and stressed that the cost of geothermal power was going down while its value was going up. Honorable Nevada State Senator Patricia Spearman, a member of the Energy Resources Task Force, was a keynote speaker, opening the event alongside City Councilman David Bobzien. Both gave spirited remarks.
Councilman Bobzien kicked off the morning, with over 150 attendees from Iceland to Taiwan, addressing the diverse audience with enthusiasm regarding the Clean Power Plan, its opportunities for baseload technologies, and COP 21: “As a member of the Reno City Council, I’m proud to say we signed a global pledge to be green… I was thinking first and foremost of our natural geothermal energy.” Reno is well-suited to benefit from geothermal, and was a fitting place for the Summit. Councilman Bobzien indicated Nevada was looking towards the future with green energy in sight: “My sense is that our legislature must answer the question of what the grid will look like in 2020.”
Sen. Spearman, a champion for civil rights, the environment, and renewable energy, gave a rousing keynote address: “I am delighted to talk about… comprehensive energy planning,” she began, calling for a “21st century energy strategy” that incorporated both intermittent and baseload technologies “that guarantees healthy development of renewable energy.” Like Councilman Bobzien, Sen. Spearman believes in a future that is both sustainable and profitable for the green energy industry: “We cannot continue to consume, it is unsustainable,” Sen. Spearman concluded, urging participants to help bring about the energy grid shift needed to combat climate change and pollution.
A diverse array of speakers followed, from the Bureau of Land Management, who outlined their new workplan (story found below) to representatives of the hydropower and biomass industries. A repeated theme was the need for a diverse power portfolio to provide reliable service. Some notable highlights were:
- Rob DelMar of the Oregon Department of Energy talking about their upcoming renewable power RFP;
- Charlene Wardlow of California’s DOGGR describing plans to streamline and modernize the regulatory agency;
- Imperial County, Mariposa County and CalEnergy Executives taking about their ideas for a California Baseload Coalition involving both geothermal and biomass industries;
- Jim Caldwell of CEERT showing results of the Low Carbon Grid Study projecting a future California grid with more baseload diversity resulting in less curtailment, greater reliability and lower system cost;
- Drew Bohan of the CEC pointing to a Fall 2016 Geothermal Grant and Loan Program solicitation with roughly $4.7 million to award;
- Presentations on new technology in biomass, geothermal and hydropower, and more.
After a dynamic day-long discussion between panelists, moderators, and the audience, GEA’s Executive Director Karl Gawell concluded “It’s not about the price of kWh you provide, it’s about the value you bring to the table,” echoing sentiments of other industry leaders that baseloads have a place in the diversified energy portfolios of America’s future, on the same level as intermittents, with different but equal value.
BLM Outlines Workplans at GEA Summit
Lorenzo Trimble, BLM’s Geothermal Program lead, outlined an ambitious workplan at the GEA Summit in Reno. BLM is an important partner of the geothermal industry with 73 federal leases in production generating $16 million annually in federal royalty income.
Among the list are plans for an October 26, 2015 geothermal lease offering. The lease offering is expected to include 2 parcels in California, 11 in Oregon, 81,820 acres in Washington, 8 parcels in Utah and 30 parcels in Nevada.
BLM is also updating its regulations to incorporate its Geothermal Resource Operational Orders. The agency received legal recommendations to updates its orders and the changes required require their incorporation into the regulations. The existing GROs cover: exploration, drilling on leases, P&A of wells, environmental protection, permit report records, pipelines and surface facilities, and royalty and testing.
In addition to the lease sale and regulatory review, BLM plans to update its MOU with the Forest Service, prepare a new instruction memorandum on temperature gradient wells, prepare an instruction memo on geothermal leasing and mining claims, support the Department of Energy’s FORGE initiative, administer the agency’s sage grouse plan and more.
GEA Applauds EPA for Proposing to Include Geothermal Power in the CEIP
The EPA has issued its proposed rule for the Clean Energy Incentive Program (CEIP), and they include geothermal energy! The proposed rule is at: https://www.epa.gov/sites/production/files/2016-06/documents/ceip-design-details-nprm.pdf . Section III.C proposes the expansion of eligible CEIP projects to include, in addition to wind and solar, two other RE technologies: geothermal and hydropower.
“While GEA is still reviewing the proposed rule, we are pleased the EPA has proposed to include geothermal technology as part of its CEIP program, said Ben Matek, GEA’s Industry Analyst. “Geothermal is the only renewable, clean and carbon negligible technology that offers both firm and flexible power which will be important to achieve the Clean Power Plans goals,” he said.
