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Geothermal Energy 2013 Year-in-Review: An Awakening Global Market

As the thousands of people in the geothermal energy industry wrap up an exciting and challenging year, they are united by some recurring themes. Investigative geologists, problem-solving engineers, and pioneering international business leaders are some of the players who worked this year to bring together the heat of the Earth with the cities, customers, and other industries that need its unique environmental and economic benefits.

Applications within the Earth power sector are diverse, but the message that the industry sends is the same: with 13,000 MW under development globally, now is the time to get in to the geothermal business.

“We are seeing new technology developments moving forward,” said the Geothermal Energy Association’s Executive Director Karl Gawell.  “For example, a California company began construction on the first commercial plant using lithium carbonate from geothermal, and a University of Minnesota startup began the first application of carbon dioxide plume geothermal.”

The Association of U.S. companies who are developing geo power recognized advancements in the industry through its 2013 Honors program. The 22-MW Neal Hot Springs, Oregon plant was honored for being the first commercial, supercritical Organic Rankine Cycle (ORC) binary power plant. It was built by US Geothermal and TAS Energy. GeothermEx, a Schlumberger company, was recognized for its work supporting the development of over 7,000 MW of geothermal. And a planned geothermal community led by Dale Merrick and CanbyGeo that would combine power, district hearing, greenhouses and aquaculture was honored for its Environmental Stewardship.

“The industry’s knowledge about Enhanced Geothermal Systems also increased in 2013,” said Mr. Gawell: aside from U.S. projects, Australia put its first “enhanced geo” or EGS pilot plant, a 1-MW trial, on line at Habanero. This success was celebrated by U.S. parties and drove further interest in the technology. In Europe, there were EGS advancements in Hungary, the United Kingdom, and Switzerland.

Meanwhile the EGS projects in the U.S. that made strides were headed up by Calpine Corp., Ormat Technologies, and AltaRock Energy, and all received federal administrative support. Their demonstrations have been successful, too.

The Department of Energy (DOE)’s Geothermal Technologies Office coordinates federal support for these and other geo industry projects.  Other Administrative steps to support the international industry this year included the Power Africa initiative.

Halley Dickey, Director of Geothermal Business Development for TAS Energy said the $7 billion U.S. federal commitment called Power Africa, along with industry efforts on both continents, “demonstrates the absolute potential and emphasis on an emerging market for geothermal; namely Africa, from both a resource potential in sheer megawatts and from a commercial potential in a short period.”

But, he went on, “It also demonstrates the confusion within the United States and lack of the same laser-like focus on our current resource potential and our need for renewable energy within our own borders.  What could we do with the same focus and emphasis?”

Still, “there are many U.S. projects that can come on prior to 2016,” Mr. Dickey said.

Mr. Gawell agrees that the U.S. policy landscape has been lacking. “In the U.S., geothermal has been a hostage to Washington’s gridlock politics and lack of any clear national clean energy policy,” he said.

Around this time last year, the U.S. Congress escalated the fight over a legislative package that included renewable energy tax credit riders, taking the country to the brink of a fiscal cliff at year's end.  On January 1, 2013 the industry received the holiday news that tax credits for geothermal were, though not extended, adjusted.  This would encourage more geo projects to develop their power plants just as fast as the permitting and other paperwork would allow—which by most counts, unfortunately, is not very fast. 

Oil and gas companies have been getting incentives for decades, and renewable energy is a more recent addition.  Geo experts want to be on a level playing field and are still catching up since geothermal has qualified for the major renewable tax credit only since 2005.  

The adjustment Congress adopted at the beginning of the year allowed projects to qualify earlier in the project development process. Instead of having to be in production, they could qualify at the construction stage. There are a number of projects that will benefit from this that might not have been built otherwise. It will take some time to piece together how many projects end up qualifying.

Only in the last month of the year have there been signs of change in Washington, with a bipartisan, bicameral budget deal in the Congress and a new clean energy tax proposal by Senate Finance Chair Max Baucus (D-MT).  “The budget deal could open the door to finishing appropriations bills, which could reinvigorate the DOE research program,” Mr. Gawell said; “And the Baucus tax paper breathes new life into efforts to establish long-term incentives for geothermal and other clean power technologies.”

While the U.S. works through its challenges, “We have continued to engage the community of developers and supporters and have tracked milestones from all over the world,” he said.

Becky Little coordinates some of the activities of the Executive Director and the Association. She said, “As 2013 comes to a close, many U.S. developers are looking abroad to countries where geothermal growth has been strong.”

Mr. Dickey’s international geo market involvement included Indonesia, the Philippines, Africa, and: “As a company, our greatest growth market was and is Turkey,” he said.

