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Geothermal Industry Report Shows Growth, Potential and Frustration

Though the geothermal industry faces many hurdles including uncertain federal policies and lengthy project timelines, the Geothermal Energy Association announced last week that it added 91 MW of newly installed U.S. capacity in the past year. With this addition, the U.S. now has a total of 3,177 MW of capacity, which far outpaces the rest of the world.

According to GEA’s annual industry report, California leads the eight states that boast any geothermal capacity with 2,615 MW online and 2,000 MW in the pipeline. Nevada is close behind with 59 projects in development.  

Four companies developed the 91 MW: Energy Source developed the 49.9-MW Hudson Ranch I project in Imperial Valley, Calif.; Ormat Technologies completed various projects that totaled 26 MW; Terra-Gen completed a 1.9-MW expansion on its Beowawe facility in Nevada, which was awarded an Excellence in Renewable Energy Award for Geothermal Project of the Year; and U.S. Geothermal replaced old generating equipment at its San Emidio facility, added 12.75 MW of capacity. 

“We’ve seen slow but steady growth for geothermal, even in a challenging economy.  The drivers for that growth have been state renewable portfolio standards, federal tax credits, DOE demonstration project support, and the fact that utility scale geothermal energy offers clean baseload energy that’s competitive with other clean energy technologies,” said Karl Gawell, executive director of GEA, in a release. “The geothermal industry looks to our policy leaders to provide a stable environment to foster growth that could lead the U.S. toward greater energy independence.” 

Industry leaders hope to extend tax credits, but not by just one or two years. Geothermal projects generally take four to five years to develop, and this long development time makes it difficult for projects to use credits that expire quickly. Though the PTC doesn’t expire until next year, the industry is already facing challenges and uncertainty, which is affecting growth significantly. 

“At the federal level we see tax credits that are key to investment, especially given the high risk of geothermal. Those credits are going to expire at the end of next year. Everyone looks at the wind industry and says, ‘Gee, that’s their clip because the credit is going to expire.’ But when you’ve got a geothermal project that takes years to build, you’re already facing that clip in terms of federal incentives,” said Gawell during a teleconference. 

The industry is also lobbying for utilities in states with renewable portfolio standards (RPS) to look beyond quick project fixes. Though geothermal may require a larger up-front investment and has long lead times, experts tout its ability to provide baseload power generation. Gawell explained that once a project is completed, it provides baseload power that meets demand 24/7, and emphasized that these facts need to be considered. 

Despite these issues, experts are enthusiastic about future development and have identified projects that can put several thousand megawatts on the grid, and surveys say there is even more potential than that. But first, federal and state policies must reflect industry needs.

“We’re trying to rebuild the industry into what you saw in the seventies and eighties where you had double-digit growth rates and where you saw price reductions over time. But we’re not going to get there with starts and stops at the federal and state level. You’ve got a longer-term industry here with long lead times, but you’ve got federal and state policies which are not giving developers and investors the kind of certainty they need to really move forward,” said Gawell.

Image: N.Minton via Shutterstock

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