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September 12, 2008
Investors Take Note of Clean and Sustainable Geothermal Energy Production
    by Robert Kropp

New technologies such as EGS offer potential for large-scale electricity production and lead to high-visibility investments.


The rush to develop alternative energy sources has intensified in the last year, as rapidly rising oil prices have finally raised serious questions about the future of fossil fuels. Solar and wind power may have been the early favorites of the environmentalist and SRI communities, but recently geothermal energy—an application reputed to be as old as human civilization in some parts of the world—has gained many adherents.

Geothermal energy is provided by extreme heat from deep inside the earth which rises to the surface in natural streams of hot steam or water. In the United States, most geothermal reservoirs of hot water are located in the western states, where wells have been drilled into underground reservoirs for the generation of electricity.

According to an assessment by the Geothermal Energy Association , "Nine western states together have the potential to provide over 20 percent of national electricity needs." Furthermore, "Unlike wind and solar resources, geothermal resources are available 24 hours a day, 7 days a week."

Investors and environmentalists have taken note, finding in geothermal energy a renewable technology capable of providing clean energy in significant quantities without reliance on variable environmental factors. One of the companies benefiting from the surge of interest in geothermal is Ormat Technologies Inc.

Founded in 1965 and headquartered in Reno, Nevada, Ormat Technologies is one of the established companies in the field of geothermal energy. Paul Thomsen, Director of Public Policy and Business Development, said, "Ormat is a vertically integrated pure play in the field of sustainable energy, and is the leading developer of technology for the geothermal industry. Our hydrothermal geothermal power plants produce over 1000 gigawatts of electricity worldwide, with 400 megawatts occurring in the United States."

Thomsen referred to a co-production project that Ormat will undertake in cooperation with the U.S. Department of Energy in Wyoming. "We will use hot water brought up during oil field production to generate commercial electricity." The heat from the water will be utilized before the water reaches a bioremediation pond on the site.

Thomsen credits increased Congressional attention to such matters as carbon tax and alternatives to fossil fuels for Ormat's financial strength. In addition, the extension of production tax credits makes it more likely that geothermal can exceed the goal of more than 15,000 megawatts of geothermal power online nationally by 2025.

Other prominent companies in the geothermal field include Sierra Geothermal Power and Nevada Geothermal Power ,both of whom can expect to benefit from Senator Harry Reid's proposed Clean Renewable Energy and Economic Development Act. The bill will provide financing for power transmission lines and interconnections to carry power from renewable energy zones to areas with growing electricity demand.

Reid’s bill limits Federal financing of high-voltage transmission lines to those that carry at least 75 percent renewable electricity, and applies the same limitation to new lines built across Federal lands.

The biggest limitations of using geothermal energy to generate electricity are geographical. There are few places on earth where magma is close enough to the earth’s surface to generate electricity economically. Yet the thermal energy in the uppermost six miles of the earth’s crust amounts to 50,000 times the energy of all the oil and gas resources in the world, according to the U.S. Department of Energy.

When Google.org, the charitable branch of the search engine company, announced last month that it would invest $11 million in Enhanced Geothermal Systems (EGS), investors took note of a cutting-edge technology that has the potential for accessing the Earth's vast resources of heat to help meet the energy needs of the United States.

In EGS, wells are drilled, in some cases to depths of up to two miles, and water is injected under high pressure, which creates an artificial geothermal reservoir at depth. Water is circulated through the reservoir, extracting heat from the rock for use in producing geothermal electric power.

The U.S. Department of Energy (DOE) estimates that the application of EGS technology is capable of providing at least 100,000 MWe of electricity within 50 years. With a modest R&D investment of $1 billion over 15 years, a recent report by MIT estimated that 100 GWe of electricity could be installed by 2050 in the United States.

Beneficiaries of Google.org's investment include AltaRock Energy Inc., a technology company, and Potter Drilling, a developer of deep hard-rock drilling technology.

Don O'Shei, Chief Executive Officer of AltaRock Energy, told socialfunds.com, "The Google.org investment certainly brought us increased media attention, but it was in fact only part of a $26.25 million round of private placement financing.

"AltaRock has spent much of the last year in a technology development phase, and will use the financing to create a project that demonstrates EGS in action. After the end of next year and successful completion of the EGS project, AltaRock hopes to begin commercialization of EGS."

Socialfunds.com asked O'Shei what government can do to support the development of renewable energy. O'Shei pointed out that "Production tax credits have been helpful. However, their renewal cycles have been so short that it is difficult for companies to consider them reliable in the long term."

For years the recipient of less media and investor attention than other renewable energy sources such as wind and solar, geothermal can now boast several solid companies, developing technologies, and heightened interest from the socially responsible investment community.

While its more ambitious undertakings may take years to develop, the geothermal industry anticipates that carbon tax credits and other initiatives will help spur further investment and an accelerated timeline for development.

 

 
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