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Mike Long represents Galena Advisors and works with the POWER Engineers geothermal team. Their work this year involved feasibility and study efforts for projects around the world. Major developments included “detailed engineering, construction support, commissioning and startup activities for Kizildere, Turkey; Los Azufres, Mexico; and Cove Fort, United States,” he said. Kizildere, Mr. Long added, is “a complex project with cutting-edge triple flash technology. Our staff was closely involved in all aspects of design and procurement of the project.”

Mr. Gawell said, “New projects have been announced in every region. We see countries with little prior experience, but with an interest in the potential below their lands, pursuing development for the first time. It’s worth considering the sheer number of countries that are pursuing development as compared to just a few years ago.”

In September the Association identified 70 countries moving forward with nearly 700 geo power projects. A similar report from 2007 showed 46 countries developing or actively considering projects. 

This year new geologic studies relating to resource development or exploration moved forward in places as diverse as American Samoa, Argentina, Armenia, Australia, Azerbaijan, El Salvador, Ethiopia, Indonesia, Japan, Malaysia, Rwanda, Saudi Arabia, St. Vincent and the Grenadines, Taiwan, Thailand, Uganda, the United States, and Yemen.

Every country or state has a different system of regulating its lands, resources, and energy distribution. In 2013, announcements about permits and MOUs came from around the globe, including from Alaska, California, Costa Rica, Ethiopia, Fiji, France, Hungary, India, Indonesia, Mexico, Panama, Peru, Rwanda, Tanzania, Turkey, Uganda, and Vanuatu.

U.S. examples include Sonoma Clean Power’s proposal for 10 years of geo power from Calpine Corp.’s The Geysers, Ormat’s deal for expanded output at its McGinness Hills, Nevada facility, and the permit for US Renewable Group's Bottle Rock power plant in northern California was extended 30 years.

New financing was announced for projects in the Costa Rica, Dominica, Djibouti, Ethiopia, Indonesia, Japan, Kenya, Mexico, Tanzania, and the United States.  Projects in the next few stages of drilling and start-of-construction made headway in Chile, Germany, Guatemala, Italy, Japan, Montserrat, The Philippines, Rwanda, and Zambia.

For example, Alstom will build the 25-MW Los Humeros III power plant in Mexico, and Alterra Power announced drilling would begin at its Mariposa, Chile site next year. MidAmerican pledged $1 billion to extend the life of its Salton Sea, California geothermal fields. US Geothermal is building the El Ceibillo plant in Guatemela, and Ram Power is at work on the Jacinto-Tizate plant in Nicaragua.

“Ormat signed agreements for the development of international projects including Hu’u Dompu in Indonesia following President Obama’s U.S. Asia Pacific Comprehensive Energy Partnership encouraging U.S. companies to develop renewable energy in South East Asian countries,” said Dita Bronicki, Chief Executive Officer of Ormat Technologies, Inc. “And, most recently, we announced the acquisition of the Geotérmica Platanares geothermal project, a late-stage development project in Honduras where demand for electricity is strong and Ormat can deliver clean, base-load renewable power from local resources.”

New geo power came on line in Kenya, Nevada, New Zealand, Mexico, Nicaragua, Oregon, and Turkey, as well as Nevada, Oregon, and Utah in the United States.  

“With the recent completion of the hundred-megawatt Ngatamariki geothermal power plant in New Zealand, Ormat built the largest single-site binary power plant, as well as the largest single air-cooled binary unit, in the world,” Ms. Bronicki said.

“The industry is seeing a big push to achieve project completion on time and on budget, which will continue to be a priority for successful geothermal development worldwide,” she added.

The international market is woven together by experienced companies and individuals who develop joint ventures and partnerships with local groups who are familiar with regional and cultural differences. 

Many of these partnerships form at Geothermal Energy Association events, like the International Geothermal Showcase in Washington DC and the Geothermal Energy Expo, the world’s largest annual geothermal trade show. This year the Expo was located in Las Vegas, Nevada and hosted upwards of 2,000 visitors. The U.S. presence remained dominant, but there were more international visitors than at any previous installment of the event.

Expo visitors attended from nearly forty countries and all fifty states, reported Kathy Kent, manager of the event.

“International development is booming so it’s not surprising there were so many international folks at the Expo,” she said. “It is crucial that the industry works together to grow as a sector.”

The event is co-located with the Geothermal Resources Council Annual Meeting. At the Opening Session of what some called “Geothermal Week,” industry leaders spoke to a shared vision for the future.

It was there that the Association’s President Craig Mataczynski of Gradient Resources named an industry goal to reach 5% of total U.S. electricity production. The vast geothermal resources that are already known and entered in the National Geothermal Data System are more than enough to cover this goal. But it will take advancements in geothermal resource technology as well as in power system technology. It will also require policymakers to recognize the reasons that geothermal is uniquely suited to replace fossil fuel power and fulfill state Renewable Portfolio Standard requirements and federal environmental standards.