“We applaud the EPA for proposing to include geothermal power in its Clean Energy Incentive Program under the Clean Power Plan,” stated GEA Executive Director Karl Gawell. “There are a significant amount of geothermal projects that could be under development if provided market incentives as proposed in the CEIP. Doing so would help states meet their Clean Power Plan goals and bring benefits to their local communities,” he added.
Geothermal plants provide numerous economic benefits to the communities they serve such as tax revenues, royalties, and permanent jobs that last for decades. For more information on the benefits of including geothermal in the CEIP, see: http://geo-energy.org/reports/2015/Geothermal%20Energy%20Association%20Issue%20Brief_Clean%20Energy%20Incentive%20Program_Final.pdf
Senate Finance Committee Holds Tax Policy Hearing
On June 14th, the Senate Finance Committee held full Committee hearing to discuss “Energy Tax Policy in 2016 and Beyond.”
Chairman Orrin Hatch (R-UT) opened the hearing by criticizing the Administration for espousing an all- of- the- above energy policy, yet seeking to impose costs and restrictions on fossil fuels. Senator Hatch explained, “I am all for promoting innovation and advancing alternative energy sources. Like I said, I want an all-of-the-above approach. However, I do not believe we should be purposefully raising the cost of existing and proven energy sources – and adding to the costs of doing business or raising a family in the U.S. – in order to make alternative energy sources more attractive.”
The Chairman continued: “Ultimately, the energy-related provisions in our tax code – like everything else – will have to be reconsidered as part of our ongoing tax reform efforts. In our attempts to make the tax code fairer, simpler, and more conducive to economic growth, I’m willing to consider any reasonable alternatives. However, that is a long-term effort that will likely not bear fruit in the immediate future. In the meantime, I think we need to work to ensure that our tax code is designed so that it does not punish the production of any viable energy source.”
Ranking Member Senator Ron Wyden (D-OR) focused his remarks on the near term problems that need to be addressed. Senator Wyden said, “In my view, there are two parts to the energy debate today. First is where our energy policy needs to go in the long term – a tech-neutral approach that throws the current mishmash of incentives in the trash can, cuts their cost in half, and promotes a clean-energy economy. More green for less green. The second part of the debate is about creating the running room in the short term that makes it possible to achieve that goal for the future. I want to talk about both today, beginning with the short term”
The Ranking Member pointed out, “at the end of last year, Democrats and Republicans came together and began to move away from the same old cycle of temporary tax extenders. Congress decided, on a bipartisan basis, that another weeks- or months-long renewal of the renewable energy incentives wasn’t good enough. Incentives for wind and solar, which have grown to become major parts of the American energy portfolio, got five years of certainty, and other clean technologies got two. And the result has been dramatic: New solar installations are projected to double this year and for the first time, new solar generation will exceed natural gas.”
But he also recognized the outstanding problems last year’s tax deal created. He said, “Here in the short term, let’s remember that there’s leftover business that needs to be addressed. Certain renewable technologies were left out of last year’s package – fuel cells, geothermal and more. The clock is ticking down to another round of expirations at the end of this year. For example, bipartisan legislation on waste-heat-to-energy that passed this committee last year was left out. The sooner Democrats and Republicans come together, take care of these energy extenders and clear the decks, the sooner we can turn to finding a smarter, fresh approach to energy tax policy.”
GEA submitted a statement for the hearing urging Committee action to restore parity among renewable technologies. It said, “Geothermal power was left out when Congress passed longer-term tax incentive legislation as part of the PATH Act of 2015. This was an unfortunate oversight for the Nation’s energy future. Developing our Nation’s geothermal potential is an investment in learning how to tap an enormous resource. To achieve stable growth in the geothermal industry, long-term, predictable incentives are needed to spur innovation, allow fair competition and boost new geothermal power growth.”
GEA called on the Committee to restore the balance upset by last years “PATH Act”: “The PATH Act extended Section 48’s 30% Investment Tax Credit for solar technologies beginning construction by 2019 and phasing out through 2023. Geothermal often competes with solar, particularly in states that have adopted renewable portfolio standards (RPS). Congress did not intend to legislate solar as the marketplace winner, which we are concerned may be the result if the current ITC imbalance is not addressed. Thus we urge the Committee to support parity between solar and geothermal. It would be fair, would engender healthy competition, and would continue to encourage innovation in these technologies,” GEA said.
Meanwhile, most of the technologies left out of the long-term deal in 2015 are hopeful that the House and Senate will act on legislation that will allow a correction and extension of credits before the current one expires at the end of 2016.
Philippines EDC Exploring Investment Opportunities in South America
The biggest producer of geothermal energy in the Philippines, Energy Development Corp. (EDC), a member of the Lopez Group, is exploring renewable energy (RE) investment opportunities in South America.
