U.S. Installs Only One Geothermal Plant in 2010

That 15 MW of capacity was installed by industry-leader Ormat at its Jersey Valley plant in Nevada. (And it just happens to be a nominee in the Geothermal Project of the Year category for our North American Awards). The total plant capacity will be 25 MW when completed sometime later this year.

When compared side by side with installed capacity in other leading sectors in the U.S. – particularly wind and solar – the numbers look grim. The solar industry doubled capacity in 2010, putting somewhere around 900 MW of systems online. And although the wind industry saw a 50% decline in installations, it still managed to connect 5 GW of projects to the grid.

Internationally, the American geothermal market slipped as well. The three largest plants commissioned in 2010 were in New Zealand (132 MW), Italy (40 MW) and Kenya (35 MW).

But this only shows part of the picture.

Firstly, capacity is just that: Capacity. As a baseload resource, geothermal power plants generate far more energy over time than an equivalent wind or solar plant. According to the Energy Information Administration, in 2009, 3,150 MW of geothermal capacity generated 15.2 TWh of electricity. That same year, around 35 GW of wind capacity generated 70.7 TWh of electricity. If an equivalent amount of geothermal were online, it would generate more than double the amount of energy than wind.

But of course, that amount of geothermal is not online. As of the end of 2010, around 3,165 MW of capacity had been built. The National Renewable Energy Laboratory predicts that the U.S. has about 36,000 MW of traditional hydrothermal resources left to tap. But utilizing anywhere close to that amount will require billions of dollars in risk capital (for exploration and drilling), hundreds of drilling rigs (that are currently in tight supply) and a much larger workforce (which is still lagging).

Wind and solar projects are much faster and less capital intensive to develop, boosting those sectors considerably. It takes anywhere from 3-7 years to develop a geothermal power plant. In wind and solar, the timeframe for development is often measured in months.

That's why the 15 MW figure, while low, doesn't accurately portray where the geothermal market is going. According to the Geothermal Energy Association, there are more than 500 MW of projects in advanced stages of development in the U.S. – meaning a large portion of those projects could come online at the end of this year or the beginning of 2012. That's a 25% increase in the growth of new projects under development since 2009.

The extension of the Treasury Grant Program – an incentive that gives project owners a cash payment of up to 30% of a project's cost instead of a tax credit – was also a major boon for the geothermal industry. The extra year of the grant program made it more likely that projects in the pipeline would get financed and completed.

Ormat said recently that it had 100 MW of projects underway – all of them qualifying for the cash grant. The company also secured $350 million in loan guarantees for three new power plants in Nevada.

So in spite of a bad year for new capacity, development continues. If a large portion of the power plants in advanced phases get completed on schedule, 2011 could be a substantial year for the geothermal industry.

Missed our video coverage of the geothermal industry last fall? Below is an interview with Karl Gawell, the executive director of the Geothermal Energy Association, on the challenge of completing the 500-700 MW of advanced projects in the U.S. pipeliine.