The current challenge for the geothermal energy industry is what U.S. Geothermal CEO Dennis Gilles calls “leveling the playing field” with wind and solar.
“We’re competing with the wind and solar companies,” Gilles said during the Geothermal Resources Council 39th Annual Meeting opening session in Reno, Nev., on Sept. 21. “They have incentives, and as a result of their dramatic growth, they have seen their costs come down dramatically.”
Gilles said that until the incentives change for the wind and solar industries, and until there is additional growth or technological breakthroughs in the geothermal energy industry that allows geothermal producers to lower costs, the geothermal industry is going “to continue to be challenged.”
According to Gilles, success for geothermal projects comes down to securing power purchase agreements.
Gilles said that U.S. Geothermal is attempting to negotiate power purchase agreements for a handful of projects, but the company has seen setbacks due to the drop in solar pricing.
“The response that we get from the [municipal utilities] or the community choice aggregators for the utilities is, ‘why should we buy geothermal if we could buy solar for so cheap?’”
According to Gilles, geothermal companies must demonstrate to potential customers that geothermal energy is a premier product.
“I had a community choice aggregator come back to me saying, ‘We acknowledge that you’re a premier product, we acknowledge that your product should fetch a premium, and we acknowledge that we would prefer to have a product like yours in our portfolio, but we can’t justify building that into our rate base that we’re charging our ratepayers,’” Gilles said.
Gilles said that GeothermEx recently releases its report on the resource at U.S. Geothermal’s Western GeoPower Geysers project in Sonoma County, Calif. The report confirmed that four production wells at the site have about 28 MW gross (25 MW net) of steam behind pipe ready for that project.
In a Sept. 21 statement, U.S. Geothermal said that GeothermEx reported that longer term tests show the wells would initially produce a combined total of 458,000 pounds per hour of steam compared to 462,000 pounds per hour of steam from short-term tests performed when the wells were first drilled, demonstrating that the capacity of the wells is virtually unchanged. Using the average steam production rate from the wells and an assumed interference factor of 30 percent, GeothermEx estimated that an additional two to three production wells would be needed to support the long-term operation of a 28.8 MW net plant.
Gilles said that in 2015, U.S. Geothermal has been working on drilling at its Crescent Valley project in Eureka County, Nev.; San Emidio II project in Washoe County, Nev.; and Gerlach project in Washoe County. He added that the company on Sept. 20 also completed drilling work at the El Ceibillo project in Guatemala City, Republic of Guatemala.
Lead image: U.S. Geothermal CEO Dennis Gilles at the Geothermal Resources Council 39th Annual Meeting opening session in Reno, Nev., on Sept. 21. Credit: Renewable Energy World.