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Mark Taylor of Bloomberg New Energy Finance also addressed the meeting and outlined substantial new opportunities for geo power in the years ahead as Western states seek to meet growing RPS and climate goal needs. Taylor demonstrated the long-term potential for the California geo power market, showing that anticipated closings of fossil fuel plants, along with Renewable Energy Portfolio demand, create a gap that geothermal can fill.

Geothermal Week in Las Vegas also hosted over 20 industry representatives from Kenya and Ethiopia whose participation was made possible by the East Africa Geothermal Partnership between the Geothermal Energy Association and the U.S. Agency for International Development.

This was the public-private program’s first year in action, and its other activities were a series of modules in Kenya to promote geothermal industry skills.

 “The African turn-out in Las Vegas as well as at Southern Methodist University’s Geothermal Conference really impressed me and further illustrated their dedication to a geothermal energy future,” said Andrés Ruzo, a National Geographic Young Explorer whose film documentary The Boiling River premiered at the event.

“It’s been amazing to see what the international geothermal community has been able to do in advancing a geothermal community in Africa so quickly, especially when comparing it to the time it’s taken for things to heat up in other parts of the world.” Mr. Ruzo is part of the new generation of geo-minded professionals, and the SMU geothermal alumnus gave a Ted Talk on the technology this year to an enthusiastic ovation. 

Mr. Dickey said the year’s “incredible focus” on facilitating power in Africa with emphasis on geothermal came “from the entire global community; country government, multi-national agencies for financing, and technical expertise and technology export.”

The initiatives being developed in Kenya, Ethiopia, Tanzania, Rwanda, Uganda, and other East African companies are “a significant growth potential in the geothermal industry,” Mr. Long said. “This represents a very bright spot in the market coupled with a focused effort by the United States’ government and industry to commit funds to advancing projects.”

For the POWER Engineers team, this was a year of sorting out opportunities in East Africa, especially Kenya. “It is very important for our geothermal business that we are involved in the region and develop a sustainable business,” he said.

Ms. Bronicki said, “Ormat completed Phase Two of the Olkaria Three geothermal complex in Kenya, increasing output by thirty-six megawatts and exemplifying the value of the multi-phased approach.”

She commented on technology advancements and experience: “Drawing knowledge from each phase of development to methodically improve project and plant performance has proven to maximize efficiency and reduce risk.” 

The growing international scene continues to provide opportunities to stay competitive for many of the industry’s top companies, many of which gained their expertise within the United States.

At home, national politics spelled stagnancy at the federal level, but several individual U.S. states opened up new opportunities in 2013. For example, Hawaii Electric Light Company completed a geothermal Request for Proposals and is soon expected to announce the winner out of six bidders.

The Imperial Irrigation District announced plans to develop 1,700 MW of new geothermal in California as part of an environmental initiative to restore the Salton Sea. And in Nevada, NV Energy is looking to replace coal plants with 300 MW of renewable energy, including geothermal. With these two initiatives, “There is new demand for two thousand megawatts of geo power capacity in the western United States,” the Association’s on-staff analyst Benjamin Matek said. “This could also be a stimulus for further renewed development of new geo power generation.”

He added, “I think the Salton Sea Restoration and Renewables Initiative helped restore some confidence in the U.S. geo power market to developers by introducing new, unforeseen opportunities.”

Other states are also looking to replace fossil fuel plants in order to meet new federal standards on environmental cleanliness.

The World Bank also marked a shift this year: new greenfield coal power will only be supported in rare circumstances, such as to meet “basic energy needs in countries with no feasible alternatives.” Mr. Matek said, “I think this represents a big shift in global attitudes toward fossil fuel generation. Five to ten years ago, climate change was barely on the minds of politicians. Now global policymakers are recognizing the immediate need to swap fossil fuel power generation for clean options like geothermal because climate change poses a serious threat to the livelihoods of people across the globe and to the environment.”

The World Bank also announced a Global Geothermal Development Plan and announced plans to finance a geo project in Djibouti—their first exploratory project in decades.

In total, about 600 MW of new geo power came on line this year. In the last months of 2013, the international geo power industry surpassed 12,000 MW of geothermal power operational, and is poised to place between 500 and 1,000 MW on line per year for the rest of the decade. “New announcements in the United States, Ethiopia, Kenya, the Caribbean, and others have increased the developing resource of geo power to about thirty thousand megawatts. That’s three thousand megawatts announced in [the past] three to four months, with about thirteen thousand megawatts of identifiable projects under development globally,” said Matek. “The industry is positioned to put more power on line in three to four years than in all the previous decade combined,” he said.

The unique benefits of geo energy are what make it a worthy contender in the changing power sector and as nations consider fossil fuel replacements.  Experts who are considering the choices would do well to heed the message: the global geothermal market saw an awakening in 2013. 

Lead image: Geothermal plant via Shutterstock

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Leslie is located in Washington DC at the Office of the Geothermal Energy Association and serves on the Renewable Energy World North America Conference and Expo committee.

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