Despite some financial and regulatory setbacks, the U.S. geothermal industry will plough ahead next year, finding some refuge in international markets.
The U.S. geothermal market adds new projects to its development pipeline each year and 2012 will be no different. The industry will enter January with up to billions of dollars in planned investments. In 2005, geothermal energy became a qualifying renewable for the production tax credit (PTC), sparking new developments and by early 2011, U.S. capacity had swollen to 3,102 MW. Currently, up to 5,745 MW are in development. In May of 2011, Terra-Gen Power and TAS Energy added 2 MW to the 17-MW Beowawe, Nev. plant - the first geothermal project supported by the American Recovery and Reinvestment Act to begin operations.
But although many U.S. decision-makers have expressed their desire to have renewables in the energy mix, geothermal is still overlooked in Congress. Lou Capuano, founder of geothermal drillers ThermaSource says, "even though most of California's renewables are actually geothermal, it is still the poor stepchild." Funding for projects continues to stymie the industry: "the credit market in the U.S. and in Europe is not doing well, and a lot of our clients are still waiting for funding," he said.
Further, the PTC, which gives developers a tax credit of 2.2 cents per kilowatt-hour of geothermal power generated for 10 years, is set to expire at the end of 2013. Congressional committees in both wings are considering extension bills. This will be on the industry's watch list in 2012.
Many developing projects could meet the 2012 deadline. Ormat Technologies has two projects in Nevada: Tuscarora and McGinness Hills, which are expected to reach commercial operation in 2012. Ormat expects these two projects and others to qualify for the cash grant option, including the 29-MW Mammoth Complex, where the generating capacity will expand up to 70 MW.
Boise's US Geothermal is working toward completion of the 23-MW Neal Hot Springs, in eastern Oregon. In addition, its re-powered San Emidio plant near Reno is scheduled to start up in 2011.
Gradient Resources' Patua, Nev. project is in advanced stages, with commercial operation also expected to begin in 2012.
EnergySource's Hudson Ranch, Calif., project will be the first flash plant to go online in the U.S. since the 1990s - most recent designs have been binary or binary-flash.
Hybrid Partnerships Could Play a Greater Role in 2012
Some geothermal companies are forming hybrid energy relationships to increase power plants' efficiency. Enel Green Power North America plans to integrate a 24-MW PV solar farm into its existing 60-MW Stillwater geothermal plant in Churchill County, Nev., in order to increase the plant's capacity.
Several companies are now manufacturing small-scale geothermal units that can be built offsite and then integrated into a plant's design for production. A project using this technology came online this year in Louisiana. It is the first geothermal project in the state. The method takes brine water that is otherwise discarded as a byproduct of oil and gas development and uses it to produce geothermal power. It is potentially applicable at hundreds of existing oilfield wells across the Gulf States, Texas and beyond.
The Louisiana project is the first commercial use of geothermal at an existing oilfield site. Supplier ElectraTherm will next equip a geothermal project at Florida Canyon Mine in Nevada.
Another interesting hybrid technology comes from Simbol Materials. The company reported success at its DOE-backed project to tap lithium, zinc and manganese at an existing geothermal plant in Imperial Valley, Calif. Once in full operation, the project could help the U.S. become a major exporter of lithium, a metal required for energy storage technologies including EV batteries.
Little Geothermal Companies Enter the Big International Market
While research indicates geothermal potential in more areas of the U.S. than ever, policies supporting domestic development are not yet strong enough to foster serious development activity. Thankfully, this is at least partly offset by a robust international market involving many U.S. companies. Indeed, many nations look to U.S. firms as the world leaders in geothermal energy development. According to the Department of Commerce, geothermal is one of the only renewables that exports more than it imports into the U.S.
In 2012, expect to hear more announcements from U.S. companies going overseas to do business.
ThermaSource is involved in consulting and drilling in South America and the Caribbean. "Our work at San Jacinto-Tizante in Nicaragua is finished and our rig is down there waiting for the next international opportunity," Capuano said. "We're betting on a lot of international projects," he said, adding, "we like to stay competitive, and the international market is where you can do that. Our rigs are all dual purpose, so we could jump back in to oil and gas, but we prefer to keep our rigs and the experience of our crews in geothermal."
Marshall Ralph of Idaho-based Power Engineers said that working in foreign markets keeps U.S. engineers and suppliers competitive. Among its ventures, the company is providing engineering services for two plants in Turkey - the 60-MW Kizildere resource study and the 40-MW Germancik project.
Ralph says U.S. suppliers are highly regarded for engineering and equipment. "We've been doing this a long time, so we've made most of the mistakes you can make, and we've learned from that," he said. We represent a very highly respected national industry. If we pay attention to the margins, we can hold on to a pretty good share of the market out in the world."
US Geothermal is involved in overseas projects, as is Nevada-based PowerChem. A GEA member survey indicated 40 percent of companies that responded are already involved in the export market. More than 50 percent indicated an interest in expanding exports, especially in areas such as South and Central America, Indonesia and New Zealand. Ormat recently received its largest order ever for the product segment with a $130-million supply and EPC contract for the Ngatamariki Geothermal Power Plant in New Zealand.
Ralph noted that Power Engineers is one that anticipates its export markets growing fairly dramatically over the next few years. "There's a lot of cash in the U.S. and in Europe that wants profitable places to sit, and that tends to be in more rapidly growing places," he said. "That's where you find load growth and direct investment."
"On the other side of things, it would be nice to have a project in California," he added. "We've always wanted to do more closer to home. But the U.S. electrical system has a pretty modest load growth, and gas prices are low."
2012 OUTLOOK Global Geothermal Growth To Continue
Across the globe there is increasing support for baseload energy in areas that are bursting with the underground heat necessary for a viable resource. Japan and Indonesia are relaxing rules on developing geothermal projects on protected land, which should open up more sites for development. Australia recently passed clean energy future legislation to put a price on carbon emissions, providing a policy backbone and clear pricing signals.
The Kenyan government anticipates that geothermal power will make up 30 percent of its additional electricity by 2030. There, the Eastern Rift area is known among developers worldwide as having some of the best conditions for geothermal in the world. Ormat recently received up to $310 million from the Overseas Private Investment Corp. to refinance and expand its 48-MW Olkaria III geothermal complex.
Power Engineers is providing the design and procurement at Olkaria. "People in Kenya are making very good decisions about the future of their electrical infrastructure, because they need the power and are willing to find ways to make that happen," said Marshall Ralph of the Idaho-based company. "They need to keep the lights on, treat water, and build schools. That hunger for growth solves a lot of problems - it helps lenders make better decisions, engineers sharpen their pencils, and suppliers pay attention to margins, so we can all together make these things happen."
"Geothermal decisions are never easy to make," he added, noting the cost and the resource risk. "But there's a rational appetite for risk in places where there is high load growth and where there are social values at stake in the difficult business of developing infrastructure rapidly and sustainably."
Reno-based Geothermal Development Associates has also been heavily involved in African projects and is currently facilitating the design and supply of the Eburru Wellhead Geothermal Power Plant under contract with Kenya Electricity Generating Company Ltd.
The commitment shown by Kenya and other nations is indicative of the opportunities for stalwart U.S. engineers, suppliers and drillers in the international energy world. While fossil fuels still account for 88 percent of world consumption, overall energy use continues to increase - by 5.6 percent last year - with demand for all fuel types across the board. The momentum of the world energy market is far from slowing down, and geothermal is in the thick of it.