geothermal energy steams ahead

Wall Street Journal


"Geothermal Energy Steams Ahead With Up To $6B In Planned Investments"

http://online.wsj.com/article/BT-CO-20110119-713768.html

* JANUARY 19, 2011, 3:38 P.M. ET

Geothermal Energy Steams Ahead With Up To $6B In Planned Investments



By Steve Gelsi


Tapping into the heat of the Earth's crust to generate electricity has been slower to catch on in the United States compared with solar and wind power, but the geothermal industry hopes to gain traction with up to $6 billion in planned investments in new plants in the next year or two.

While 2009 and 2010 provided fewer breakthroughs in the mainstream adoption of geothermal energy, this year holds greater potential as the sector looks past the economic slowdown, according to Karl Gawell, executive director of the Geothermal Energy Association.

The geothermal industry is seeking about $5 billion to $6 billion in financing for new construction on plants that already have gotten past the tricky part: finding a source of steady, reliable heat by completing test wells. Projects are slated in the near term in states including California, Idaho, Nevada, New Mexico, Oregon and Utah.

"There is the potential to power millions of homes, businesses and schools from the heat of the Earth," Gawell said.

Additional capital is needed to drill production wells and build new plants, but if all goes as planned, geothermal players plan to build about 1,000 megawatts of capacity--the equivalent of one nuclear-power plant--over the next two years.

Some technological advances also have made geothermal more attractive, Gawell elaborated. Use of methanol instead of water in geothermal plants has helped reduce the amount of heat needed from the sources, he said. That means wells may not have to be drilled as deeply as before, resulting in a cost savings.

In recent years, the potential for geothermal has moved beyond its base in the Western United States to include resources in Louisiana, North Dakota and West Virginia.

Investors seeking exposure to geothermal energy in the United States already have a number of options for pure-play companies including Ormat Technologies Inc. (ORA), Nevada Geothermal Power Inc. (NGLPF), Magma Energy Corp. (MGMXF, MXY.T), Raser Technologies Inc. (RZTI), U.S. Geothermal Inc. (HTM, GTH.T) and Ram Power Corp. (RAMPF, RPG.T).

Several conglomerates take part in the geothermal industry as well, including Italian energy giant Enel SpA (ENEL.MI) Calpine Corp. (CPN) and Berkshire Hathaway Inc.'s (BRKA) MidAmerican Energy Co.

While geothermal power remains less prominent for now in America, it currently provides about 25% of the electric power and all of the heating needs for Iceland.

Olafur Ragnar Grimsson, the president of Iceland, will keynote a Geothermal Energy Association conference on project financing, scheduled for Feb. 9 in New York.

Congressional approval of the U.S. tax-grant program for renewable energy also will help improve financing prospects for geothermal.

Separately, another geothermal-industry event, the GeoPower Americas Conference Feb. 24-25 in San Francisco, has drawn a 50% increase in attendees this year, according to Green Power Conferences.