“The time is right” for geothermal project in South America, EDC president and chief operating officer, Richard Tantoco said. Chile, he highlighted, has recently cancelled two coal-fired power plants. “There are also invitations from other countries in the region to invest in renewable energy, so we’re looking at it,” he said. Mexico’s energy sector, Tantoco commented, is deregulating and privatizing. “So, we want to take a look,” but he added, “we’re not doing anything yet; we’re studying.”
EDC operates 12 power facilities in five geothermal service contract areas in the Philippines.
According to Tantoco, weatherproofing of EDC’s Bacman geothermal facilities, located in the towns of Bacon and Manito in Albay has been completed. “The facilities that took the longest time, five months, to restore was the cooling towers. Those had been completely redesigned and re-engineered and then on top of that we have 100 percent spares. So if another Yolanda happens, we have strategic spare,” Tantoco said.
“We’re doing all the landslide work, indications, we realigned roads, huge water diversion,” he continued.
In previous years, EDC’s geothermal facilities in Leyte took damage when the super typhoon Yolanda, internationally known as Haiyan, battered the region in November 2013.
Damaged plants included the 112.5 MW Tongonan plant and the Unified Leyte geothermal power complex, which consists of 125-MW Upper Mahiao plant, 232.5 MW Malitbog plant, 180 MW Mahanagdong plant, and 51-MW Leyte optimization plants.
In addition, EDC is on the processing of technology optimization for its 3 power plants for which build an additional 50 MW capacity.
Just like EDC had done with Bacman from 120 MW to 140 MW, the three plants that will have additional capacity are Nasulo from 120 to 140 MW with an added 20 MW, Tongonan with 10 MW, and following that Palinpinon with 20 MW.
Tantoco said that the optimization would be finished by first or second quarter next year for additional output.
With the additional 50 MW, Tantoco said that it would bring approximately $13 million in revenues to the company when completed.
Geothermal Works Will Begin in Bogoria Silali Block
Drilling operation for geothermal energy in the Baringo Silali Block will begin in January 2017, according Eng. Johnson Ole Nchoe, the Managing Director and CEO of the Geothermal Development Company (GDC).
Eng. Nchoe announced this during a recent tour of the Menengai Geothermal Project in Nakuru
“We’re committed to opening up the Baringo-Silali geothermal prospect which has a huge potential. Already we have issued some works contracts that will accelerate the development of the project. We need to speed up the generation of electricity from renewable sources to meet the demands of the country,” said Eng. Nchoe.
The Baringo Silali Block Project has been funded by KFW of Germany with approximately $79 million. GDC is slated to drill around 20 wells that will produce up to 200 MW of electricity. The Baringo Silali Block has a potential output of 3,000 MW. GDC has already performed comprehensive scientific exploration. The company has also paved roads in the project area that are critical for drilling operations.
Meanwhile, GDC has announced that power plant construction at the Menengai Geothermal Project will begin in the next three months to tap and produce 105 MW of electricity. The company has contracted three Independent Power Producers (IPPs) to construct three power plants in the project. In this manner, Kenya’s efforts towards cheap green electricity will be realized.
“Menengai is a ripe project. It’s on the brink of production and we are happy with it. we have completed major works and drilling for the generation of the 105 MW by the three IPPs. We ‘re glad that we are going to deliver on our promises to Kenyans,” Eng. Nchoe said.
While speaking to his staff in Nakuru Town, Eng. Nchoe reaffirmed that GDC is a corruption free company. “We are not going to tolerate any corrupt elements in the company. Before we come for you, you are better advised to send in your resignation letter, because we will get you,” he said in a terse statement.
EBRD Press Release: EBRD Presents Financing Scheme for Geothermal Projects at Izmir Conference
The European Bank for Reconstruction and Development (EBRD) has presented its innovative financing scheme in support of geothermal energy projects at a three-day IGC Turkey conference which concluded in Izmir today.
The new US$ 125 million PLUTO initiative provides finance and advice to private developers at exploratory stages in a move to tap Turkey’s significant potential for geothermal energy and help the country meet growing demand for electricity.
Geothermal energy projects face high risks, particularly in their initial stages, including high investment costs and development risks and very limited access to project finance once drilling has confirmed the existence of the resource. PLUTO, named after the ruler of the underworld in classical mythology, helps minimise these risks.
PLUTO combines US$ 100 million from the EBRD with US$ 25 million from the Clean Technology Fund, a funding window of the Climate Investment Funds. The programme is part of a global push by multilateral development banks to scale up geothermal energy production.
