Eco Investor November 2013

Industry Focus

International Geothermal Energy Powers On

Despite issues in Australia, the international geothermal energy sector is powering ahead with 11,765 megawatts of geothermal power operating globally as at August this year. With several hundred megawatts of capacity in the final stages of construction, the global geothermal market is expected to reach 12,000 MW by the end of 2013, says the report, 2013 Geothermal Power: International Market Overview by the Geothermal Energy Association (GEA).

The sector is on track to double as currently another 11,766 MWs of planned capacity additions are in the early stages of development or under construction in 70 countries and territories.

The GEA has counted 674 developing geothermal power projects around the world from prospects to projects in the late stages of development. "Countries such as Uganda, France, Tanzania, Chile, and Rwanda have geothermal projects under construction or in the latter stages of development and will have their first operational geothermal power plants within the next few years," it says.

1,741 MW of geothermal power is under construction in 12 countries, and developers are actively engaged with 27 Gigawatts of geothermal resources. Global capacity could approach 14,000 MW by 2020 as several hundred MW of new power become operational each year.

The leading developers with projects under construction are Indonesia with roughly 425 MW followed by Kenya with 296 MW.

Other leading developers are the Philippines with 110 MW, Iceland with 260 MW, New Zealand 166 MW, and the US with 178 MW under construction. Germany has 8 new power plants and 47 MW under construction, mostly smaller projects from 1 to 6 MW each.

Other countries where the GEA expects to see more exploration and development include Japan and Chile.

Interestingly, the report says Italy was the first country to install a geothermal power facility, at the beginning of the 20th century, but little new development is now underway.

In this busy picture, Australia's young and struggling geothermal sector gets little mention. Australia is shown as having 22 projects but only the 1 megawatt Geodynamics Habanero pilot plant that gets on the megawatt radar.

A highlight was that 2013 saw some of the first demonstration Enhanced Geothermal System (EGS) projects provide electricity in Australia and the United States.

"In Australia, the commissioning of the Greenfield 1 MW Habanero Pilot Plant is a long anticipated and major milestone for Geodynamics. It marks a significant achievement for Australia and global geothermal exploration. The project is the first Enhanced Geothermal System (EGS) to derive power in Australia and the southern hemisphere," says the report.

The US contribution was Ormat Technologies, the US Department of Energy, and GeothermEx producing 1.7 additional megawatts from an EGS Infield project in an existing US well field after four years of work. Others partners were Lawrence Berkeley National Laboratory, US Geological Survey, Sandia National Laboratory, University of Utah EGI, Temple University, and TerraTek.

"Using innovative subsurface technologies, development teams stimulated an existing sub commercial injection well, resulting in a 38 per cent increase in power output from brine at Ormat's Desert Peak 2 geothermal power plant in the Brady Complex in Churchill County, Nevada."

A second US contribution was at the Geysers geothermal field, where Calpine Corporation completed a Nearfield EGS project of 1.75 MW with potential for another 3.25 MW. "A pair of wells were completed as a production injection well pair (respectively) into low permeability rock with temperatures as high as around 400oC. As a result of the successful demonstration, Calpine expects that additional EGS targets are available in the Geysers geothermal fields."

The Geothermal Energy Association says it was not able to include information on all countries with geothermal production, development, and exploration, and although geothermal energy includes heat as well as power, the report primarily focuses on the power market.

The author of the report, Benjamin Matek, says there are three main types of geothermal power technologies: binary, flash, and dry steam.

The oldest and most common technology is dry steam where steam is taken directly from an underground reservoir to run the turbines that power the generator. In flash plants, high pressure and high temperature geothermal water is separated or flashed into steam and water with the steam used to drive a turbine. In binary plants, geothermal water is used to heat a secondary, working fluid which boils at a lower temperature than water and in vaporizing turns the turbines.

Enhanced Geothermal System (EGS) technology, as used by Geodynamics and its fellow US innovators, is new.

"The long term goal with EGS technology is to create geothermal resources from Greenfield projects. Conventional geothermal resources tend to cost US$3-12 million to drill, carry significant exploration risk with low success rates, and incur high costs for drilling equipment."

However, in the US it is possible to use EGS technologies that could build wells for US$0.5- 1.5 million by eliminating the risks associated with permits, PPA, financing, financial risk, drilling, mechanical equipment, etc, says the report, which examples one US EGS developer, AltaRock Energy, in this position.

In terms of funding, the World Bank has announced a US$500 million Global Geothermal Development Plan (GGDP) to help expand geothermal power exploration and generation in developing countries. The Bank's financing for development has increased from US$73 million in 2007 to US$336 million in 2012, and is now almost 10 per cent of the Bank's total renewable energy lending, says the report.

With a long growth curve ahead, the future looks solid for international geothermal energy. However, large, profitable and dividend paying pure play international listed geothermal companies are hard to find. Philippines based Energy Development Corporation may be an exception, although it has some hydro, and WaterFurnace International pays a dividend but it is not a large company. There are large and profitable companies with a mix of other renewable technologies, and there are also some promising pre-profit companies.

Worth a look are Ormat Technologies (see Eco Investor February 2013), Energy Development Corporation, Calpine Corporation (with gas), Enel Green Power (with wind and hydro), Alterra Power Corp (with hydro, wind and solar), U.S. Geothermal Inc, and Ram Power; and WaterFurnace International for geothermal heating.

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