Washington, DC, United States — In the April 2010 US Geothermal Power Production and Development Update, the Geothermal Energy Association (GEA) surveyed current developers of geothermal energy in the United States. The update identified 188 projects underway in 15 states. With seven new geothermal plants that came online in the U.S. in 2009, geothermal power capacity rose 6% from 2008-2009 and there was 26% growth in new projects under development.
Headlines proclaimed that “Geothermal grows 26% in 2009” following release of this report.
The April 2010 report stated, “In 2007 geothermal energy accounted for 4% of renewable energy-based electricity consumption in the United States. As of April 2010, geothermal electric power generation is occurring in nine U.S. states: Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, Utah, and Wyoming. Other states, such as Colorado, Louisiana, Mississippi, and Texas are soon to be added to the list. The United States has a total installed capacity of 3086.6 MW.”
As 2010 unfolds, the number of states actually producing geothermal power will reach double digits. Further, as advancements in geothermal technologies expand the power potential of geothermal resources, the energy source will be available in more places than ever before.
Daniel Jennejohn, Research Associate for the Geothermal Energy Association was the lead author on GEA’s April 2010 report. I questioned him on some of the contributing factors he saw as he worked through the numbers. His answers are below.
LB: The economic recession has had the potential to change the face of industries worldwide. What impact has the recession had on geothermal development?
DJ: When we did our last update, in September of last year, we saw that while we had tracked an increasing number of projects and that power plants were brought online, projects were not advancing from early to later stages of development.
However, in this recent update we have seen not only an increase in the number of projects but also we are seeing more movement from early phases of project development to later phases. So developers are moving their projects forward toward final completion. Also, despite the recession, in 2009 geothermal energy employers added 750 full-time jobs and 2,827 construction-related jobs.
Seven geothermal projects came online in 2009, adding approximately 176 MW of renewable energy capacity in five different states. These included the following 5 large-scale geothermal power plants:
1 and 2: Enel North America’s two geothermal projects in the state of Nevada with a combined total of 65 MW;
3: Nevada Geothermal Power, Inc.’s 50-MW Blue Mountain Faulkner 1 power plant in Nevada;
4: Ormat Technologies, Inc.’s 50-MW North Brawley power plant in California; and
5: Raser Technologies, Inc.’s 10-MW Thermo No. 1 or Hatch power plant.
New smaller power units also became operational:
6: The Oregon Institute of Technology’s 0.28 MW unit at its Klamath Falls campus in Oregon; and
7: The Rocky Mountain Oil Testing Center’s 0.25-MW geothermal hydrocarbon co-production unit at its facilities near Casper, Wyoming.
LB: Will you discuss the 26% growth in projects versus the growth of online capacity?
DJ: This survey reflected a 26% growth in new projects under development. While online capacity grew 6%, the high growth of project development means that online geothermal power capacity should be growing at a faster rate in years ahead. Remember that geothermal projects have long lead-times and can take several years to build. What’s important in this industry is that we seeing developers beginning work on new projects that will be bringing clean, renewable, electricity to the grid at an increasing rate.
LB: The report shows which projects under development will receive, or have already received funding through the American Recovery and Reinvestment Act (ARRA). How did this legislation affect development numbers?
DJ: In last fall’s update, we were concerned that the progress of new projects appeared to be stalling due to financing and permitting problems. Now, along with a number of new projects, we are seeing projects continue in their development and we believe that the stimulus funding has played an important role in that.”
Additionally, stimulus funding will not only support geothermal development in states where the industry is relatively well established but it will also support the development of geothermal industry’s in “new” states as well as new technologies. We are seeing this with the funding of oil and gas co-production projects in the Gulf States as well as the funding of innovative exploration technologies and enhanced geothermal systems (EGS) technologies, which have the potential to significantly expand the geothermal resource base.
The ARRA from DOE has so far resulted in awards of $338 million for 123 projects in 39 states to explore and develop new geothermal fields and research into advanced geothermal technologies. Recipients include private industry, academic institutions, tribal entities, local governments, and DOE’s National Laboratories. Further, the initial grant of $338 million in ARRA funding from DOE will be supplemented by $353 million in cost share funds from award recipients so that, when completed, these projects will represent a total of $691 million invested in new geothermal technology and applications.
LB: How did other policies affect development numbers?
DJ: Tax credits, loan guarantees, and state renewable portfolio standards have all provided significant incentives to drive the development of geothermal resources.
ARRA extended the full Production Tax Credit to all geothermal power projects that go online by December 2013. Also, qualified facilities are now eligible for the 30% investment tax credit instead of the PTC and can take advantage of the Treasury Tax Grant Program that allows developers to receive a cash grant in lieu of the credit.
The ARRA also established a loan guarantee program for commercial renewable energy projects at the Department of Energy. This temporarily directs the Secretary of Energy to use the $6 billion in appropriated funds to make guarantees for projects commencing construction before Sept. 30, 2011 in qualifying categories. The loan guarantee program was originally authorized under the Energy Policy Act of 2005, but for the first time, DOE opened its loan program for commercial geothermal technologies.
Renewable Portfolio Standard (RPS) policies also provide markets for renewable power. The two largest geothermal producers, California and Nevada, have both set standards that positively affect the industry. Governor Schwarzenegger recently signed an Executive Order to increase California’s RPS to 33% by 2020. Nevada’s RPS, 25% by 2025, has been in place since 2005.
Meanwhile, approximately 255,355 acres of land in Nevada, California, and Utah were dispersed for the purposes of geothermal energy exploration at a 2009 BLM lease sale, generating total revenues of $9 million. Current trends of upward growth are expected to continue.
LB: Thanks for your time today, Daniel.
DJ: My pleasure.
The GEA regularly surveys U.S. geothermal power production companies and is expected to release another later in the year. The next publication expected from the GEA will focus on international developments.