EBRD Managing Director for Turkey and Central Asia Natalia Khanjenkova said: “Turkey is probably the hottest geothermal market in the world, not because of the temperature of its hot springs, but thanks to its vibrant private sector and the strong regulatory support that has been put in place by the government.”
Turkey ranked first globally for new geothermal power capacity last year, according to the Renewables 2016 Global Status Report. The country accounts for half of new additions to global capacity, the report found, and is well on its way to meeting the goal of having 1 GW of geothermal power capacity in place by 2023.
The EBRD – a leading investor in renewable energy in Turkey – has financed over a third of the total installed capacity for geothermal energy. It has provided finance to seven geothermal power plants in Turkey, including Efeler, the largest in Turkey and the second-largest in Europe.
Under the PLUTO initiative, the Bank aims to develop at least five new geothermal power plants with a combined capacity of at least 60 MW, generating more than 450 GWh of renewable electricity per year. It will increase the amount of installed geothermal capacity in Turkey by more than 10 per cent, thereby making a substantial contribution to reaching the country’s renewable energy targets.
The conference in Izmir, a Turkish city at the heart of the country’s geothermal resources, brought together over 180 local and foreign developers, suppliers, investors and policy-makers to discuss Turkey’s significant geothermal energy potential and project development opportunities.
Participants also explored ways to expand the use of geothermal energy, including the carbon dioxide that it sometimes produces, to such sectors as agriculture, fish farming and district heating.
Izmir Mayor Aziz Kocaoğlu said his municipality is keen to realize the geothermal potential in the area, ranging from the rehabilitation of a district heating system powered by geothermal energy to building a geothermal power plant. He also highlighted the role of thermal springs for the health and wellbeing tourism industry in the Izmir region.
Investing in sustainable energy is a strategic priority for the EBRD in Turkey, as the country aims to diversify away from expensive imported fuel. The Bank has already committed around €1.8 billion of its funds through dedicated credit lines such as TurSEFF and MidSEFF as well as through direct financing – both debt and equity – to renewable projects ranging from small ventures to very large ones.
The EBRD has also helped the Turkish Ministry of Energy and Natural Resources develop Turkey’s first National Renewable Energy Action Plan to attract more investment in renewable energy projects.
The EBRD’s focus on sustainable energy is part of the Bank’s overall strategy of helping to re-energise the transition process in its regions according to three key priorities: strengthening resilience, promoting integration, and addressing global and regional challenges.
Press Release: K&M Advisors Retained as Transaction Advisor for Olkaria VI 140 MW Geothermal Power Plant in Kenya
K&M Advisors LLC, a leading financial and technical advisory firm, is pleased to announce that it has been awarded a contract by The National Treasury in Kenya and KenGen to serve as the transaction advisor for the Olkaria VI 140 MW geothermal power plant.
K&M’s involvement includes preparing a feasibility study to establish the technical configuration, and bankability of the Olkaria VI project. This will include a grid connection study and advice on the grid capability to accommodate additional power. K&M will also recommend the best Public-Private Partnership (PPP) model and advise KenGen on risk allocation and the contractual structure, as well as prepare all necessary project agreements. Finally, K&M will prepare the request for qualifications and request for proposals, and advise KenGen through the procurement process and proposal evaluation, as well as provide transaction advisory support through to financial close. This assignment is expected to last approximately 18 months.
“We are very pleased to have been selected to advise the National Treasury and KenGen on the Olkaria VI competitively procured PPP transaction that will deliver much needed renewable energy to Kenya,” states Alfonso Guzman, President of K&M Advisors LLC.
The Olkaria VI power plant will be developed through a PPP arrangement governed by the PPP Act, 2013. The private partner will have a role on the design, finance, supply, construction, commissioning and maintenance of the plant, and in building a grid interconnection of approximately 5km (including the substation, switch gears and the associated facilities). K&M will advise KenGen on designing a bankable PPP transaction.
K&M’s team includes AECOM (technical advisor) and ACMIRS (PPP advisor).
K&M Advisors has a hard-to-match track record as transaction advisor for thermal power plants, including power plants in Africa. K&M has been the lead transaction advisor on eighteen thermal power generation PPP projects in emerging markets, all of which reached financial close, totaling 7,221 MW of capacity and over US$6.5 billion of investment. In East Africa, K&M is currently the transaction advisor to TANESCO on the development of a 250MW CCGT PPP. K&M’s scope of work on this project is very similar to the scope of work on the Olkaria VI project.
More information on K&M Advisors can be found at www.km-advisorsllc.com.
K&M Advisors, LLC
Alfonso Guzman, President