U.S. Geothermal Inc.

Green power from a blue┬áplanet┬áU.S. Geothermal Inc. finds, establishes and operates geothermal energy plants in the Western United States. Keith Regan finds out how the firmÔÇÖs mining-industry approach to the market could get a significant boost from federal stimulus spending. In the search for alternative and sustainable energy sources, geothermal is often overlooked. But technological advances and economic realities are helping to boost the viability of using water warmed by the earthÔÇÖs internal heat to produce electricity.With its Raft River project in Idaho, U.S. Geothermal has demonstrated that geothermal power can be produced in a way that is economically competitive with other renewable power sources such as hydroelectricity and wind power, according to U.S. Geothermal chief executive officer Daniel Kunz. In fact, a combination of renewable energy tax credits and hoped-for investment capital that could flow from the Obama administrationÔÇÖs economic stimulus bill may help get other projects fast-tracked in a difficult economic and financing environment. ÔÇ£We have projects that are shovel-ready,ÔÇØ Kunz says. ÔÇ£We have demonstrated that we have the capacity and the expertise to get projects up and running, and weÔÇÖre ready to partner to make that happen.ÔÇØGeothermal energy is not new, with the Larderello field near Pisa, Italy, having produced steam power since the early 1900s and the Geysers field north of San Francisco having produced electricity for more than 40 years. Geothermal energy is estimated to be a $1.5 billion per year industry, with more than 8,000 megawatts of generating capacity around the world. U.S. GeothermalÔÇÖs Raft River project was build on the site of a Department of Energy experiment conducted during the late 1970s, when the oil crisis prompted investment aimed at proving the viability of geothermal electric production. Though a plant was successfully built on the site, it was later moved to Nevada and the site mothballed. ÔÇ£It was basically sagebrush, with a chain link fence around it,ÔÇØ when the company acquired it in 2002, says Kunz. The project was brought back online during 2008 thanks to partners including Goldman Sachs, who worked with U.S. Geothermal to take advantage of federal tax credits for renewable energy projects. The company built a binary plant, which uses hot but not necessarily flash steam heated water from deep wells to heat isopentane, which turns into vapor at just above room temperature. That vapor powers electricity-producing turbines and is cooled and reused. The Raft River plant ran for 12 months last year at 99.9 percent uptime, the company has said. Since opening Raft River, U.S. Geothermal has purchased a second operating geothermal plant, buying the San Emidio project in Nevada in April 2008. An existing plant on the site, in operation since 1987, has 3.6 MW of net capacity, and the acquisition included some 22,944 acres of private and federal land rights that could be capable of producing as much as 44 MW of power annually.That project stands ready for expansion, as does the third project in U.S. GeothermalÔÇÖs portfolio, Neal Hot Springs. Located in Eastern Oregon, Neal Hot Springs covers some 9.6 square miles of surface and energy rights that was explored in the 1970s by Chevron Minerals and where U.S. Geothermal hopes to begin work soon on a plant capable of producing as much as 20ÔÇô25 MW of power. Site preparation work has begun, and Idaho Power has started work on an 11-mile transmission line to the site as part of an off-take agreement. With financing, the company would begin work on the binary plant itself, with the entire project carrying a $115 million price tag. San Emidio and Neal Hot Springs are both shovel-ready for expansion and construction if federal stimulus funds become available, says Kunz. The Obama administration has said it wants to encourage so-called ÔÇ£green collarÔÇØ jobs in the renewable energy sector, and funds aimed at sustainable power sources could benefit geothermal, in part through direct funding and in part by helping to loosen private financing. Geothermal projects have benefited in the past from renewable tax credits aimed initially at wind power projects. New legislation to enable those 10 yearsÔÇÖ worth of tax credits to be taken up front as an investment tax credit, which a company such as U.S. Geothermal can turn into a grant from the Department of Energy, may help spark private investment as well. ÔÇ£We think thatÔÇÖs an important piece because itÔÇÖs a way to improve project returns,ÔÇØ which are already competitive in the long run with wind and water projects, Kunz says. Geothermal can be valuable to utilities looking to add incremental power to feed growing cities in the West, Kunz adds. Often, incremental power needs are addressed with natural-gas-fired plants that expose utilities to the volatility of the commodities markets. By comparison, geothermal is a base power source that is always available and creates no emissions. ÔÇ£A utilityÔÇÖs other choices are nuclear, which means waiting 10 years or more, or coal, which has environmental implications and is not the image a lot of companies want to project,ÔÇØ Kunz says. ÔÇ£In the right location, geothermal can compete well against wind and water options.ÔÇØDrilling and exploration represent significant up-front costs on geothermal projects, Kunz notes. He believes U.S. Geothermal can use its expertise in explorationÔÇöbefore he joined the company he ran metals exploration operations, helping to find one of the worldÔÇÖs largest copper and gold deposits in the Gobi DesertÔÇöwith partners who can benefit from the tax credits as well. ÔÇ£We look to partnerships as a way to bring more ambitious projects into the marketplace.ÔÇØ In the long run, the company may explore overseas opportunities, with geothermal a viable option in many places on the map, such as Central and South America and parts of Canada. For now, it remains focused on building on the success of its first projects. ÔÇ£The space is very good right now. WeÔÇÖre in growth mode and focused on trying to key on the experience we already have in building and running plants,ÔÇØ says Kunz. ÔÇ£We have a team that has just executed the first project in the Pacific Northwest very well and is ready to get out and work on others.ÔÇØ  ÔÇô Editorial research by Sam Howard┬á